Every pound cut from new homes will cost the economy £3.50, Shelter warns

Any government cuts to housing investment will lead to widespread job loss and plunge the country into an even deeper housing crisis, Shelter says today.

As the Treasury prepares to announce deep spending cuts across government, Shelter is warning that £610 million of funding for new homes this year is at risk.

This, coupled with the £150 million of cuts to housing announced by the Chancellor in May, will mean 12,625 less homes built, 19,000 job losses and a cost of £2.7 billion to the economy.

New analysis by the housing charity shows that for every pound cut from public investment in housing, the wider economy will take a hit of at least £3.50.

At a time of record unemployment, Shelter is today warning that Government investment in new homes must be ring-fenced to continue to support house building during the downturn so that homes are delivered and jobs and skills protected.

Campbell Robb, chief executive of Shelter, said: “On top of the 1.8 million households on waiting lists and the million children in overcrowding who desperately need new homes, this research also shows how crucial house building is to our economy, providing vital jobs and economic growth. 

“With the private sector hit hard by the recession, public housing investment has been critical in getting homes built. Cuts now would cause one of our key industries to continue to flounder, bringing house building to a standstill at a time when the need for more homes has never been greater.

“As Government decides where the axe will fall, it must consider the colossal impact that cutting housing investment will have. If the overarching aim is to stabilise our already fragile economy, cuts now just don’t make economic sense.”

Areas such as the North East, already highlighted as a region at risk of public sector job losses, are likely to be hit hard by cuts to housing investment, with one in 12 people in work employed in the construction industry.

Shelter is warning that large-scale job losses would mean the loss of skills that could take over a decade to recover.

Campbell Robb continued: “We know from the last recession that it took years for the construction industry to recover and we simply cannot afford let this happen again.

“Every job loss takes with it vital skills and expertise that will be lost forever if people leave the workforce altogether or retrain in other sectors. There is a real danger that when house building picks up again we won't have the capacity to build the homes we need.

“Each year that we fail to deliver enough homes the backlog will grow greater, pushing us deeper and deeper into a housing crisis that will become impossible to get out of.  We owe it to future generations to continue investment now so they are not saddled with this legacy.”

Later this year Shelter will be releasing further research quantifying the social and economic return on housing investment in areas including crime, health and education.