CBI urges Osborne to boost housing market in Budget
Published by Max Salsbury for 24dash.com in Housing and also in Central Government, Finance
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The CBI has written to Chancellor George Osborne urging him to use the Budget to boost the housing market.
The self-proclaimed voice of British business says that a fiscally-neutral Budget would shift £2.2 billion from current spending to high-growth areas, including £1.25 billion on capital investment in areas such as housing.
In its letter to the Chancellor, the CBI writes: "With its high economic and social impact, housing should be central to the government’s commitment to boost capital investment. Housing benefits from the high construction multiplier – for every £1 invested in construction, £2.84 is generated in the wider economy – without suffering the long lead-in times that can affect major infrastructure projects. It is therefore well-positioned to be a focus of government efforts to boost business investment and drive growth within this Parliament."
The CBI would like the Chancellor to:
- Fund a further 50,000 affordable homes directly by injecting £1.25 billion of capital investment through the Affordable Homes Programme, generating £18 billion within the wider economy and creating 75,000 jobs
- Encourage refurbishment of existing houses though tax cuts or subsidies on renovation and repair work. This has the potential to create 80,000 jobs at a cost of no more than £500m, and would bring empty homes back into use
- Accelerate public sector land release for new housing on “build now, pay later” terms by moving all responsibility to the Homes and Communities Agency
- Review measures to increase institutional investment to encourage pension funds to invest in housing
- Explore expanding the NewBuy mortgage guarantee scheme to those with limited or negative equity looking to step-up to their second home, making more properties available for first-time buyers
- Introduce a housing deposit ISA to encourage saving. Combined with proactive marketing of the FirstBuy and NewBuy Government schemes, this would help overcome the perception among first-time buyers that they are unable to get a foot on the housing ladder
- Extend the housing guarantee scheme to cover all housing tenures to support smaller house builders access finance
John Cridland, the CBI Director-General, said: “The government must stick to its fiscal plan but now is the time to kick-start confidence.
“Our measures will provide another boost for the housing market and will benefit first-time buyers, those trapped in negative equity and those looking to refurbish their homes.
“To boost the construction sector, we are calling for 50,000 new affordable homes to be built, incentives for refurbishing empty homes and the housing guarantee scheme to be extended to all types of housing.
“We must supercharge the NewBuy scheme to allow second-time buyers struggling to get on the next rung of the property ladder.
“With its relatively short lead-in times, house building offers the most bang-for-buck in growth terms - unleashing pent-up demand, while creating jobs and growth.”
The National Housing Federation's assistant director, Stuart Ropke, said: “We’re pleased that the CBI has echoed our calls for the government to boost the housing market and that the business sector recognises the positive effect more investment in housing can have on the economy.
“September’s housing stimulus package was welcome and will help build the homes this country desperately needs. But more can and must be done. Housing associations can fill in the missing pieces of the puzzle and will be able to play a pivotal role with little cost to the taxpayer - creating thousands of jobs across the country and driving the growth we need.”
Meanwhile, Mark Henderson, chief executive of housing association Home Group, said: “For many months now Home Group has argued the case for immediate government incentivisation to kick-start further housing development as the best means of invigorating the stagnant UK economy.
“There is a desperate need for more social housing and the CBI’s proposals hit to the heart of the solution. Targeted financial measures, support for home buyers and accelerating the release of public land will all energise the housing market.
“I would go one step further and advocate that George Osborne packages these measures together in areas designated for strategic housing development – along the lines of Enterprise Zones – as a means of leveraging maximum impact.”