Britain's Housing Splurge Is Long Overdue

The £39 billion ($53 billion) boost that Britain’s Labour government has announced for affordable housing still leaves its ambition of building 1.5 million homes over five years looking like a stretch. That shouldn’t obscure the broader point that the country has underspent for decades on accommodation for its most disadvantaged. Any attempt to reverse this trend has the potential to pay for itself in wider economic benefits and even lead to a healthier private property market.

The state’s retreat from providing housing began with Margaret Thatcher in the 1980s and gained added impetus after 2010 with the Conservative-led government’s efforts to cut expenditure and repair the public finances following the global financial crisis. Rather than building homes, the government aimed to steer financial support to low-income households to enable them to rent in the private market or from not-for-profit housing associations. The guiding philosophy was that a more market-based approach would encourage a more aspirational society; public housing, by contrast, kept people caught in dependency.