The following open letter to the Chancellor Rachel Reeves was signed by representatives of INET Oxford's Five Programme Teams, including: Sir David Hendry (Deputy Director, Climate Econometrics), John Muellbauer (Co-Director, Macroeconomics and Finance), Max Kasy (Professorial Research Fellow Economics, Inequality and Opportunity) & Alex Teytelboym (Professorial Research Fellow, Complexity Economics and Economics of Sustainability).
Dear Chancellor,
We urge you to seize the Spending Review this June as the moment to increase investment in a robust successor to the Affordable Homes Programme that prioritises social rent homes. It is our expert view that this will not only improve the nation’s health and wellbeing but stimulate economic activity and help drive the growth that you have declared a priority.
There are 1.3 million households stuck on social housing waitlists. Over 164,000 children are denied their right to a safe, stable home. As rents continue to rise, millions of renters are forced to cut back on food and heating, and child poverty is increasing.
History shows you will not end homelessness or deliver new homes on the scale you have promised solely through planning reforms and the private market. Funding social housebuilding is the clearest way to increase supply sustainably. As an upcoming collection of essays by some of the country’s leading economists and policy experts shows, government must prioritise investment in social homes and capitalise on the economic benefits this would bring.
Investment would provide a significant stimulus. One estimate indicates that for every £1 in gross value added (GVA) directly generated, a further £1.63 is supported through indirect and induced activity, producing a total GVA multiplier of £2.63.6 Some predictions on job creation reach well into the hundreds of thousands. Growth would be spurred across multiple sectors, including sustainable technology industries, helping address fuel poverty and supporting our transition to net zero.
Secondly, it would increase disposable income for hundreds of thousands. Around half of lowincome private tenants spend at least 40% of their income on rent – over a third higher than the OECD average. Investing in social housing, for which average rents are a third of the private sector, would leave many more pounds in many of their pockets. The security of a social rent home also provides the stability needed to access and retain employment.
Finally, investment in social homes would deliver significant savings. As the number of social rent homes has fallen by over a million since 1980,10 the housing benefit bill has risen from £4bn to over £32bn a year – a seven-fold real terms increase. Significant government expenditure has in effect been transferred from building new social homes to subsidising private rentals as rents soar.
Last year, councils spent over £2 billion on temporary accommodation. Authorities such as Hastings, Crawley and Dartford spend over half of their council tax income on temporary accommodation, whilst making cuts to other vital services to balance the books. Poor quality housing – which a new generation of social homes would help address - has also been estimated to cost the NHS £1.4 billion annually, alongside wider societal costs of over £18 billion. Large-scale investment in new social rent homes would drastically cut these costs.
To secure these benefits and deliver on the promises of strong economic growth and the biggest increase in social homes in a generation, the government must commit to a major boost to social housing investment, of at least double the value of the previous Affordable Homes Programme. Now is the time to make a clear commitment and deliver the changes that will bring stability and security to the economy and to a generation.
cc:
Angela Rayner, Deputy Prime Minister and Secretary of State for Ministry of Housing, Communities and Local Government (MHCLG)
Darren Jones, Treasury Minister
Matthew Pennycook, Housing Minister
Key links
List of Signatories:
- Professor Daron Acemoglu, Institute Professor of Economics in the Department of Economics at the Massachusetts Institute of Technology, Nobel Laureate in Economic Sciences 2024
- Professor Charles Baden-Fuller, Centenary Professor of Strategy, Bayes Business School (formerly Cass), Fellow of British Academy, Strategic Management Society Fellow, Fellow of Academy of Social Sciences, British Academy of Management Fellow, Senior Fellow of Wharton School
- Professor Mark Blyth, William R. Rhodes Professor of International Economics and Professor of International and Public Affairs at Brown University
- Professor Glen Bramley, Professor of Urban Studies at Heriot-Watt University
- Professor Ha-Joon Chang, Distinguished Research Professor at SOAS University of London
- Professor Brett Christophers, Professor of Human Geography at Uppsala University
- Professor Josh Ryan-Collins, Professor of Economics and Finance at the UCL Institute for Innovation and Public Purpose (IIPP)
- Professor Andrew Cumbers, Professor of Political Economy at the University of Glasgow Lord Meghnad Desai, Emeritus Professor of Economics at LSE
- Professor Gary Dymski, Professor of Applied Economics at Leeds University Business School, University of Leeds
- Professor Daniela Gabor, Professor of Economics at SOAS University of London
- Professor Kenneth Gibb, Professor in Housing Economics at the University of Glasgow, Director of UK Collaborative Centre for Housing Evidence and Shelter Scotland committee member
- Sir Oliver Hart, Lewis P. and Linda L. Geyser University Professor at Harvard University, Nobel Laureate in Economic Sciences 2016
- Sir David Hendry, Co-director of Climate Econometrics and Senior Research Fellow of Nuffield College and previously Professor of Economics at Oxford University and Econometrics at LSE
- Professor Dan Hill, Director of Melbourne School of Design and formerly Director of Strategic Design at Vinnova, the Swedish government’s innovation agency
- Dr Stuart Hodkinson, Associate Professor of Critical Urban Geography at the University of Leeds
- Professor Simon Johnson, Ronald A. Kurtz (1954) Professor of Entrepreneurship at the MIT Sloan School of Management, Head of the Global Economics and Management group, former Chief Economist of the IMF, Nobel Laureate in Economic Sciences 2024
- Professor Maximilian Kasy, Professor of Economics at University of Oxford
- Professor Mariana Mazzucato, Founding Director of UCL Institute for Innovation and Public Purpose (IIPP)
- Professor Jo Michell, Professor of Economics at UWE Bristol
- Professor Simon Mohun, Emeritus Professor of Political Economy at Queen Mary University of London
- Professor Mary S. Morgan, Albert O. Hirschman Professor of History and Philosophy of Economics, LSE, President of the Royal Economic Society 2023-24
- Professor John Muellbauer, Professor of Economics at Institute for New Economic Thinking, Senior Research Fellow of Nuffield College, Oxford University
- Professor Sir Anton Muscatelli, University of Glasgow
- Professor Susan Newman, Professor and former Head of Economics, The Open University
- Polly Neate CBE, Chief Executive Officer, Shelter
- Professor Charles Nolan, Professor of Economics at University of Glasgow, Bonar MacFie Chair in Economics, former President of the Scottish Economic Society
- Avner Offer, Professor Emeritus of Economic History, University of Oxford, Fellow of All Souls College
- Lord Jim O’Neill Honorary Chair of Economics at Manchester University, Former Commercial Secretary to the Treasury, Former Chief Economist of Goldman Sachs and Chair of Goldman Sachs Asset Management
- Professor Ozlem Onaran, Professor of Economics at the University of Greenwich and Associate Head of the School of Accounting, Finance & Economics, Co-director of PEGFA
- Dr Thomas Palley, former Chief Economist for the United States-China Economic and Security Review Commission
- Professor Carlota Perez, Honorary Professor at the UCL Institute for Innovation and Public Purpose (IIPP)
- Ann Pettifor, Director of Policy Research in Macroeconomics (PRIME)
- Professor Kate Pickett, Professor of Epidemiology at University of York
- Professor Jonathan Portes, Professor of Economics and Public Policy, King’s College London, Former Chief Economist at the Department for Work and Pensions and the Cabinet Office, Former Director of the National Institute for Economic and Social Research (NIESR)
- Sir Christopher Pissarides, Regius Professor of Economics at the London School of Politics and Economics, Nobel Laureate in Economic Sciences, 2010
- Dr Howard Reed, Senior Research Fellow at Northumbria University, Director of the economic research consultancy Landman Economics, former Chief Economist and Director of Research at the Institute for Public Policy Research Professor Andrew Sayer, Emeritus Professor of Social Theory and Political Economy at Lancaster University
- Professor Malcolm Sawyer, Emeritus Professor of Economics at University of Leeds
- Professor Pritam Singh DPhil, Professor Emeritus in Economics, Oxford Brookes Business School, Oxford Brookes University
- Professor Guy Standing, Professorial Research Associate and former Professor of Development Studies at SOAS University of London
- Professor Engelbert Stockhammer, Professor of Political Economy at King's College London
- Professor Alexander Teytelboym, Professor of Economics at the University of Oxford
- Dr Jan Toporowski, Progressive Economy Forum
- Professor Tony Venables, Senior Research Fellow at University of Oxford
- Dr Adam Yousef, Head of Economics at the Greater London Authority (GLA), Policy Fellow at the University of Cambridge
