Neil Hudson talks to a housing association chief about the Government’s grand plan to build our way out of recession and re-kindle the hopes of young home owners everywhere.
We’ve heard it all before. It’s everyone’s favourite solution to the economic crisis, from politicians and internet bloggers to those down the pub of a Friday night – the mantra that we build our way out of recession.
Harold Wilson did just that in the 1960s. The only thing is, he didn’t have a deficit reduction plan to stick to.
This time round, the old adage seems to fall a little short of the mark because the only way to build more houses is to borrow money. But when no-one is lending, where does the money come from?
The consensus view among housing experts is there’s a distinct lack of new homes.
According to the National Housing Federation (NHF), the body which represents social housing organisations, including 138 in Yorkshire and the Humber, that’s had a knock-on effect on the rental market, meaning many now pay as much in rent as they would on a mortgage.
As if things couldn’t get any worse, new figures show a worrying increase in the number of unemployed young people across the Yorkshire and Humber.
Between August 2008 and August 2012 the number of 18 to 24-year-olds in Leeds claiming Job Seekers’ Allowance for more than 12 months increased by 1,450 per cent (or by more than 16 times).
Mervyn Jones is chief executive of Yorkshire Housing, which looks after around 16,000 houses across Yorkshire including around 1,500 on the Swarcliffe estate in Leeds.
He said the Government’s plan to guarantee £10bn worth of cheap City loans might just work.
“The problem is they cannot just use Government money because they have a deficit reduction plan to stick to, so they have to make it look to the Bank of England and the EU like it’s not Government spending.
“The idea proposed by Vince Cable in September was to guarantee loans made by the City, not by the banks, which are now essentially closed for business, but by insurance companies and pension funds, who do have money and are still looking for long term investment.
“The Government would essentially guarantee the loans but instead of them being at 5.5 per cent interest, they would be at 3.5 per cent, because the Government can borrow money a lot cheaper.
“For us, when you are talking about investing something like £50m, that makes a huge difference to the number of homes you can build.
“We’re a not-for-profit organisation and last year we had a turnover of about 80m.
“The Tories neglected the issue of housing for two years. When they first came into office, the first thing they did was slash the housing budget by 60 per cent. Now they have realised how urgent it is.
“In practical terms, it means not only that people cannot get on the housing ladder, or afford rents, it means they cannot get jobs. We have 22 people doing apprenticeships, we’d like to do more.
“The thing about investing in bricks and mortar is that no-one’s ever lost money on it and there’s the so-called ‘multiplier effect’, which, in essence, means that for every pound spend, two gets invested in the local economy.
“That’s money on local services, on trade, on fish n’ chips for the workers.”
Ian Hirst, 19, from Swarcliffe, works as an apprentice for Able Bathing and Builders as an electrician fitting bathrooms and rewiring kitchens and extensions.
He is typical of the kind of people being affected by the economic downturn and a lack of houses.
A lot of his work is on Yorkshire Housing properties. Ian trained at college and gained a City and Guilds in electrical installation (Level 2) but struggled to find a job.
He said he applied for countless jobs and apprenticeships before being taken on and worked for over a year in a manual low paid factory job.
Ian said: “I trained in electrical installation but I felt like I kept on hitting a brick wall. I applied for so many jobs but kept on getting turned down. In the end I got a job in a factory on the machines but I felt like it was going nowhere.
“Eventually I attended an apprentice open day at my local youth centre, where I got talking to someone from Yorkshire Housing. I filed in a form and managed to get this apprenticeship. When I heard I’d got it I was really pleased.
“A lot of young people out there are struggling, many of them have been to college and trained for a career but there just aren’t the jobs. At the moment, I live at home with my parents. but one day, I want own my own house, just as a lot of people do.”
Mr Smith added: “We anticipate it will be spring time before we know more details about how the £10bn plan will work.”
If that’s the case and the plan works, who knows, perhaps things will be looking a little more rosy just in time for the next general election.