Andy Burnham is unlikely to be able to fund the “biggest council housebuilding programme since the post-war period” that he has promised, economists have said.
Researchers from Capital Economics, the forecasting house, said the “fiscal reality will be the same under Burnham as it is now” for Sir Keir Starmer.
“Announcing a big homebuilding plan is easy,” Ashley Webb, senior UK economist at Capital Economics, said. “But, as Starmer found out, delivering one is harder, not least due to the fiscal constraints. This is why we doubt council house building will return to its post-war period levels, especially not soon.”
At the peak in 1954, councils built a combined 208,000 homes, compared with an average of about 32,700 over the past decade.
In the 35 years after the end of the Second World War, an average of 126,000 council homes were built each year. The researchers estimate the government would have to spend an extra £12.5 billion a year to return to those levels.
An increase in annual council house construction to 208,000 homes would cost an extra £23 billion a year relative to current plans, they estimated.
With the war in Iran having pushed up energy prices and, as a consequence, construction costs, Capital Economics said that the actual cost of funding Burnham’s ambitions could be even higher. Either way, his plans would “almost certainly require a chunky rise in public borrowing”, the researchers said.
Webb doubts that bond market investors would tolerate so much extra borrowing, and so Burnham would have to cut spending elsewhere or further raise taxes, although both options may be politically unpalatable.
Starmer is looking increasingly unlikely to get anywhere near his target of building 1.5 million homes before the end of 2029 and Webb predicted that Burnham, the former mayor of Greater Manchester and prime minister in waiting, was also at risk of making “yet another empty house-building promise”.
The researchers also flagged other potential constraints, including planning delays and a shortage of construction workers if Burnham was serious about his housebuilding ambitions