Report sets out raft of recommendations to boost public housebuilding and criticises government's unclear budgeting

An influential panel of MPs has urged the government to increase its social housing targets in response to the economic crisis.

In a report entitled Housing and the Credit Crunch, out today, the Communities and Local Government Select Committee called for a greater proportion of new homes to be public.

But the MPs criticised the government for failing to explain clearly how it would repay money borrowed for construction of social housing. It said £975m had been drawn from its 2010-11 budgets to build social rented housing with no explanation of how the debt would be settled.

In a raft of recommendations, the committee also urged the government to impose more effective sanctions against lenders that repossess homes too quickly and take further steps to support housing associations.

Dr Phyllis Starkey, chair of the committee, said: “The credit crunch has not reduced the numbers of households needing new housing, nor does it affect the need to address years of undersupply.

“The message which we received from witnesses during our inquiry was clear: the steps the government is taking are welcome, but further action is needed if the government is to have a chance of meeting its targets for home building and achieving the goal of a decent home for all.

“We are particularly concerned that the government is borrowing from future budgets now with apparently no idea how it is going to restore that money at a later date.”

The RICS said the number of homes built in 2009 was likely to fall far short of official targets and urged the government to use public resources to shrink the gap.

Policy officer James Rowlands said: “Low levels of housebuilding are a serious issue that must be addressed alongside mortgage lending as part of the government's response to the economic situation.

“With private housebuilders reluctant to develop, the government must be looking to use the Homes and Communities Agency and housing associations to make up some of the shortfall. This will help deliver essential new units and prevent skilled workers leaving the housebuilding industry.”

The committee of MPs has urged the Department for Communities and Local Government to:

  • Put pressure on the Treasury to ensure measures to revive the mortgage markets are implemented immediately
  • Increase construction of new social housing
  • Accelerate refurbishment programmes for social housing
  • Ensure appropriate opportunities are taken to acquire further social housing through the purchase of unsold stock and street properties
  • Consider the purchase of unsold family homes that have been on the market for more than a year
  • Encourage public sector bodies to make land available for the development of new homes
  • Make its low-cost homeownership offers easier to understand and use.