A pain-free solution for social housing

This is a smart plan and there is surely a lesson here for George Osborne

High-value social tenancies have long been a source of public resentment. The unfairness of council and housing association tenants living at low rents in expensive homes that are way beyond the reach of most people understandably rankles. The think tank Policy Exchange has produced an elegant solution. It proposes that social housing that is classified as “expensive” – worth more than the average for a home of that size in the same locality – should be sold when it becomes vacant, with the proceeds put into building low-cost social housing.

There are more than 800,000 such properties, with a total value of about £160 billion. At current vacancy rates, about £4.5 billion-worth of these flats and houses fall empty every year and selling them would, according to Policy Exchange, raise enough money to build 170,000 new social homes. That would be a bigger social housing programme than at any time since the Seventies. And there will be no need to ease green-field planning laws to achieve such an ambitious goal, for most social housing can be accommodated within town and city boundaries.

Downing Street has rowed in behind the scheme and it is easy to see why. It is a relatively pain-free way of ending an anomaly while making deep inroads into housing waiting lists – and giving our ailing economy a shot-in-the-arm in the process. It also meshes with the Coalition’s existing policies for making social housing fairer and cheaper – capping housing benefit payments at £400 a week for large properties and making high-earning social tenants pay a market rent for their properties.

The Labour Party is clearly rattled by the proposal and has responded with predictable scare tactics, claiming that it would “drive out hard-working families on low wages from whole neighbourhoods”. Labour has deliberately chosen not to notice that these properties will be sold only when they are empty. Such alarmism is par for the course. Labour claimed that the housing benefit cap would lead to the “social cleansing” of high-cost housing areas but that has simply not happened.

This is a smart plan and there is surely a lesson here for George Osborne. He is in danger of appearing impotent against the economic storm. That is not a good look for a chancellor. Policy Exchange has shown that radical ideas do not have to be complex or costly. Mr Osborne needs to start demonstrating the same ingenuity and a lot more energy if this recession is to be beaten. David Cameron’s warning last month that we will have to get used to austerity was defeatist: it is time the Government started fighting back.