Miliband announces plans for £5 billion housing fund to kickstart home building

Speaking at a rally in Warrington, Ed Miliband will today announce plans for a £5 billion housing fund to kickstart home building in the next Parliament – contributing 125,000 homes to Labour’s target of 200,000 homes a year by 2020.

The “Future Homes Investment Fund” will be financed by the new “First Time Buyer ISA” announced in last month’s Budget, and requires no new additional borrowing or spending. By ensuring that any bank or building society which offers these ISAs will have to invest it in building houses. A Labour Government would underwrite these ISA investments by extending existing government guarantees if they put this money into the Future Homes Fund, and savers will still be guaranteed the same return on their investment and be able to withdraw their money at any time.

This also has the handy upside for Labour of taking a popular Tory measure from the last budget, and making it part of the party’s own solution to the housing crisis.

The move is inspired by action taken in the 1920s when housing constructed was kick-started by the Addison Act and the issue of Housing Bonds, and will be focused on pump priming investment in “Housing Growth Areas” where the need for housing is most acute. Local people who have lived in these areas for three years will be given priority access to new homes as part of a “First Time Buyers First policy”.

In Miliband’s speech, he’ll seek to draw a distinction between the Tory approach (stoking demand without tackling supply) and the Labour approach – tackling supply by building more homes.

Here’s what Miliband is expect to say:

“There’s nothing more British than the dream of home ownership, starting out in a place of your own. But for so many young people today that dream is disappearing into the distance.

“Home ownership is now at its lowest level in 30 years. People are getting older and older before they can afford to buy their first home. There are now 11 million people who rent their homes, most of whom say they would like to buy. 

“There are almost three and a half million young adults living with their parents – an increase of half a million in the last five years alone.

“So much of this is because the number of houses being built just isn’t keeping up with demand. Average house prices are now eight times the average wage.” 

“And this government has presided over the lowest level of housebuilding since the 1920s. No wonder people can’t get the start they need.

“We’ll get Britain building again. Our plan is the first real plan for house building in a generation.

“We will get at least 200,000 homes a year built by the end of the Parliament.

“We won’t let those large developers just hoard land, waiting for it to go up in value when it could be used to build homes. We’ll say: either you use the land or you lose the land.

“We will say to small developers and construction companies that we will help them to build homes again in our country.

“We will build a new generation of towns, garden cities and suburbs creating over half a million new homes.

“We will make housing the top priority for additional capital investment in the next parliament.

“And today I can announce the next step in our plan: In just 32 days we can have Labour government. And that government will create a new Future Homes Investment Fund.

“That means, we’ll put the money saved by first time buyers in the First Time Buyer ISA scheme to work. Using those precious investments not just to sit in banks and building societies to spend as they wish but using it to invest in new home building, unlocking a minimum of £5 billion to deliver 125,000 new homes in our Housing Growth Areas.

“There’s no bigger symbol that our country doesn’t work for working people than young people not being able to get a start with a home of their own. We’re going to turn it round and build the kind of country in which we can all be proud.

“Investing in our future, investing in the next generation, giving hope back to young people and restoring the Promise of Britain.”