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Vince Cable: housebuilding is key to recovery

The business secretary has called for government financing guarantees to encourage public and private housebuilding

In a speech at the CentreForum yesterday morning (18 June), the Vince Cable claimed that ‘the experience of the 1930s tells us that it is possible to build, and grow, out of deep economic crisis’.

It comes days after Cable told the AJ’s sister title Construction News that construction - and housebuilding in particular - was at the heart of the UK’s economic recovery.

He said there was ‘large unmet demand for social housing which may be self-financing if built, in conjunction with private housing’.

‘Indeed, some major UK contractors are doing just that with access to long term – 10 years plus – finance, with access to guarantees. This activity could be multiplied.’

‘The public sector balance sheet has to be used to leverage in private capital, particularly in housing. There is scope here to both create demand and solve a pressing supply need at the same time.’

The Lib Dem cabinet minister pointed out that private housebuilding during the economic crisis of the 1930s reached levels of almost 300,000 each year – many times higher than current levels - and contributed a third of employment increases.

Cable called for government guarantees on housebuilding credit and for increased certainty in the market to stimulate private sector investment. This, he claimed, could lead to a virtuous circle, with “more mortgage demand leading to more house building leading to more houses; leading to lower prices and greater affordability; leading to more demand”.

‘Insofar as these ideas reduce uncertainty, they can encourage significant investment from the private sector. Recovery requires a big expansion in social and private house building.’

‘The industrial strategy that I am promoting has the same underlying purpose: providing certainty about ongoing government support to encourage greater supply chain investment. Co-financing private housebuilding alongside council housebuilding could be an extension of the same principle.’

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