House building to give Labour £13.2 billion green investment war chest

Building the homes that that Britain desperately needs would give Keir Starmer and Rachel Reeves billions of pounds to invest in clean energy and making homes more energy efficient.

New analysis from pro-growth campaign group Britain Remade, and seen exclusively by The Mirror, shows that turbocharging housebuilding would increase the spending firepower available to Ms Reeves, if Labour wins the next election, by over £13 billion.

Labour has committed to building 1.5 million homes over the next Parliament - 300,000 a year it runs for 5 years with an election in 2029.

Building 300,000 homes to the highest energy efficiency standards where housing costs are the highest would boost the economy by a massive £22.5 billion and hand the Treasury a further £9.2 billion in tax. 

The reasons for this include the huge number of new jobs that would be created in the construction industry and more spending on building supplies.

Building more homes will also bring down sale prices. By making homes cheaper people will have more money to spend on economy boosting goods and services. It also frees up money for homeowners to make other investments which will boost long-term growth rate.

Thirdly, expensive housing in Britain’s most productive areas means that many people are priced out of the areas completely, so that they can’t move within reach of better jobs.

Wages in London, for example, are 15% higher than the national average, but once you factor in the higher housing costs, the average Londoner is only 1% better off. 

This means that many people are better off staying where they are rather than moving to cities where they can earn a higher wage.

More housebuilding also means more Stamp Duty being paid. By building 300,000 homes a year the tax take would increase by £3.1 billion - plus further Stamp Duty being paid in future years when new homes are sold.

By bringing down the cost of housing the Government will also spend less on housing benefit. Building the homes Britain needs could cut the cost of housing benefit by £800 million.

New homes are also good for the environment. Building to the highest energy efficiency standards reduces carbon dioxide emissions by 2.8 tonnes a year per home compared to the average home - delivering an emissions saving of 840,000 tonnes a year.

If Labour is even more ambitious the benefits would be even greater.

Building the 442,000 homes a year that the Centre for Cities says needs to be built to close Britain’s housing shortage could boost Labour’s spending power by almost £19 billion.

Commenting Sam Richards, founder and campaign director of Britain Remade, said:

“Never has it been so difficult for young people to get onto the housing ladder. 

“The last time house prices were this high relative to the average salary, Queen Victoria was on the throne.

“Building the homes we desperately need will not only mean young people can get on the housing ladder and boost the economy, it will also provide Labour, if they win the next election, with the firepower needed to deliver more of the green prosperity plan.

“The country has been through a horrible couple of years so fiscal credibility is important. But Sir Keir and Rachel Reeves should not lose sight of the huge economic benefits of building the homes we need. After scaling back their ambitions earlier this month building new homes and the economic boost this will deliver could provide the extra funding they need to deliver their plans. 

“And by building homes to the highest energy efficiency standards rather than just the average, which sadly is all most builders do, will make a meaningful impact on emissions.

“Building homes is a win for young people, a win for the economy and a win for the environment.”