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Government to stimulate housing boom

The Government is planning to stimulate a housing boom reminiscent of the 1930s, as policymakers attempt drag the UK out of the second recession without abandoning austerity measures.

During the last six months of 2011 the UK moved back into recession, resulting in increasing pressure mounting on the coalition to tone down the programme of spending cuts and tax hikes.

While the Chancellor George Osborne has held firm on his plans by exploiting in-built flexibility in his deficit plans, he is expected to make an announcement within the next few weeks to encourage further infrastructure investment from the private sector. This would be done by using low Government borrowing costs to make finance cheaper.

In a speech in London, Vince Cable, who is an influential member of the Liberal Democrat junior coalition said: “The government is now looking at even more radical solutions in order to provide a platform for a 1930s style recovery.

Cable also pointed out that between 1931 ans 1934 house building surged from 130,000 to 300,000, with the sector contributing almost a third of new jobs during that period.

In England only 110,000 new houses were built last year, as the construction industry witnessed its deepest fall in three years.

The Government are now in talks to free up planning regulations and exploit areas on the “policy frontier” where there is room for manoeuvre without loosening fiscal policy. It is hoped that this will help to engineer private sector housing investment.

Dr Cable added: “There are now some interesting ideas out there for government guarantees which could trigger a significant volume of housing investment, replicating the recovery model of the 1930s and leading hopefully to a virtuous circle of new building lending,”

This was posted in Bdaily's Members' News section by Ruth Mitchell .