The rules around public borrowing and debt are complex and influence how government builds social housing.Councils can borrow from government to build social housing. That creates a liability, a debt for the Council, but an asset, money owed to it, for the government. The government will borrow to lend the money to the Council, so that creates a net debt. Once built, the house or flat is an asset, but the value of that doesn't count against the debt.Government lending to Housing Associations is classed as private debt so doesn't add to National debt.What a government borrows for affects how markets respond. Borrowing to fund the 37 billion spent on housing benefit each year is money gone, no asset created. Money spent building social housing would create an asset, that would remain when the debt was repaid and would start reducing the housing benefit bill. The policy that seems really crazy now, was selling off properties owned by Councils, mostly mortgage free, at huge discounts. To then have to rent them back years later at high rents to house social tenants. Public asset stripping. Don't begrudge the people who benefitted, but it has left an expensive legacy. A better policy might have been to give large grants to Council tenants to buy in the private sector. It would have preserved public housing stock and helped stimulate private sector building, which would have increased over all housing stock.
Kathleen Healy ● 2d