Enabling cost-effective economic appraisal for social housing schemes

by Nico Westermann

The case for more social housing

The UK has a long history of providing social housing for those who cannot afford to buy or rent in the private sector. However, there are challenges in the UK’s social housing system that have been identified by housing experts and tenants alike. This is reflected the NHF’s recent Better Social Housing Review, with increasingly prominent discussions across government around the need for more and better housing.

According to the National Housing Federation, approximately 1.15 million UK households are on a waiting list for social housing.

Another major issue is the poor quality of many existing homes. Data from the English Housing Survey identified that in 2021 around 23% of private rented sector housing in England did not meet the Decent Homes Standard. This means that many private tenants are living in homes that are damp, cold, poorly insulated, or otherwise unsuitable for habitation – further strengthening the case for investment in the social housing sector (where the proportion of homes falling short of the Decent Homes Standard is far lower, at around 10%).

Clearly shortages in social housing are a major contributor to high levels of expenditure on social care. In 2021/22 local authorities in England spent around £30bn out of their total £49bn total services spend (excl. education) on social care alone. This is forcing a reduction in spending on housing and transport which ultimately amplifies the problem.

Showing the true value of housing schemes

Many institutes such as the National Housing Federation and Centre for Cities recognise the importance of economic additionality when evaluating the benefits of housing. 

Yet it is challenging for many organisations to produce the type of robust economic analysis needed to demonstrate the full economic value of their schemes.

Improving access to economic analysis can help to address this issue. Clear and logical methodologies do exist which can demonstrate, amongst other things, how improving social housing stock will reduce the proportion of spending on social care freeing up budgets for alternative expenditure.

The Benefit Cost Calculation Tool can support this process. Its purpose is to empower housing associations by providing an evidence-based framework that allows them to show the full range of benefits delivered by social housing projects in a robust and accessible way. The BCC Tool can help social housing promoters bid for government funding, by providing a more complete and accurate picture of the value for money delivered by their projects.

Now available (via subscription) through PfH’s SHED 2 framework, the BCC Tool is open to organisations across the housing sector. Please visit the new BCC Tool website, or contact us, if you would like to find out more. We would be delighted to support development projects in this important sector.  

Published by Tim Ashwin

I am an independent consultant specialising in business cases, economic appraisals, feasibility & market studies, due diligence reviews and regulatory analysis for transport and infrastructure projects.

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