Building Britain out of the slump

Curitn&Co LibDem consultant, Chris Oughton, looks at Vince Cable’s demands that the Government should “build Britain out of the slump”, echoing the emphasis that the party have been placing on housing as the catalyst for rapid, deliverable growth in recent months and bringing the argument full-circle - back to the conservative lending by banks. 

Earlier this month, Secretary of State for Business, Innovation and Skills, Vince Cable spoke to liberal think tank, CentreForum, about directing substantial chunks of the Governments £20bn allocation to underwrite infrastructure projects towards housing associations to help trigger a much needed housing boom.

He suggested that using Government guarantees to underwrite significant investment in increasing housing volume through housing associations (the predominant force behind social housing) could replicate the recovery of the inter-war era when the UK embarked on building its way out of recession with 300,000 new homes a year.

He told the Guildhall audience that housing could deliver progress quickly, help meet the growing demand for social housing and, if built in conjunction with private housing, could be self-financing and sustainable.

Advocating more lending and more houses Vince Cable said:

“There are now some interesting ideas out there for government guarantees 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 to increased affordability and also increased private demand. Construction products account for 20% of manufacturing. 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.”

Similar measures, which as guarantees do not contribute to public debt, have already helped to secure low borrowing rates for small businesses.

Ensuring his message was delivered in the context of recent banking crisis, Cable suggested that what he was addressing was similarly rooted in the damaged banks refusal to provide lending, as well as the weakening of building societies, which he branded as, “one of the great acts of economic vandalism in modern times”. He added, “There is now no institutional structure in place to offer countercyclical lending, particularly small and medium sized businesses, in place of the banks. A major and urgent task of government today is to ensure that we have banks that meet that requirement”.