Vince Cable calls for more Housing Investments

There have been an increasing number of MPs discussing ways in which the housing crisis could be alleviated, which is causing a fair amount of tension in the government. At the moment, there are thousands of people looking for both private and rented accommodation, and whilst landlords are doing their best to try and accommodate everyone, the government are concerned that the markets are too risky and that borrowing more to invest in housing could be detrimental to the economy.

This is why business secretary Vince Cable wrote in the New Statesman yesterday that he feels the government need to do more when it comes to borrowing money and giving local councils the power to invest in more housing in their areas. In the article, seen by many as an attempt to derail Prime Minister David Cameron’s speech yesterday concerning the economy, Cable says that he believes the government should increase borrowing for housing purposes even if many are concerned with the risks.

Mr Cable wrote: “The more controversial question is whether the government should not switch but should borrow some more, at current very low interest rates, in order to finance more capital spending: building of schools and colleges; small road and rail projects; more prudential borrowing by councils for housebuilding. This last is crucial to reviving an area which led to an economic recovery in the 1930s but is now severely depressed.”

“Such a programme would inject demand into the weakest sector of our economy – construction – and, at one remove, the manufacturing supply chain (cement, steel). It would target two significant bottlenecks to growth: infrastructure and housing.” At the moment the government is trying to solve the billion pound UK deficit, so the idea of borrowing more money is not one that will be popular amongst many MPs. Furthermore, many are concerned that the market will respond badly if the government is seen to be borrowing more money, which could lead to even more economic problems for the country.

Mr Cable has admitted that it is impossible to predict what will happen if the government starts to borrow more money in order to fund housing projects, and that the amount of risk “remains a matter of judgment” for politicians. However, those in housing related industries such as landlords, landlord insurance providers and housebuilders would welcome further investment, and many feel the risk would be low as there is such a high demand for housing across the UK.

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