By Brian Swint
Feb. 23 (Bloomberg) -- The U.K. government should build public housing to help the economy emerge from the recession, a group chaired by Bank of England policy maker Kate Barker said.
Funding the construction of 100,000 new homes over the next two years would save 30,000 jobs and prevent a shortage of housing supply from inflating property prices in the future, the 2020 Group said in London today.
“Support for housing today offers excellent value in terms of sustaining economic activity, and reduces the risk of a very severe loss of capacity in the housing and related industries,” Barker said in an e-mailed statement. “Social housing waiting lists are rising. This package meets a real and urgent need.”
British property prices are plummeting in the worst recession for almost 30 years after home values tripled in the decade to 1997. The plan would create homes for more than 200,000 people of the 1.8 million on waiting lists for government- provided housing, the statement said.
Housing starts dropped 58 percent in the fourth quarter from a year earlier and completions slumped 26 percent, the government said Feb. 19. Homebuilder Taylor Wimpey Plc is renegotiating debt with its creditors as business dries up.
“Without radical action many people in construction will lose their jobs, and up to 5 million people could find themselves on waiting lists by the end of 2010,” said National Housing Federation chief executive David Orr in a statement.
Barker was formerly a housing adviser to Prime Minister Gordon Brown when he was finance minister under Tony Blair, writing a review that was published 2004.
To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net.
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