The government must provide more funding to local authorities in order to meet housing needs by creating 90,000 new social homes a year, according to MPs on an influential committee.

Only a significant increase in financial support for councils and housing providers will create the uplift necessary to meet demand, the report by the Housing, Community and Local Government Committee claims.

The MPs say that such increased funding must be accompanied by broader reforms to make land more affordable and to harness all the money that is raised through Right to Buy property sales. 

They argue that the nation is in a social housing crisis with 83,700 households in temporary accommodation, an increase of 82 per cent since 2010.

The number of people sleeping rough has risen by 165 per cent over the same period.

Meanwhile, social housing stock has diminished with over a million homes lost from the sector since 1981, while in 2019 only 6,827 new homes were built.

Economic and social repercussions from the pandemic are likely to put the social housing sector under greater strain, the committee warns.

The MPs calculate that the government could reduce the amount of public spending required to create the new homes by 40 per cent through reforming land value capture, using public land for social housing and redistributing existing budget.

Reducing the use of private-rental properties to shore up the social housing system would create a significant reduction in the housing benefit bill, they say.

Although local authorities will benefit from the removal of the borrowing cap, this will not be sufficient to cover the cost of new housing required and the committee argues that £10bn in grant funding will still be required. 

They argue that investment in social housing provides an economic boost that pays for itself over time and increased house building will create much-needed jobs during the economic uncertainty caused by the pandemic.

The HCLG Committee urges the government to reconsider how it disposes of public land, prioritising housing needs rather than selling to the highest bidder.

The MPs say that the way in which cash generated from Right to Buy is distributed makes it difficult to fund replacement social homes as providers only receive a small share of the property’s value. 

Instead councils should receive 100 per cent of the revenue from Right to Buy sales and should be given a longer window within which to spend it, they say.

HCLG Committee chair Clive Betts says:  “The collapse of social housing building since the 1980s has had terrible consequences on our ability to provide adequate housing for those who need it. 

“The last decade has seen a surge in families living in temporary accommodation and people rough sleeping, while at the same time we have come to rely on the private rental sector to shore up the creaking social housing capacity.

“We need at least 90,000 new homes a year to get to the level of social housing we need, but this is achievable. 

“We believe this target can be reached in five years, but only if the government gives providers sufficient financial backing and reforms the wider landscape that social housing providers operate in. 

“They must ensure that the money is there to build, that land is available to build on and allow flexibility to buy surplus housing where it is not needed in the private sector.

“The system must ensure that any housing sold via Right to Buy is replaced like-for-like, and that local authorities are allowed to retain all the receipts produced to enable them to achieve this.

“This must be a long-term commitment to creating a social housing system that meets long-term demand. 

“It will be challenging but it is achievable.”