Conditions are right for the large-scale social housing that the UK urgently needs. Why wait?

The problem is how to help the millions who have no chance of ever being able to shoulder a mortgage

What is the answer to the housing shortage? Given demographic trends, and the inevitable increase in immigration to the UK, there seems little chance of demand falling away soon, even in areas where the recovery has been subdued.

In go-go London, the inward flow of investment bankers and mini-cab drivers alike means that the National Housing Federation’s forecast of an average house price of £650,000 in the capital by 2020 may turn out to be an undershoot. Meanwhile, the taxpayer picks up the cost of escalating claims for housing benefit, as rents skyrocket. Even with the Government’s cap, which is necessary, these claims are liable to grow.

Reducing the cap imposes an unacceptable cost on the poorest, and pushes labour out of areas of high demand. One rational answer – to choke off speculative property demand by applying capital gains tax to primary residences – is politically unthinkable.

So the answer is “increase supply”. The good news is that this is not so difficult. The various schemes to oblige developers to allot a certain percentage of any schemes to “affordable” homes suffer a fundamental weakness – they target those in range of buying their own place, by definition the relatively well-off, and they are small in scale.

The problem is how to help the millions who have no chance of ever being able to shoulder a mortgage. This is where the National Housing Federation is wrong. Living in warm, dry, safe accommodation might be a human right; to own the title deeds patently is not.

In fact, the Government could return to the lost world of post-war politics, where housing ministers on the make – including a One Nation Tory by the name of Harold Macmillan – set ever more ambitious plans for council housing at elections. A half-million target for new homes over five years was the usual entry-price to the national debate.

Some poor designs resulted, and the vast sums of cash swilling around the system fuelled corruption. In addition, some of the worst works of well-meaning architects had to be dynamited ahead of their natural lifespan. At the same time there was a great addition to the housing stock, the majority of it still standing. Social housing, though in shortage (memorably portrayed in the 1960s TV drama Cathy Come Home), was not, as now, in crisis. We have every reason to repeat what we did then, especially as the dearth in house-building of any kind since the 1980s has rapidly aged the national housing stock.

The cost of borrowing for the Government is now so low that a large-scale programme could pay for itself, even at lowish rents. It would boost the economy and jobs. Rents could be set at levels that were sub-economic, but still offer a payback over the life of the stock – half a century plus. We would save on benefits.

The problem is another shibboleth; the “right to buy”. This guarantees a loss for the taxpayer, on any programme of social housing. Witness the row over the under-pricing of Royal Mail shares by, say, £2bn. And yet the discounts offered to ex-tenants exercising a “right to buy” since the 1980s is probably somewhere between £50bn and £100bn: the largest transfer of wealth since the Reformation.

There is no point in spending billions on social housing just to flog it off at a 40 per cent discount in a few years. Therefore we need to abolish the so-called right to buy and pledge to build half-a-million social homes. Now, which One Nation party is going to suggest that at the next election?