Battling the cycle

With the world staring down the barrel of a renewed economic downturn, and possibly even a depression, the search is on for stimulus tactics.

Devoted fans of BBC Newsnight economics editor Paul Mason will have spotted his recent reference to Charles Kindleberger's classic economic history, 'The World In Depression 1929-39'. And many are looking back to the Great Depression for clues as to how to handle our current predicament. At the time, Roosevelt implemented the stimulus-focused economics of John Maynard Keynes to great effect. Despite the popular rise of the 'New Keynsians', such as Nobel Prize winner Paul Krugman, there are few signs of Keynsian deficit-spending coming back into fashion among today's finance ministers.

Roosevelt's New Deal established infrastructure spending as one of the most effective ways of providing a counter-cyclical stimulus. Traditionally focused on roads, railways, sewerage and other aspects of the public realm, the concept could quite easily be extended to housing. It is a popular trope among social housing experts that the sector is counter-cyclical - in times of downturn, it makes sense to boost spending on new affordable housing development. But the current government does not agree, having cut the grant funding budget to the bone for 2011-15, and with few kind words to say about the sector.

As Affinity Sutton chief executive Keith Exford pointed out at our annual conference last week, there are few alternatives to grant funding when it comes to the role of housing as an economic stimulus. 'There is no silver bullet that enables us to deliver subsidised housing without subsidy,' he said. 'As a sector, we haven't won the argument about the economic and social benefits of affordable housing. We don't have a well-trodden methodology for demonstrating it, unllike other sectors such as road-building, and it's about time that we did.'

Given the reluctance within government to consider expansionary economic policy measures, it seems that the first group of people whom any such methodology must seek to convince will be housing minister Grant Shapps and his colleagues at the Treasury.

HCA deputy chief executive Richard Hill warned our conference delegates that the government's forthcoming housing strategy will look to the sector to provide just such a demonstration of its economic power. '[It] will focus on economic growth, and how the sector can contribute,' he said.

The opportunity will thus be offered, it appears, for landlords to make their case for housing's role as an economic stimulus. The NHF, CIH and other sector bodies had better brush up on their General Theory textbooks.