The U.K. government is developing plans to drive more pension fund money into affordable housing to address Britain's homes shortage, Chancellor of the Exchequer Jeremy Hunt said.
Former Liberal Democrat leader Tim Farron asked Hunt in the House of Commons on Nov. 14 whether he would look at rules governing pension investment funds to give them more incentives to invest in affordable housing, and Hunt replied that the Treasury was already working on "proposals in that very area."
"We are doing a lot of work to remove the barriers to them investing in the U.K.," Hunt said, referring to pension funds. "Things like affordable housing, infrastructure, our growth businesses are areas of great potential."
The government is trying to spur more construction amid a housing crisis that's driving up living costs and has become a totemic political issue. Earlier this year, the Center for Cities think tank said the U.K. was missing 4.3 million homes compared to the European average.
With the governing Conservatives trailing the main opposition Labour Party by around 20 points in recent polls and a general election expected next year, housing is set to become one of the battleground issues in a national vote. Labour has pledged to deliver the biggest boost to affordable housing in a generation if it takes power.
The Tories have committed to building 1 million new homes over this parliament, which must end in January 2025. Junior Treasury minister Bim Afolami told the Commons on Tuesday that the government is "optimistic that we will reach our target."
Under his Mansion House "compact," Hunt wants pension funds to direct more investment into U.K. growth industries. He is also pushing for greater pension fund consolidation and more insurance buyouts from sponsoring companies.
Earlier this week, the Pension Insurance Corp., a buy-out specialist, pledged to build 125 affordable homes in London in partnership with Square Roots, an affordable housing subsidiary of developer London Square.