New Stable
Think tank: Localis
Author(s): Sandy Forsyth
May 14, 2025
This report from UK think tank Localis discusses expanding and reforming the role of the LGPS in driving affordable housing.
Solving the housing crisis, a stated but unrealised goal of successive recent governments, is both a generational challenge for policy and a hugely significant potential investment in place. That a crisis exists is well-rehearsed, but its hydra-like, multifaceted nature must be stressed. The housing crisis is principally one of supply, with not enough homes being built in general year-on-year.
Beyond this, however, is the crisis over the type of homes being supplied – with far too few genuinely affordable and social homes being built. This means that an uptick in supply itself without further intervention will not alleviate the problem. There are also myriad effects of the crisis and the vicious cycle they create: the pressure on services such as temporary accommodation caused by homelessness, the enormous and unequally distributed downwards pressure on disposable income caused by escalating housing costs. It is for all these reasons and more that the new government have placed the delivery of homes at a scale not seen in decades at the centre of their agenda for this Parliament, with much of the responsibility sitting on the shoulders of local authorities.
The Local Government Pension Scheme (LGPS) is cited by the chancellor as a key means to achieve investment. New Stable puts forward the case that, by creating appropriate investment vehicles and funding principles, and providing clear government incentives and support, the LGPS can become a significant source of patient capital for addressing the UK’s chronic under-investment in genuinely affordable and social housing, ultimately contributing to both social prosperity and national economic growth.
As part of this, the report also explores the potential for a long-term and stable lower rate of local authority contributions into the LGPS to act as a means of increasing access to revenue spend for support the crucial task of addressing the housing crisis.
