Building 100,000 government-funded social rent homes a year over the past two decades would have cut billions from the housing benefit bill, provided higher disposable income for tenants and generated significant economic returns, new analysis has revealed.

The Local Government Association (LGA) said its new research provides evidence for why the Government should use the Spending Review to work with councils to ensure that the genuine renaissance in council housebuilding needed to increase housing supply, boost affordability and reduce homelessness, is a success.

Social rent, which provides secure tenancies on low rents for low income families and vulnerable people, is at a historic low. In 1997, over a third of households lived in council housing, compared with just one in 10 today. The number of homes built for social rent each year has fallen from over 40,000 in 1997 to 6,000 in 2017. This decline has resulted from the policies of successive governments, such as rules and restrictions hampering the ability of councils to replace homes sold through Right to Buy and central government control of rental income and borrowing limits.

This loss of social housing has led to more and more individuals and families finding themselves pushed into an often more expensive and less secure private rented sector (PRS). As a result, the housing benefit bill paid to private landlords has more than doubled since the early 2000s.

The LGA commissioned Cambridge Economics to assess the implications if 100,000 government-funded social rent homes had been built each year over the past two decades. It found that: