The Bank of England has injected £375 billion through Quantitative Easing, but mostly this has been injected into the City of London. Whereas the USA federal government has used its QE programme in a more targeted manner into the ‘real economy’ by linking it to more jobs as well as lowering inflation.
There is talk of more QE still being needed in the UK because of subdued growth. This should happen, but QE or something similar needs to be targeted into government-backed infrastructure works and social house building throughout Britain.
A social entrepreneurship is leading the way here by showing government how this can be done, bottom up. Mencap along with Golden Lane Housing and the Triodos Bank are offering a 5-year fixed term bond at 4pc interest to finance social housing, building small group homes, each one for up to four learning disabled residents. The majority of British councils are reporting a shortage of housing for learning disabled people locally. The minimum investment is £2,000 and the bond issue seeks to raise £10 million by the end of April.
QE is sometimes referred to as monetary policy (crudely, what the Bank of England does) whereas infrastructure spending is covered by fiscal policy (crudely, what government can do).
The UK Budget on 20 March is a golden opportunity to scale up exactly this type of responsible and sustainable investment in the economy and in communities. Maybe even for council house building programmes.
(updated, 24 February 2013)