Who broke Britain? Welcome to The i Paper’s opinion series in which experts and writers debate the issues that concern them about modern Britain.

• Martin Lewis: the money-saving expert… who accidentally cost Britons billions
• The American woman who ripped the heart out of Cadbury
• The slum king who showed British landlords how to get rich without working

It was in Gloucestershire at the 2009 Conservative Party Spring Forum that David Cameron made an announcement about where he and his shadow chancellor, George Osborne, were headed.

“The age of irresponsibility is giving way to an age of austerity,” Cameron declared. And, in the years that followed after the Tories entered government in 2010, as has been well-documented and debated, billions of pounds were cut from both the welfare state and local government.

However, Osborne made another decision during this time. A decision that is far less discussed. A decision that, expert economists have told me, was a mistake that may have brought the tough times upon Britain that we are experiencing today.

That decision was not making greater use of the ultra-low interest rates that were available after the 2008 financial crisis to borrow to invest in infrastructure, particularly affordable housing.

Social housing and housing for market sale are often discussed as being totally separate. In fact, they are intrinsically linked. And Osborne’s decision not to boost social and affordable housing had a knock-on effect on the private market because it kept the number of homes for lower-income households low, pushing people into private renting and driving up demand at a time when house prices were rising and sending middle-income households – particularly those headed up by younger people – who couldn’t quite afford to buy into private renting as well.

It is painful to think about now as mortgage rates once again surge above 5 per cent and the Bank of England mulls a base rate increase, but, in 2010, when Osborne was chancellor, the Bank’s rate remained flat at a record-low of 0.5 per cent. This was where it had been set in 2009 to stimulate the economy after the crisis.

This, as esteemed economist and former Bank of England Monetary Policy Committee member Dame Kate Barker has told me, was the opportune moment for the state to take advantage of those historically low rates to borrow and invest in infrastructure like social housing.

It is surprising to nobody with even a vague awareness of recent British political history that Osborne did not think social housing was a priority after the 2008 crisis. Osborne has described Margaret Thatcher – who introduced the great social housing sell off via Right to Buy – as his “generation’s inspiration”.

However, if you go back a little further, from the 1920s until the 1980s, there had been cross-party consensus that building social housing was the best way, not only to boost living standards but also grow Britain’s war-battered economy.

Barker, who conducted a landmark housing review for Tony Blair’s government in 2004, has told me that the decision not to use those low rates, which, as we are now learning, may not be available to us again for some time (if ever), was not just a mistake but “really regrettable”.

Since my interview with Barker, I’ve also spoken to other economic titans like former Bank of England economist Andy Haldane, who have pointed to how important building social and affordable housing is for Britain.

Measured as they might sound, the fact that they have spoken out at all tells you that they think the situation is serious. Indeed, Haldane has recently said that Britain is now “on thin fiscal ice”.

Osborne did not hold a crystal ball. He could not have known that the 2008 financial crisis was plunging our housing problem into the housing crisis we are now stuck in. But, equally, as the years of the coalition government rolled by, it started to become clear that even though the private housebuilding industry was struggling because of the credit crunch, collapse in buyer demand, and the fact that the banking crash had limited the funding available for developers, something was awry.

That something was this: After falling by somewhere between 15-20 per cent during the 2007-09 crash, house prices started to soar. Between 2013 and 2016, house prices rose by 23 per cent on average (adjusted for inflation) in a period of less than four years.

At this time, I was an early-career journalist at the BBC, and I remember covering stories about this asset price inflation. I also remember the feeling that it was pushing homeownership further and further out of reach for me and the generation I was part of, now called Generation Rent. Yet, at the same time, I knew people whose parents were buying up starter flats as “investments” and newspapers were awash with horror stories about mega landlords.

After a brief lull in 2018-19, house prices then spiked again in the wake of the coronavirus pandemic, rising by 13 per cent (once adjusted for inflation) in just over two years.

The knock-on effect of high house prices left many more dependent on private renting and private landlords for a home. This put pressure on the private rental sector and pushed rents up for everyone. Lower-income households were pushed even closer to the financial brink.

However, because we had not invested in and built enough affordable or social housing during the “age of austerity” and, at the same time, reduced the resources available to councils (in his 2010 spending review one of Osborne’s first moves was to cut council budgets), another crisis developed.

The number of people who were eligible for social housing surged. Many of them had become homeless – in no small part because private rents were also rising while the state support available to pay them (housing benefit) was capped by Osborne. And the result, as has been the case for several years now, is that more than 1.3 million households (which contain many more people) were left languishing on social housing waiting lists in England alone.

Worse still, hundreds of thousands of children are now homeless and living in temporary accommodation. English councils now spend £2.93bn a year on temporary accommodation. That’s over £8m every day. Housing benefit – much of which is paid via tenants to private landlords who were able to invest in the wake of 2008, when house prices fell – is forecast to cost us £39bn a year very soon.

This brings us to why Osborne’s mistake was so grave. Had he leveraged low rates to borrow and build social and affordable housing, it would be generating revenue for the state via social rent. It would be an asset.

Instead, local councils have been left with spiralling costs that every government since Cameron and Osborne has panicked about but failed to get a grip on. The human cost of this situation is, of course, almost immeasurable in terms of the heartache and misery caused: the childhoods blighted by growing up homeless.

We are now, as I have recently reported, potentially facing a period of economic volatility due to global conflicts and political upheaval. This is already affecting the housing market. And due to decisions taken in the early 2010s, we have little to no safety net left.