Plans to build 250,000 affordable homes set to be axed as a result of Budget cuts, Federation warns
Thursday 1 July 2010
Plans to build hundreds of thousands of desperately needed affordable homes over the next decade could be scrapped after the Chancellor announced public spending cuts which imply a reduction of at least 25% to the housing budget over the next four years, the National Housing Federation has warned.
But the Federation, which represents England’s housing associations, welcomed the Government’s decision to rule out any further cuts to capital investment projects – stressing housing providers could offer the exceptional value for money schemes ministers were keen to support.
The Federation also warned that increasing VAT from 17.5% to 20% would unfairly hit the poorest the hardest.
Cuts
The Chancellor announced today that all unprotected government departmental budgets would be cut in real terms by 25% on average over the next four financial years.
Plans to build around 250,000 homes could be axed as a direct result of the cuts. The Federation warned the nation’s affordable housing crisis will plumb new depths as a result – with housing waiting lists already standing at a record 4.5 million.
Thousands of jobs in construction and related fields could also be lost or not be created.
Federation chief executive David Orr said: 'We understand the Chancellor is faced with some difficult and painful decisions of where the axe should fall.
'However, we are in the midst of the worst housing crisis this country has seen in generations, with a record 4.5 million people languishing on housing waiting lists and 2.6 million people trapped in overcrowded housing. We simply cannot afford to stop building new homes and turn our backs on millions of hard up families.
'These cuts will hit the poorest hardest and could condemn an entire generation to living in substandard housing.'
Capital investment
The Federation welcomed the Government’s decision to rule out any further reductions to the capital investment budget this year – and said investing in housing provided huge economic benefits to the wider economy.
Commenting on the announcement, Mr Orr said: 'The Chancellor stated he would be looking to invest in projects which offered a significant economic return to the country – and that’s exactly what affordable house builders deliver.
'Investing in affordable housing generates huge economic benefits to the wider economy.
'Our sector creates 60,000 jobs a year, support hundreds of businesses in related fields, and evers in billions of pounds of investment from the private sector and from their own resources.
'Typically, housing associations pay for 60% of the cost of every affordable home built, with 40% being met by government grants. This allows new affordable homes to be built at the lowest cost to the taxpayer.'
Housing benefit
The Chancellor spoke of the need to limit housing benefit for those living in social housing to appropriately sized accommodation. The red book says 'From April 2013 housing entitlements for working age people in the social sector will reflect family size'.
Mr Orr commented: 'Whilst it is good that these restrictions do not apply to retired people, they should not mean that people of working age feel forced to move to give up a spare room if their children have grown up and left home.
'Having a spare room where children can come and stay is an important part of family life and the ongoing support that parents like to be able to give their children.'
VAT
Commenting on the Chancellor’s decision to raise VAT from 17.5% to 20%, Mr Orr said: 'Raising VAT will inevitably hit the poorest families the hardest – as bills for everyday goods and services are increased. Those who can least afford it will end up paying the most under this regressive tax.
'The VAT rise will also increase the cost of refurbishing homes.'
For more information, or to arrange an interview, please contact the Federation press office on 0207 067 1028.
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