Mixed response to public expenditure review

An extra £170 million to build social homes, announced in the public expenditure review by the Chancellor of the Exchequer, was praised by the National Housing Federation (NHF), but it expressed uncertainty about the £780 million of savings the Communities & Local Government (CLG) department is expected to make

The NHF said the additional funds recognise “social housing as a key frontline service” after the Chancellor announced that, following his review of public spending, £170 million of additional funding would be spent on new social homes this financial year. The money is expected to deliver 4,000 units in 2010/11.

“In the space of just a week, we have found and agreed to cut [over] £6 billion of wasteful spending, across the public sector,” said Chancellor of the Exchequer George Osborne. “Of that, £500 million will be recycled and used to invest in targeted measures to improve Britain’s long-term growth potential and build a fairer society.

“But the great majority will go towards cutting the deficit this year so we can avoid the jobs tax next year. We have conducted the fastest and most collegiate spending review in recent history. That is what this new Government is all about. Rolling up our sleeves, getting on with the job, working together in the national interest, delivering on our promises, getting a grip.”

Though the extra money for new homes was welcomed, the NHF was unsure of the impact of the announced £780 million budget cuts for the CLG and said it would be meeting with the department to “clarify where the savings will be made”.

“I am delighted the coalition government has recognised that social housing represents a key frontline service that it is in need of extra funding. Indeed it is one of only three areas to benefit from extra investment,” said David Orr, the NHF ’s chief executive.

“With record housing waiting lists and overcrowding reaching epidemic proportions in many places across the country, the need for more social housing has never been greater.

“This hopefully signals the Government’s long term commitment to protecting public spending on social housing and to tackling the country’s chronic housing crisis. Housing can play a vital role in supporting a private sector-led recovery by stimulating growth in the construction industry.”

CIH chief executive, Sarah Webb, was cautious in her response describing the announcement as a “mixed bag for housing”. “On the one hand there are cuts from housing pledge initiatives; on the other hand these savings have been re-allocated into new affordable housing,” she said.

Webb went on to say that it is clear that funding for housing has come under close scrutiny and is encouraged by the commitment to “supporting house building and investment in much needed social housing.

“What isn’t fully clear, however, are the nature of cuts to existing initiatives and the impact their withdrawal could have. It also remains to be seen what reductions in funding for local government and devolved authorities could have on their respective housing responsibilities.

“Looking ahead, it is apparent that the emergency budget and spending review remain key in providing details of how government intends to address the deficit in coming months and years, including the full scale of implications for housing.”

Osborne will deliver an emergency Budget on Tuesday 22 June.