Pre-Budget Report: It's a bit tight, Darling

Tackling youth unemployment and helping more people to improve the energy efficiency of their homes proved to be strong themes in Chancellor Alistair Darling’s Pre-Budget Report yesterday.

For all the low carbon measures, however, the National Housing Federation (NHF) was quick to condemn the report as a missed opportunity to ‘green’ the nation’s social homes. The CIH, meanwhile, said the Pre-Budget Report showed that the housing sector was going to face a continuing squeeze and a fight for its share of public funding.

Darling announced a ‘scrappage’ scheme for old boilers, so that they can upgrade to more energy efficient, lower carbon boilers, modelled on the initiative that enables people to trade in old cars for more efficient models. The scheme is expected to help 125,000 homes to reduce their carbon footprint and reduce their energy bills. He told the Commons that each inefficient boiler in use adds over £200 to the household’s annual bills and contributes one tonne of CO2 to the atmosphere per year.

Meanwhile, an additional £200 million was pledged to energy efficiency schemes, with an extra 75,000 households expected to gain assistance from the Warm Front Scheme. “This will go alongside further requirements from the energy companies, up to £300 million overall, to provide discounts on energy bills to another one million low-income households,” Darling added.

The roll-out of smart meters, which will be completed by 2020, Darling said, is expected to help families identify how to become energy efficient. And the Government is to provide at least £160 million through the Innovation Investment Fund and the Carbon Trust’s Venture Capital Scheme to support both public and private investment in low carbon schemes. People whose homes are fitted with solar photovoltaics, or wind turbines, that contribute electricity to the National Grid, will receive an average tax-free payment of £900 a year.

For homeowners, there was the reminder that the stamp duty holiday ends this month, but Darling said that with “unemployment still likely to rise” it wasn’t right to withdraw all support from homeowners. He added: “Last year, I improved the Support for Mortgage Interest scheme to provide better cover for mortgage interest payments for those who had lost their jobs. Over 220,000 people have been helped so far. I have decided this additional support will be extended for a further six months.

“There will, of course, be a cost to this and other continued Government support. But the cost to families of losing their home would be immense. And it would be a false economy for the country. For the more successful these measures are in restoring confidence to the housing market, the lower the cost will be to the Exchequer. Mr Speaker, the best way of avoiding repossessions is to help people stay in work or re-enter the labour market quickly.”

Efforts to tackle unemployment maintained a strong emphasis on young people to stave off the prospects of a ‘lost generation’, but Darling’s speech also contained a commitment to help older workers who had lost their job.

“[I]n the past, older people were allowed – indeed often encouraged – to drift into permanent unemployment,” he said. “We can’t afford to write off this experience. So we will ensure the over-50s receive specialist and tailored support, to equip them with the confidence and skills needed to get a job.”

Darling has halved the period of time to six months unemployed before people under the age of 24 receive a guaranteed place of training or employment. Funding has also been pledged to give every 16 or 17 year old school-leaver a place in education or training next September.
“The more successful our targeted support, the more likely that the rise in unemployment will be lower than expected and therefore cost the country less,” Darling said.

Closing his speech, he added: “The steps that I have announced are aimed at securing recovery, reducing borrowing, and through targeted investment, providing a springboard for long-term growth. The choice facing the country is between securing recovery or wrecking it. Between investment to build a fair society where all prosper and a divided society that favours the wealthy few. A choice between ambition driven by the values of fairness and opportunity, or austerity driven by an out-dated dogma.”

The Chancellor’s speech “gives the clearest indication yet that housing will continue to be squeezed in the fight for a share of public spending over the next few years” said the CIH, responding to the Pre-Budget Report. Health, education and policing appear to be the only areas of Government policy with guarantees of public expenditure growth, it added.

However, the organisation felt that the housing sector can take some “crumbs of comfort” with the Government’s decision to maintain its high levels of public borrowing through to the end of 2011 to safeguard public services and support the economy.

“The decision means that Government will continue to honour its housing pledge to build 112,000 affordable homes over two years and extend, by six months, the Support for Mortgage Interest (SMI) scheme which helps homeowners who have experienced a fall in income to remain in their homes,” the CIH said.

Some of the most needy and vulnerable people in society are expected to benefit from today's announcements to improve home heating and insulation, it says. However, the estimated 200,000 people this may help fall a long way short of the estimated 7.6 million non decent homes in England alone.

Sarah Webb, the CIH’s chief executive said: "There are some helpful measures announced today and we should recognise Government efforts and success to stabilise the housing market. The reduction of 6.1 per cent to 3.1 per cent for average rent increases in 2010/2011 for local authority tenants will also make a difference to millions of people.

"However, there are now some real dangers that the recession will derail the excellent progress we were making to improve housing policy in key areas. An improved role for the private rented sector, a decent homes two programme, addressing carbon emissions from our 26 million homes – accounting for over a quarter of all of the UK's output – and the creation of a more stable and sustainable housing market, which is less reliant on the boom and bust of house price inflation, could all now be at risk.

"We hope housing professionals will support CIH in the coming months, as we approach the next election, to send a loud and clear message to all politicians of the need to invest in housing."

According to the NHF, the Government has missed an opportunity to slash the UK’s carbon emissions and reduce energy bills by failing to back a mass ‘green’ refurbishment programme of social homes. Prior to Darling’s Pre-Budget Report, the organisation had called for a £3 billion programme to improve the energy efficiency of over 250,000 social homes to prove its green credentials.

Despite that, the NHF said that it cautiously welcomed the Chancellor’s promise of limited new funding for low carbon projects and renewable energy – but will look for reassurance that lower income households will benefit from the schemes announced today as well as those from more affluent backgrounds.

“We're very disappointed that the Chancellor failed to adopt our proposed programme of greening thousands of the nation’s social homes, which would have slashed carbon emissions, reduced energy bills for the less well-off, created nearly 100,000 jobs and supported the economic recovery,” said NHF chief executive David Orr.

“With the world’s attention focused on the Copenhagen Summit, this was a real chance for the Government to prove its green credentials and help hard up families cut their energy bills – but sadly it has passed up this golden opportunity to tackle these huge problems.

“Housing associations are already doing their bit by being the only major part of the construction sector building low carbon homes – now the Government needs to play its part.”

The NHF was more welcoming to the Chancellor’s measures to help the young unemployed – and it said the nation’s housing associations were ready to meet the challenge of providing many of the proposed training schemes.

“With the recession being the worst on record, thousands of our young people have now been out of work for a very long time and currently have little hope for the future,” Orr added.

“Therefore any major drive to create workplace opportunities for young adults will be of vital importance – and will be welcomed by the nation’s housing associations, many of whom house thousands of people in unemployment hot spots up and down the country.

“Housing associations are at the forefront of providing work placements, training and apprenticeships for young unemployed people – and are already using money recently made available by the Government to provide 6,300 jobs in numerous areas hit by high rates of unemployment. This initiative could also help the environment if the training opportunities and apprenticeships provided are used to help green our homes.”