Affordable housing schemes will be axed to plug £780 million ‘black hole’ minister warns
Shapps: the coffers are empty
Housing minister Grant Shapps has claimed money for affordable housing has run out and a ‘myriad’ of schemes will face the axe.
In an exclusive interview with Inside Housing, to be published in full next week, Mr Shapps said that the previous government had known ‘the money was all gone, but it wasn’t stopping them spending - particularly not in this department’.
He alleged £780 million of funding allocated by Labour as part of its £1.5 billion housing pledge had never been transferred from departments such as health and education as promised.
Plugging the ‘black hole’ will see ‘a whole myriad’ of schemes at risk, he said. ‘There are about £1 billion of housing and local-government related projects which, for one reason or another, are projects which we are questioning,’ he added.
In a separate speech, made to the Royal Institution of Chartered Surveyors, he said: ‘Cash for affordable housing has run out. Half of the money simply was not there. We are left with pledges and money that has been suggested that is not in existence.’
Mr Shapps said he had looked at about 150 projects under the spotlight so far. He insisted the department had been left with a £780 million deficit for the housing budget.
‘This is why I have been going through all of the department’s projects this year to see what I can claw back,’ he said.
‘Sadly this will mean that this is somewhat painful for the people involved in this, but I will try to give clarity as quickly as I can.’
He also hinted that quangos in the housing sector were living on borrowed time.
Shadow housing minister John Healey said Mr Shapps’ accusations were ‘pure and simple spin’.
‘These were agreements made with the Treasury and the new ministers should be straight and open with people about the different decisions they are now taking.’
Mr Healey has already demanded an apology from the Treasury for information David Laws, former chief secretary to the Treasury, gave to parliament about the black hole.
In his letter, Mr Healey stated: ‘If this money is not now available to build new affordable housing it is because you and the chancellor have pulled the plug on the arrangements and agreements in place.’
The Homes and Communities Agency this week stated that all of the uncommitted funding promised as part of its kick-start programme could be at risk if it has to absorb more of the CLG budget cuts.
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Readers' comments (15)
Anonymous | 11/06/2010 0:41 am
Remember what Liam Byrne, the former chief secretary to the Treasury aka Baldermort, bequeated to his successor in a note: "Sorry mate, there's no money left".
Everyone has known this for the past two years. What planet has Healey been on?
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Bernard Townroe | 11/06/2010 6:34 am
....apparently the one where people still need homes and the construction industry still needs work. That kind of world, perhaps.
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Simon Stokes | 11/06/2010 7:58 am
But in that world you still have to have the money to be able to deliver. Empty promises with no back up are no use to anyone as the previous Govt had been doing for some time. Its no secret that those in the previous Govt were happy to lose the election as they knew the real state of the country and that all the money had gone and then some.
You cant build homes out of thin air, we are all going to have to look at the way we run our businesses and see how we can do better. Looking around the Council I work for, there is so much waste and deadwood and ineffiency, we can easily turn it around if those at the top would just admit it. The money has gone and we need to change and fast or we go under, end of story!
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Len White | 11/06/2010 9:19 am
This is a complete fabrication by Shapps to cover up their absolutely huge housing cuts.
Labour announced the £1.5bn Housing Pledge as a programme to combat the recession but made clear that 780m of it was funded from underspending in other programmes and departments. This was always clear. It was fully approved by the Treasury. It would not have been possible for Ministers to announce it without full approval. In this case Ministers did not have to provide a written Ministerial instruction, so there was clearly no civil service opposition to the move.
If Labour had won, the money would have been spent. Thousands of homes would have been provided and thousands of jobs secured, hundreds of businesses saved. The fact that the money has not yet been transferred is neither here nor there, we are only 3 months into the financial year.
Laws announced part of the 780m before he resigned and claimed that amount - 170m - was 'new'. He was spinning so much he must have got dizzy.
So the housing cuts are clear - 150m from main programmes and 610m from the Housing Pledge. Housing gets the worst of the cuts by far despite everything they said at the Election. Tories and LibDems hand in hand to slash housing. They didn't tell the electorate that one.
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michael barratt | 11/06/2010 10:05 am
he bankers and financier have put the country into a financial mire and the middle classes and the socially disadvantaged must pay. Once again the under taxed financial wheelers and dealers will be up and once again the poor down.
In the early post war years Britain was economically destitute. I remember the financial difficulties as a young boy, the black outs, poor quality and little food. Yet in the decade after 1945 approximately 1.5 million homes were built under both Labour and Tory governments. Over that period of time the percentage of the people renting from local authorities had risen to over a quarter of the population.
Today Shappe, his Conservative and Liberal Party mates expects the poor to shoulder the burden of homelessness, over crowding and extortionate private rents. In contrast disgraced banker Sir Fred 'the Shred” enjoys a a lump sum of £3m and £500,000 a year pension and this month moved into a £3.5 million Edinburgh mansion.
In the new Tory order it is the rich that gets the pleasure and the poor gets the blame.
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Brian Capaloff | 11/06/2010 11:09 am
Just as the idea that cutting jobs of consumers and taxpayers and placing them on benefits seems, to me, to be completely misconceived, dring times of recession, as someone who has worked in homelessness for 20 years I am forever amazed at the idea that money is saved by not building more homes. What is the cost to society of the need to provide teporary accommodation; of the detriment to children's education of their family not having a settled home, with the impact upon future careers; of the impact on the ability of adults to gain employment; of the damage done to communities through homelessness; of any consequent increase in crime figures, etc?
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Single Aspect | 11/06/2010 11:17 am
Grant Shapps is simply continuing along the path he was on 16th March last year 2009 when he took part in a round table discussion planning the end of council housing as we know it.
http://www.localis.org.uk/images/Discussion%20note_Concentrations%20of%20deprivation.pdf
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Anonymous | 11/06/2010 1:27 pm
To begin with this sums up politicians. i think the recent events in parliament with expenses show that MP's live in cloud cuckoo land and we the voters in this nation expect more from the people who run our country. They bail out the bankers and then expect the poor and disadvantaged to take the cuts! tax the bankers more and ringfence that money to pay for social housing! but then what can we expect when you have people who don't know what it is like to live in poverty! I did expect better from the liberals as i thought they were more on the side of the disadvantaged than even labour but unfortunately they seem to have been hypnotised by power. I suggest somebody starts to sack the idiots in the treasury and civil service who can't add up or the politicians who are liars. either way i as a taxpayer want some heads to roll as it can't be rocket science to figure out who is lieing!
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Anonymous | 11/06/2010 4:02 pm
The Lib-cons are getting their apologies in first and playing the blame game because they know they can't govern.
What a con, the Tories asking he public where the cuts should be as if they are some sort of liberals - as if they will listen. I'm the public - I want house building. No cuts for social housing but plenty for banker's bonuses - that'll happen, wont it...
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Anonymous | 11/06/2010 6:02 pm
I have been a social housing tennant for 11 years. I am employed by the local government on a low wage. Unfortunately I am unable to obtain a mortgage due to my low income and age is not on my side. I constantly am worried when I read discussions by Stephen Greenhalgh, Hammersmith Leader and Grant Shapps referring to making social housing a form of assured short hold tenancy opposed to an assured tenancy. Homes give people stablity and a meaning in life. Without that securtiy what have people got?? Reading such literature has impacted on my health. The Government place such emphasis on not wanting home owners to lose their homes during the recession, however they are quite happy to consider changing social housing to a temporary tenure. Again the low income worker is penalised. I know the rent I pay meets the cost of my property you only have to read the Defend Council Housing Website to establish that. However the government is quite happy to send social housing tenants out to 'flock' in the private rent industry to line some developers coffers!!! Great!! Hope the government can budget for the ever increasing NHS and welfare bills when tennants become ill, commit crimes, lose their jobs etc due to the insecurity of not having a secure abode!
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