What’s the worst that could happen?

Scenario 1: false alarm

Things get off to a good start for housing when, rolling up his sleeves to begin his emergency budget speech to parliament, chancellor George Osborne reveals a bicep tattooed with none other than the House Proud logo. ‘My honourable friends,’ orates the old Etonian, ‘Thanks to the marvellous House Proud campaign, run by Inside Housing magazine and the Chartered Institute of Housing, you will all be aware of the massive contribution that good and affordable housing makes to all aspects of social policy. It will therefore come as no surprise to you that we shall maintain all existing housing spending and then some.’

The national affordable housing programme, kick-start funding, market renewal pathfinders, mortgage rescue fund, outstanding decent homes cash… you name it, all committed sums are to be financed with budgets frozen at 2009/10 levels for the duration of this parliament. Housing revenue account reform will continue as planned, ultimately handing stock-retaining councils unprecedented freedom and flexibilty over their finances. What’s more, the chancellor hints the housing budget may well keep pace with inflation.

Being an honest sort of chap, Mr Osborne admits credit for housing’s happy state of financial affairs is not due to him alone. He reveals that it is housing minister Grant Shapps to whom most thanks is due: it was Mr Shapps who, upon resolving a paper jam in a Communities department printer inherited from the former Labour government, discovered the dog-eared letter from Treasury confirming the funds for a supposed £780 million ‘black hole’ in the housing budget were on their way after all.

Others play their part in reviving housing’s financial fortunes. Homes and Communities Agency boss Sir Bob Kerslake bets a cheeky £1 million on New Zealand to win the World Cup. The 2,500:1 odds-off-favourites come up trumps, pocketing the HCA a cool £2.5 billion - a figure made all the more comely after contractors at the notorious Ferrier estate in south east London do the decent thing after discovering buried treasure and donate the proceeds to the NAHP.

And there are further, indirect, funding fillips for the sector. VAT is scrapped on repairs and maintenance. The move encourages recalcitrant owners of empty homes to bring the properties back into use, and landlords to keep their tenants’ homes in better nick. VAT on shared back office services is also to go, incentivising more housing providers to become more efficient by pooling resources.

Following the success of a London pilot project which allows councils to borrow against their share of HCA cash, town halls nationwide are given permission to follow suit. And there’s a hint that if the Tenant Services Authority is scrapped the £15.5 million previously spent annually on staffing it will be ring-fenced for housing.

Scenario 2: visit the GP

The sector gets the one thing it hankers after most (pots of cash aside): clarity.

The chancellor reveals that housing’s settlement in the upcoming comprehensive spending review will be no more than a third down on the £8 billion awarded in the 2007 CSR. And gone are the days of 2.9 per cent annual growth in that budget. A flat £5.4 billion, with an exceedingly slim chance of more, may not set pulses racing. But the sector is able to plan when and where its ‘efficiency savings’ will be made.

There’s more certainty as the HCA lets landlords and developers know whether or not they will receive funds committed to their programmes under the previous Labour administration. It’s good news for some, disaster for others as the agency shuns the salami-slicing approach: existing schemes are either fully funded or staring at an empty account.

Housing departments in some local authority areas benefit from the chancellor’s decreed removal of council budget ringfences as councillors divert cash their way.

Supporting People, the programme which provides housing support for vulnerable households, finds favour under prime minister David Cameron’s promise to ‘carry out these cuts in a way that protects the poorest and most vulnerable’. Spending is frozen at 2009/10 levels, though there’s no guarantee for service providers, commissioners or users that the spending review will maintain this degree of spending.

There’s a reprieve for those dreading long term freezing of, or worse, cuts to the UK housing benefit bill as the Treasury announces it will delay any decisions until Labour MP Frank Field completes his government-commissioned review of poverty towards the end of the year. But few landlords believe there’s anything but bad news in the post.

Finally, a series of new tax breaks offer the potential of stimulating meaningful institutional investment in affordable housing for the first time. The Treasury answers calls to relax tax rules for real estate investment trusts which have thus far dulled investors’ appetites for residential schemes and driven them towards higher yielding commercial schemes. Middle Eastern funds back social housing real estate investment trusts. Though affordable housing development remains well below desired levels the move prevents a complete slump in new build. The change also appears to have institutions considering significant investment in the private rented sector for the first time.

A further boon to social house building comes in a footnote to the emergency Budget: local housing companies are classified as private bodies. Clarity over the status of these joint ventures between councils and private entities, such as developers, removes the associated debt from local authority balance sheets and encourages more town halls to adopt the model to deliver new homes.

Scenario 3: call 999

A technical glitch in ‘Coins’, the online system which Treasury boffins use to collect public sector financial data, wipes all but £500 million from the national housing budget. Efficiency measures mean there is no one left to fix the problem - the data, and the cash, are irretrievably lost.

Housing benefit is slashed with immediate effect. Mr Osborne makes it clear that the current £17 billion annual payout is unacceptable, reducing it by a quarter to £12.8 billion.

Affordable housing development is hit the hardest by the ensuing drop in social landlords’ income. Developing landlords put all but near-complete schemes on hold. More than 5,000 development staff lose their jobs and the number of new affordable homes falls to an all time low.

Providers cancel all non-core services, including employment initiatives. The number of jobless tenants increases, along with the government’s jobseekers’ allowance bill.

HCA boss Sir Bob Kerslake bets a cheeky £1 million from HCA coffers on New Zealand to win the World Cup before discovering the odds were set at 2,500:1 for a reason. He waves goodbye to his dreams of the agency trousering a cool £2.5 billion return on the wager and says hello to his P45.

Hopes that the sale of treasure discovered by contractors at south east London’s Ferrier estate will net a 10 figure sum at auction to bolster the NHAP are dashed. An Inside Housing investigation reveals the loot to be discarded props from a gangster rap video, provenance: Claire’s Accessories and Elizabeth Duke at Argos.

With thanks to Richard Capie, policy director at the CIH, and law firm Trowers and Hamlins

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