Providers urged to spend HCA’s £5.4 billion housing budget before funding plummets
Big spending days are numbered
Housing providers have been told to ramp up their spending plans this year because affordable housing budgets are set to slump.
Sir Bob Kerslake, chief executive of the Homes and Communities Agency, told Inside Housing’s Question Time event last Friday that he had £5.4 billion to spend this financial year.
While this is up £1.4 billion on 2008/09, the agency’s housing and regeneration budget is set to fall by 50 per cent to £2.7 billion in 2010/11.
Sir Bob spoke as consultancy Pricewaterhouse Coopers warned that government spending on affordable housing could halve after 2011. ‘This is the year in which you should be coming forward with schemes, because life is likely to get more difficult and more challenging,’ he told delegates.
Richard Parker, head of housing at PwC, said Treasury forecasts in the Budget anticipated public spending would fall from £44 billion this year to £22 billion in 2013/14.
‘It is inevitable, if we’re seeing capital expenditure coming down to half what it has been, that the budget for affordable housing will suffer,’ he said.
Mr Parker added: ‘It wouldn’t be unreasonable to expect the budget available for affordable housing to go back to the levels it was at before this spending review - about half of existing levels.’
In the last comprehensive spending review the government allocated £8.4 billion to build affordable homes between 2008 and 2011.
Abigail Davies, head of policy at the Chartered Institute of Housing, said: ‘These three years have been the best settlement in a long time, and we’re just not going to get anything close to that [next time].’
She added: ‘For quite a long time our spending review activity has been about making the case for housing, not against other priorities, but as something which supports other priorities. This is completely different - it’s making the case to have money to spend when there isn’t any money.’
At Inside Housing’s Question Time Sir Bob said: ‘We know now, just looking at the Treasury forecasts, that there will be intense pressure on all capital investment [in the next spending review]. It follows that there is a shared interest on your part and my part to make the case for why housing and regeneration merits continuous, and, indeed, significant public investment.’
Sir Bob is setting up an advisory panel to help him attract new sources of private finance for housing.
Have your say
You must sign in to make a comment
Readers' comments (1)
Plain Speak | 18/05/2009 5:34 pm
Smoothing out spend over a 3 year period would be preferred rather than artificial limits dictated by accounting conventions. A year on year budget results in distortions in market values and costs as they tend to drive up costs and values (in the year of plenty) and cause a slump (in the year of scarcity). A better planning approach is to have an agreed budget over a 3 year period and for public finances to break away from the year on year convention (for budgeting) though one could always report actuals using year on year basis with the amount unspent being carried forward. Is this too complex for public financiers to work out?
Unsuitable or offensive? Report this comment