CLG cuts £220m to fill funding ‘black hole’
The Communities and Local Government department is to cut previously agreed spending commitments by £220 million.
The cuts are less severe than feared, as government ministers had claimed there was a £780 million ‘black hole’ in the previous government’s funding commitments.
The money will be cut from the Homes and Communities Agency’s budget. The government initially promised to safeguard £170 million of the £780 million deficit, leaving the agency facing a potential shortfall of £610 million.
The announcement of the £220 million cut means a further £390 million has been saved, which housing minister Grant Shapps said was a ‘shot in the arm’ for house builders.
‘It means that thousands of new affordable homes will now get built, protecting thousands of jobs in the process,’ he said.
The cut backs relate to Labour’s £1.5 billion housing pledge, which was designed to channel funds from other initiatives within government into house building.
The coalition government claims £780 million of this funding, which was due to come from other departments, has never been received.
In a statement to Parliament, chief secretary to the Treasury Danny Alexander said four departments have agreed to reduce unfunded spending commitments by a total of £1.54 billion.
He said the spending was reliant on the ‘end year flexibility’ system, which channels unspent funds between government departments, and that it was ‘highly unrealistic’ for the previous government to have expected the required sums to be available.
The £1.54 billion is made up of £220 million from the CLG, £1 billion from the Department for Education, £265 million from the Department for Business, Innovation and Skills, and £55 million from the Home Office.