Tuesday, 01 December 2015

Affordable homes 'will lead to further cuts'

A director at one of England’s largest housing associations has warned the affordable homes programme could lead to further government spending cuts due to its impact on the housing benefit bill.

Mike Donaldson, group director of strategy and operations at London & Quadrant, told MPs the programme will lead to increased benefit spending and could lead to the government cutting further in the future.

Mr Donaldson, speaking before the public accounts committee yesterday, said: ‘Our concern is that…there will be more cuts over and above those announced so far.’

He added that he was not opposed to the affordable homes programme in principle. He said: ‘We are not saying it is a bad thing, all we are saying is there is a consequence.’

The £1.8 billion affordable homes programme enables landlords to charge up to 80 per cent of market rent, instead of lower social rent, in return for development cash. The government hopes landlords will use the extra rental income to borrow more money for development. Rents will in many cases be covered by housing benefit.

Andrew Parfitt, head of housing policy division at the Department for Work and Pensions, said the affordable homes programme will increase housing benefit through higher rents, but also decrease it in the long term because of increased supply of affordable homes. He said there will be a ‘small increase’ in expenditure overall.

A Communities and Local Government department impact assessment into the affordable homes programme shows the policy will increase the housing benefit bill by £1.3 billion over 30 years

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