Saturday, 01 November 2014

Concerns grow over spending review settlement

Housing chiefs are anxiously waiting for clarity on several key issues for the sector, as George Osborne starts to put the final touches to the government’s spending priorities.

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The chancellor is set to reveal on Wednesday how Whitehall will make £11.5 billion of savings from current spending between April 2015 and April 2016.

The severity of these targeted cuts means that any eventual settlement with individual government departments will be tight, leading to fears that housing could receive a rough deal.

Inside Housing’s Grant Britain Homes campaign has taken the sector’s call for grant subsidy to the Treasury, with indications that some more funding will be made available for affordable housing.

However, most in the sector believe that the £2 billion called for by the Chartered Institute of Housing and National Housing Federation won’t be met, given the huge competition for capital expenditure in a weak economy.

Landlords have also been calling for certainty over the duration and method of calculation of rents.

Mr Osborne pledged to fix the formula for 10 years at April’s Budget, but there are now concerns about whether this will be delivered upon.

Housing associations and councils can currently increase rents based on the retail price index plus 0.5 per cent plus up to £2 a week, and a continuation would offer confidence in long-term income streams.

However, a source close to rent-setting negotiations has warned that Conservative ministers are reluctant to commit to more than two years of rental certainty.

One proposal that is understood to be on the table is a mechanism that would allow developing housing associations to charge higher rents than organisations that do not build homes.

Spending reviews set departmental budgets for current and capital spending over several years. It is then up to departments to decide how best to manage and distribute this spending within their areas of responsibility.

‘We have got to stick at the economic plan that is reducing our debts, making our businesses more competitive, helping to create jobs, making sure Britain can win the global race,’ Mr Osborne told the BBC’s Andrew Marr Show on Sunday.

Readers' comments (12)

  • Social tenants can't afford higher rents. Higher rents would also push up the HB bill. We need grant funding and low social rents.

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  • Alpha One

    We don't need grant funding, grant funding it an outmoded system. We need more impetus to get the philanthropists back into the sector, spending their hard earned on providing new housing. We need to look at alternatives to the state providing funding for housing.

    We can't look to squeeze much more out of the sector in terms of fund cuts, so lets lay off the benefits for a while, and give some certainty for rent setting.

    The housing sector has been through some truly monumental shifts in the last 3 years, it needs time to settle down and see what that means. Any additional funding needs to support tenants, not house builders or developing associations.

    £11b is hard to cut from the tiny number of budgets the Chancellor can take it from. He needs to remove the fencing from around, Health and Education and, most fundamentally, International Aid.

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  • The government are killing social housing delberately. Get these self-serving millionaires out.

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  • George Osborne cannot be trusted with the rent setting for social housing. How does putting up social rents ever do anything but cause misery most tenants? Social rents are already going up too fast.

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  • Misery for most tenants.

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  • Rent or buy, houses are becoming an unaffordable luxury, the way these politicians are going.

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  • Which Robert, is exactly what they want. We all serve, they all benefit.

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  • Problem is Paul the cash cow has been milked dry, so there is nothing left to give the greedy so and so's

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  • Paul and Robert have hit the nail on the head. The housing policy of the Coalition (and its New Labour Second Eleven) is high cost, insecure accommodation for the majority.
    Unaffordable 'affordable' rents
    Insecure 'flexible' tenancies (and every single housing professional who has not done everything in their power should hang their heads in shame - and those who actively have promoted it should crawl back under the stones from which they slithered)
    Virtually no social security help for low income home buyers
    Financial sector encouraged to restrict mortgage access
    Municipal capacity to enforce standards in the private rented sector decimated
    Bedroom tax
    Negligible social house bulding programme

    Simply spending the money we have more wisely:
    People's high rents could be spent on council homes or their own mortages not private landlord profits.
    It is cheaper to keep an unemployed or low income home buyer in their home than have them repossessed and forced private rented accommodation.
    The ratio of housing benefit to housing construction is 9 to 1 - it could (albeit with a short term cost but long term saving) be reversed to the benefit of the majority (and of course the disadvantage of the wealthy minority...).

    And there is absolutely no excuse at all whatsoever to have introduced into the social housing sector the tenancy insecurity that blights the lives of private tenants. That decision - and the suport for it - is just plain nasty and spiteful.

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  • The housing policy of the Coalition (and its New Labour Second Eleven) is deliberate and intentional. It is not to do with ‘austerity’ it is to create an accepted culture of high cost, insecure accommodation for the majority to reinforce the wealth and power of the undeserving minority:
    • Unaffordable 'affordable' rents
    • Insecure 'flexible' tenancies (and every single housing professional who has not done everything in their power to stop these coming into effect should hang their heads in shame - and those who actively have promoted it should crawl back under the stones from which they slithered)
    • Virtually no social security help for low income home buyers
    • Financial sector allowed to restrict mortgage access (and finance for real work and economic activity)
    • Municipal capacity to enforce standards in the private rented sector decimated
    • Bedroom tax – what more can be said that hasn’t been said?
    • Negligible social house building programme
    • Tax breaks and government backed debt for private landlords

    Simply spending the money we have more wisely could achieve so much more:
    • People's high rents could be spent on council homes or their own mortgages not private landlord profits.
    • It is cheaper to keep an unemployed or low income home buyer in their home than have them repossessed and forced private rented accommodation.
    • The ratio of housing benefit to housing construction is 9 to 1 - it could (albeit with a short term cost but long term saving) be reversed to the benefit of the majority (and of course the disadvantage of the wealthy minority...).
    • Private landlords could be compelled to offer the same rights that tenants of housing associations and councils have – it works in every other European country

    And there is absolutely no excuse at all whatsoever to have introduced into the social housing sector the tenancy insecurity that blights the lives of private tenants. That decision - and the support for it - is just plain nasty and spiteful.

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