Posted by: Jules Birch19/04/2010
Today’s joint plea by the National Housing Federation (NHF) and Home Builders Federation (HBF) is another stark reminder of the dangers facing the affordable housing budget after May 6.
Whoever wins the election looks certain to impose cuts but the question is whether they will be damaging, devastating or downright disastrous.
The starting point is the 25% cuts implied in the Budget. Extrapolating that across the next decade produces a deluge of depressing statistics including 574,000 planned affordable homes not built, 287,000 jobs lost and 1.4m people added to waiting lists.
The two organisations make a powerful case about the effects of housing cuts on health and education and on first-time buyers and the housing market. That sounds good politics since, judging from last week’s prime ministerial debate on domestic policy, they are all issues that carry more weight than affordable housing itself with the major parties.
They could add that any cuts will not deliver anything like the savings that the politicians imagine. All those homes not built and jobs lost mean tax lost to the Treasury and extra unemployment benefit costs for the Department for Work and Pensions. They would also mean years of higher housing benefit for all those extra people on the waiting list.
Just look at what happened the last time a new government imposed draconian cuts on housing. Labour took power in 1997 committed to sticking to Conservative spending plans that included eye-watering cuts in the housing budget in its first two years.
The Housing Corporation approved development programme fell from £1.1bn in 1996/97 to £702m in 1997/98 and £621m in 1998/99. The total cut was 42%. Spending recovered slowly after that but did not go back to the level of 1996/97 for another five years when Labour finally realised the importance of new homes.
Few people would now dispute that those cuts were a serious mistake. They may have delivered an immediate political dividend and boosted Labour’s reputation for prudence but in the longer term they helped to fuel the housing shortage and house price boom and left Labour open to the attack that it built fewer affordable homes than the Conservatives.
This time around, much of the housing budget for 2010/11 has already been brought forward and the crucial decision will be what happens from 2011 onwards. So far only the Lib Dems have spelt out what they will do in any detail. They have said they would cut Homebuy by £250m in 2010/11 and similar amounts in the next four years - implying that the rented programme would be protected alongside its £1.2bn programme to bring empty homes back into use.
Accepting that cuts are inevitable is by no means the same as accepting that they have to be as damaging as the NHF and HBF are warning.
From Inside edge
Housing commentator Jules Birch puts the latest news in context