Goverment’s public spending cull puts thousands of new homes under threat
HCA cuts threaten 7,000 homes
More than 7,000 new homes are under threat as a result of a £610 million package of funding cuts and spending freezes.
The Homes and Communities Agency announced the changes on Tuesday as part of a £6 billion package of government savings.
Cuts to house building programmes total £230 million, while some HCA spending is now on hold until after the emergency Budget on 22 June.
The second round of funding for the £420 million Kick-start programme, aimed at funding work at stalled sites, will lose £50 million. The £2.4 billion national affordable housing programme will be slashed by £100 million. It is estimated that Kick-start will lose 559 homes, based on a grant rate of just over £84,000 per home and NAHP will lose 2,223 homes based on a grant rate of nearly £45,000 per property. Uncommitted NAHP funds are also on hold. The HCA will cut £30 million of funding for Gypsy and Traveller sites and £50 million from the housing market renewal programme allocations announced in December, subjected to consultation.
A list of 108 Kick-start projects to have their funding cut or frozen has been published by the agency. It would not give a total value for the frozen NAHP and Kick-start schemes, but the funds would produce 3,820 homes if a grant rate of nearly £45,000 per home was used.
Local authority new build schemes worth £59 million covering 912 units are also on hold until after the emergency Budget. The affected schemes have been shortlisted but no contracts have been signed.
The government announced there would be an extra £170 million to fund 4,000 affordable homes but this will simply lessen the hole in the HCA’s budget, which would otherwise be £780 million, and will not be used for a new bid round.
Sir Bob Kerslake, chief executive of the HCA, said the agency would ‘make sure that the impact [of the funding freeze] is understood’ ahead of the emergency Budget in June and the comprehensive spending review in the autumn.
He said it was not yet known how the housing market renewal cut would be split between the pathfinders but the working assumption was that they would each take a 20 per cent cut, which would vary depending on their spending commitments.
He said funding for arm’s-length management organisations had not been affected and that mortgage rescue funding would also continue.
David Orr, chief executive of the National Housing Federation, believed area-based grant, which pays for council services including supported housing, gap funding and funding for homelessness schemes had also been protected.
The £6.2 billion programme of government cuts for 2010/11 also included £1.165 million of local authority savings and the lifting on the ring fence on £1.7 billion of their grants. Overall the Communities and Local Government department must cut £780 million of its general spend and £405 million of local government cash.