THOUSANDS OF HOMES, JOBS AND APPRENTICESHIPS COULD BE AXED UNDER CUTS

26 January 2010

The National Housing Federation said figures set out in the Pre-Budget Report imply spending cuts to the housing budget of 17.98%, which if implemented over the next decade, would slash the planned number of new affordable homes by 556,000.

The Federation also warned cuts of 17.98% over the next 10 years would also lead to 278,000 jobs and apprenticeships in the construction industry, and the wider economy, either being lost or not created.

Given the dire consequences big cuts in spending would have on house building numbers, and job losses, housing should be viewed in the same 'untouchable' terms as health, education and policing by all the political parties, and be protected from cuts, the Federation said.

In July 2007, in an attempt to tackle Britain's chronic housing shortage, the Government pledged to build 3m homes by 2020, a million of which would be affordable. It is expected that 162,000 of the targeted affordable homes will have been built by April 2011.

However, according to the Institute for Fiscal Studies, figures in the Pre-Budget Report imply the Government will have to cut budgets from all departments by an average of 17.98% in real terms - in order to slash the nation's budget deficit while protecting spending on health, policing and schools.

If cuts of this order were implemented to the housing budget up to 2020 it would mean that only 444,000 of the targeted 1m affordable homes would be built - leaving a shortfall of 556,000.

Under cuts of 17.98%, the affordable house building sector would suffer a devastating double blow through the budget cuts themselves, and the loss of billions of pounds of worth of extra public investment over the coming decade that was anticipated by the Government when it set out its 2020 housing targets.

If the reduced rate of building, that would occur under cuts of 17.98%, was continued into the long term, it would take the Government until 2038 to build the envisaged 1m affordable homes - 18 years later than expected.

Waiting lists for affordable housing currently stand at record levels of 4.5m people and demand has been further fuelled by the recession, rising unemployment and repossessions. The Federation believes that if the number of new affordable homes is slashed by 556,000, a further 1.25m people would be added to waiting lists and plunge the country into an even deeper housing crisis.

The failure to build the extra 556,000 would lead to 278,000 jobs and apprenticeship opportunities being missed on construction sites, factories, timber yards, and in the wider economy, due to the way in which money invested in house building ripples through to other sectors.

Under the Government's targets, around 280,000 homes should be built over the next three government spending periods. However, if a 17.98% budget cut is applied to housing only 99,000 affordable homes will be built between 2011/12 to 2013/14. If the same cut were applied between 2014/15 to 2016/17 only 91,000 would be built. If a commensurate reduction were applied between 2017/18 to 2019/20 then only 93,000 would be delivered.

Federation chief executive, David Orr said: "A cut of 17.98% to the budget for new affordable homes would deepen the national housing crisis and lead to the loss of thousands of jobs and apprenticeships. Reducing the number of new homes by such a huge degree would kill off the dreams of more than a million people in desperate need of decent, affordable housing - leaving many to live in cramped, unsuitable conditions for a generation.

"Axing the new homes budget would also increase unemployment and obliterate the national programme for creating apprenticeships - as housing is one of the nation's key generators of jobs and prosperity. As bad housing is closely linked to poor health, poor educational attainment and higher crime rates, ministers should give funding for the house building programme the same untouchable status as health, education and policing - and protect it from the coming savage cuts."