Spending cuts threaten housing
Published: 26 May, 2010
LONDON: Government spending cuts have left a £610m hole in the housing budget, threatening the revival of the economy and property market, housebuilders have warned.
The Homes and Communities Agency (HCA) is to put on hold spending decisions on social housing projects and its Kickstart programme, which invests in restarting mothballed private housing developments, after it emerged £780m of previously agreed funding may be pulled.
Stewart Baseley, chairman of the Home Builders' Federation, called the decisions "a cut on investment not waste.
"Public money invested through Kickstart pulled in many more times than in private sector investment - which will now be lost to the economy," he said.
The HCA was told to cut £230m from its budget as part of £6.2bn of spending cuts announced by the chancellor on Monday.
Yesterday, the agency confirmed this would lead to £100m cut from the £2.4bn social housing programme, and £50m from Kickstart's £420m budget for this year.
The department has also been told that £780m of funding for its projects is under review, with a final decision to be outlined in the Budget on 22 June.
The Kickstart programme was announced in last year's Budget in an attempt to bolster housebuilders who halted housing construction in the midst of the recession.
Last year, around £400m was invested, which allowed the construction of 9000 homes to begin.
Last year, 120 000 homes were built in the UK, the lowest total since 1923. Because of the funding cut, 108 bids for Kickstart aid from some of the UK's largest housebuilders, totalling £214m of funding, will now be put on hold and could even be axed.