Public housing to

R

How will the sector fare in the new era of a coalition government charged with slashing spending? Mark Jansen reports

adical cuts in government spending are on the way and social housing is likely to be hit hard. That is the view of the Institute for Fiscal Studies, whose deputy director Carl

Emmerson told the Journal that, because politicians have pledged to protect areas such as the NHS, ‘it seems likely to me that the housing budget will be the one to suffer very deep cuts’. The institute analysed the spending plans of all three

main political parties before the 6 May general election and concluded that, while all were agreed on the need to restore public finances, none was willing to say where the axe will fall. This view was expressed before the Conservatives agreed to form a coalition with the Liberal Democrats. But, as this supplement went to press, the new government seemed determined to press ahead with severe public sector spending cuts this year. Emmerson’s prediction will dismay social landlords,

the construction industry and the National Housing Federation, which has warned that waiting lists and over-crowding are at record levels. However, some housing associations are already exploring alternative ways to fund retrofitting programmes: ‘We know there won’t be a lot of public funding coming our way,’ says Paul Ciniglio, sustainability and innovation manager at the Radian Group, which has 17,500 properties in the south-east of England. However, Emmerson is clear that spending simply

“We know there won’t be a lot of public funding coming our

way” – Paul Ciniglio

must be cut – and soon. In the financial year completed in April 2010, Britain borrowed £163bn, or just over 11 per cent of the output of the economy, the highest level in any year since the Second World War. This ‘deficit’ of £163bn is the gap between the government’s income in that year and the amount it spent. Part of that deficit will disappear as the economy slowly recovers and tax receipts rise, but the Treasury calculated that a reduction of £71bn must be achieved through tax rises and spending cuts between April 2011 and March 2017. Prior to election, the Conservatives and Liberal

Democrats accepted these calculations but were divided on how to proceed. The Conservatives wanted to begin cutting sooner, targeting £6bn off the deficit this year, and hoped to get public finances restored by March 2016, arguing that prompt action will dissuade the investors that have lent money to the UK government from putting up their interest rates any further. As part

22

CIBSE Journal June 2010

of the coalition agreement between the two parties, this level of cuts is expected to pursued by the new government. Partly because of the high cost of interest payments

on the money already owed, and partly because politicians have pledged to protect some areas of expenditure, the institute calculated that spending in some government departments could be cut by as much as 25 per cent, whoever won the election. Because cutting defence and education would

probably be even more unpopular than cutting housing, Emmerson concludes that ‘housing is likely to suffer very deep cuts’. This will not please the National Housing Federation

(NHF), which represents 1,200 not-for-profit landlords in England. During the election, it won pledges from almost 300 parliamentary candidates that they would resist housing cuts if elected. Only 85 of these did gain a seat in Parliament. ‘None of the political parties said publicly that they would protect the housing budget,’ says an NHF

www.cibsejournal.com Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24