Brown pledges £20bn in three years for housing

The government has promised the housing sector more than £20bn over the next three years and set itself a target to build an extra 10,000 social homes in 2007/8.

To achieve this target, housing providers will be expected to make efficiency savings of nearly £1.5bn (see page 8).

In his fourth comprehensive spending review, chancellor Gordon Brown allocated more money to housing than on any of the three previous occasions.

In 2007/8, government spending on housing will hit £7.211bn, which is £1.3bn more than the amount allocated for 2004/5, and annual investment will rise steadily in the preceding two financial years.

The government also set a target of building 10,000 more social homes in 2007/8 than the 19,500 that are expected in this financial year.

However, that’s still roughly 15,000 fewer than the number recommended by Bank of England economist Kate Barker in her review four months ago (HT 19 March, page 7).

The government’s main fear now must be that the vast funding increases will make little impact on actual housebuilding. That has generally been the trend since Labour came to power in 1997: spending has soared without resulting in more homes (graphs, left.

But Jon Rouse, chief executive of the Housing Corporation, said the target of building 50% more homes was “deliverable” given changes made to the development programme. “Cost increases have come from rises in land values and materials,” said Rouse. “But these can be clawed back by efficiencies, with the help of English Partnerships and better use of public land assets.”

Further refinements in the corporation’s partnering system of distributing development grant should also save up to £160m in time for the push to meet the 2007/8 building target.

But there are concerns that the government plans are unachievable. Ed Davey, the Liberal Democrat housing spokesman, said: “The deputy prime minister proposes fewer than half the homes demanded in the Barker review. And what are the implications for the investment figures if efficiency savings aren’t made?”

By 2007/8, there will be £430m more for the Housing Corporation than in 2004/5.

Sarah Webb, director of the Chartered Institute of Housing, said the sector now must concentrate on delivery.

“We don’t want to be sitting here in a few years time and have the Conservatives or Labour attacking us for not being able to spend the money,” she said.