The Chancellor's pre-Budget statement had good news for regeneration but the news for London is not good with skill shortages slowing down building as demand soars.
Brown's billion
An extra £1bn for urban renewal announced in the Chancellor's pre-Budget statement has to be good news.

Now the work starts on figuring out how good. It is not clear where the abolition of stamp duty will apply - the DETR is to consult on which are "Britain's most deprived communities".

It seems unlikely that it will have much effect. Land and building prices take the tax bill into account, so it is the sellers who are likely to be the gainers.

Abolition will have little effect outside London for homebuyers as few homes sell above the £60 000 threshold and housing associations already get relief on transactions with local authorities.

The changes in VAT amount to something of an about face by the Treasury. Previously we were told that reducing VAT was not possible under EU rules. Now they seem to have found a way of reducing it to 5% for residential conversions and removing it entirely for homes that have been empty for 10 years or more.

It looks like something of a victory for the Empty Homes Agency which has been pressing for action. For chief executive Ashley Horsey the moves are welcome and he considers them a step in the right direction - "all positive in a little way". But it is not far enough.

He points out that there are not many homes that have been empty for ten years. And he would rather see a capital allowance for conversions - tax incentives may not be enough.

The big issue remains whether the VAT cut is as far as the Treasury is prepared to go or if this is the thin end of the wedge that will lead to a standard 5% tax rate for both new build and rehab, something the DETR wants. We are unlikely to get the answer for a year or more. Environment secretary John Prescott has indicated it is going to have to wait until after the general election.

Capital concern
There is not a lot of good news coming out of London.

Homelessness acceptances have reached record levels - they are even higher than the peaks of the early 1990s. There are reports from housing associations - anecdotal it's true - that schemes are being delayed by skilled labour shortages. Tender prices are reaching record levels, in some cases up by 30% in a year.

And despite a rise in total cost indicators and grant rates, housing associations are finding it difficult to make schemes stack up. Although the Housing Corporation believes that targets will be met, it is having to work hard, as first half figures show a slow take up of funds.

The concerns about housing key workers have been highlighted by the police force which is facing real problems in recruiting officers, as is the health service: one west London hospital has a 20% vacancy rate among nursing staff and the high cost of housing is blamed.

Now Ken Livingstone's housing commission suggests that 14 000 private sector homes and 28 000 new affordable homes are needed each year for the next ten years. This includes "intermediate" homes, for people who are excluded from the housing market because of price levels.

The figures compare with the current housing output of less than 20 000.

One solution put forward by the commission is that planning must ensure that at least half of all schemes must be affordable housing, ie via Section 106.

The implications are not spelled out, but with total scheme costs now well over £100 000 per home, it comes to about £3bn a year for the social housing, or equivalent to £2bn in grant. That is more than double the national budget for the Corporation.

Without decent services, Livingstone warns that London risks losing its 'edge' to cities abroad, which would reduce its current ability to subsidise the rest of the country - a City of London report points out that the capital contributes £58bn to the Exchequer, while getting back £40bn in expenditure, a surplus of no less than £17bn.

Peabody in vogue
Peabody Trust's position as flavour of the year continues unabated. It has received many plaudits for its innovative Murray Grove and BedZed schemes and in the summer, former chief executive, George Barlow became chair of the London Development Agency. Added to that development director Dickon Robinson was appointed a commissioner at the Commission for Architecture and the Built Environment.

Now, further success for Trust employees with new chief executive Richard McCarthy being elected to chair the National Housing Federation.