So much was expected of the pre-Budget report that if Alistair Darling had opened up the Bank of England’s vaults and invited construction firms to help themselves, there would have been a few commentators arguing that he should have gone further.

In the end, the chancellor delivered a Budget that tinkered at the edges: the cut in VAT might bring a marginal increase in repair and maintenance, the ability to delay tax and National Insurance payments will cheer up firms, and the extra £3bn or so to be spent on schools, hospitals, roads and housing certainly won’t hurt. That adds up to a package that is helpful, and just about affordable, but won’t do much to relieve unemployment.

The CPA says it could halve the expected 5% drop in output next year – but that’s looking at it optimistically. For one thing, spending public money is about as easy as herding cats, as a quick glance at the Building Schools for the Future programme will confirm. The spending on roads and housing is a help – they have less experimental procurement routes – so long as planning has already been granted. But as Sir Bob Kerslake, the chief executive designate of the Homes and Communities Agency, acknowledged this week, the extra £775m won’t buy as many social homes as it did a few years ago, when housing associations could borrow more to supplement their housing grant.

The industry will remain in the doldrums until a reasonable volume of mortgage lending is resumed, and there’s no sign of that happening in the immediate future. The government has to apply its thumbs to the banks’ windpipes and get capital flowing into the private sector again. And it needs to: otherwise we could be looking at an output of 60,000 private homes next year. That’s half the number produced in the nadir of the last recession.

One thing that has also become clear this week is that public spending will fall after the next election, whichever party gets in: the last Budget envisaged borrowing of £32bn in 2010/11; in the pre-Budget report that figure was £105bn. Education has been the biggest recipient of capital investment, which has led many firms to confuse schools with lifeboats. Unfortunately, if we go by projects for which funding has been guaranteed, this market could peak by 2010, when the fourth wave of schemes are on site. So, if the private sector hasn’t returned by then, the next decade could be decidedly parky.

We could be looking at an output of 60,000 private homes next year. That’s half the number produced in the nadir of the last recession.

Cometh the hour …

Margaret Beckett recently related her friends’ reaction to her new role as housing minister: “A fascinating job, but what a terrible time to have it.” Although he would not admit it, Sir Bob Kerslake must be having similar feelings. As Jon Rouse, a former head of the Housing Corporation, says on page 50, had the Homes and Communities Agency launched two years ago, it would have been in a better position to deal with the mess. It is unfortunate that English Partnerships was ahead of its time in acting as an investor in regeneration deals – many of which have gone sour – rather than simply handing out grants. As it is, Kerslake and his team have to make the best of it. He could do worse than look at two reviews published this week into planning and mortgage lending. There are some important messages in both of these and the government should pay heed. It is unsurprising that housebuilders have reacted with dismay to the sidelining of Sir James Crosby’s mortgage review. Kerslake wants his agency to have a policy voice – this is definitely the time to use it.

Denise Chevin, editor