Councils lose out on 2000 homes as transitional grant ends

More than 2000 affordable homes due to be funded by councils will not be built after the grant scheme funding them was abolished.

The government had estimated that 14,000 homes would be funded by the transitional arrangement put in place after local authority social housing grant was abolished in 2003. However, only 11,916 will be built by the time the transitional programme ends in 2005/6.

The figures were revealed when housing minister Keith Hill answered a parliamentary question from Ed Davey, the Liberal Democrat housing spokesman, on 26 January.

Hill said: “In 2003/4, a total of 4916 homes were completed with funding through transitional local authority social housing grant. The ODPM’s estimates for transitional local authority social housing grant schemes to complete in 2004/5 and 2005/6 are that 4800 and 2200 homes will be provided.”

Councils were outraged when the grant, which funded about 7000 homes a year, was abolished as part of the Communities Plan.

The grant ceased on 1 April 2003 and £380m of transitional funding was put in place: £175m in 2003/4; £140m in 2004/5; and just £65m in 2005/6 (HT 21 February 2003, page 7).

An ODPM spokesman said: “The 14,000 was only an estimate and wasn’t a target. The estimate was made at the time the transitional schemes were announced in October 2003. We were expecting a number of the units not to be completed. For example, they might to come to fruition because of problems with planning.”

South Cambridgeshire council had its grant slashed from about £5m to £1.2m in 2003/4.

Mark Lupton, policy analyst for the Chartered Institute of Housing, said: “It’s disappointing but it could be that the investment partnering programme has taken up some of that slack.”

Richard Kemp, deputy leader of the Liberal Democrat group of the Local Government Association, said: “We were angry when the grant was ended, so there’s an element of ‘I told you so’.”

Under the grant, councils could give money to RSLs to build homes for them, and then claim it back from the Housing Corporation.