A Treasury decision to cut £450m from this year’s housing budget looks set to spell the end of the Kickstart scheme to restart stalled sites and Labour’s plans to transform council housebuilding
The Homes and Communities Agency (HCA) this week confirmed that both programmes will be wound down once decisions are made over which of the planned developments already in the system can now proceed.
Sir Bob Kerslake, chief executive of the HCA, said: “Effectively this will close Kickstart as a national programme.” An HCA spokesperson later confirmed: “We are closing LANB [Local Authority New Build] as a national programme.”
The news came after the Treasury this week said it was cutting £220m from the HCA’s budget, in addition to £230m cut at the end of May. All uncontracted HCA schemes have been on hold since the election, pending this week’s decision.
Kerslake said the agency would now ask its regional teams to decide which schemes will go ahead and which will be cut by the end of the month. Schemes on hold include standard affordable housing, £214m of Kickstart, and local authority new build. However, rather than the original criteria under which developers bid, schemes will now be assessed simply by how much affordable housing they produce.
Building also understands that councils are liable to lose out through this process because the Treasury has changed the rules under which it assesses the value for money of those schemes. Having previously disregarded the fact local authorities would commonly supplement grant with further council borrowing in order to build homes, it will now take this into account, meaning very few will be as cheap as housing association schemes.
However, this week’s decision did mean that a limited number of Kickstart schemes which were either signed or on the verge of signing contracts when pre-election purdah began in April, got immediate approval, gaining a total of £190m in grant. Seventy-four schemes, including phase one of Berkeley Homes’ £1bn regeneration of Kidbrooke, and Countryside’s 650-home regeneration of Canning Town, were put under review. In total Kickstart and local authority schemes worth £300m will compete for a maximum of £200m in funding.
Government cuts round-up
Transport secretary Philip Hammond this week put the £7.5bn InterCity Express Programme under review.
If scrapped, it may jeopardise the planned £1bn electrification of the Great Western Railway and £800m of platform improvements to the East Coast mainline.
Paymaster general Francis Maude summoned 19 major suppliers to Whitehall this week to discuss chopping government spend.
The government has refused to clarify whether the £4bn prison-building programme will be scrapped after justice secretary Kenneth Clarke said last week that the prison population should be reduced.
One contractor said the government has not communicated to suppliers since May, when those on the framework were told it was awaiting final approval.