£220m of Kickstart, affordable and Local Authority to be cut as agency prioritises social housing

The Homes and Communities Agency is to decide within the next month which schemes go ahead as it looks to take projects off hold following yesterday’s £390m Treasury settlement.

The housing quango will prioritise funding for schemes which deliver the most social rented homes.

The HCA had put all its uncontracted schemes on hold when the Treasury said in May it could not rely on receiving £610m of Labour-approved funding. Yesterday’s settlement, announced by Treasury chief secretary Danny Alexander, means the agency has had £220m cut from this figure, but can rely on receiving the rest.

HCA chief executive Sir Bob Kerslake said the body’s regional offices would now talk to bidders about which schemes will go ahead and which will be cut, with decisions expected to be taken in July. He said: “Schemes will be considered with the aim of maximising the affordable housing output from the agency.”

The HCA put its general affordable housing programme, its local authority new build programme and its Kickstart programme to restart stalled private sector schemes, all on hold in May. The £390m has been found by Treasury under the clear instruction that affordable units rather than private homes are prioritised, leaving developers concerned that Kickstart schemes will lose out.

Kerslake said: “Clearly the private side is going to be quite constrained. I don’t want to give the impression we’re easily going to be able to fund everything in Kickstart. But that doesn’t mean that they won’t get funded – many Kickstart schemes deliver a lot of affordable housing.”

The £390m settlement means £140m of Kickstart, local authority and general affordable housing grants legally contracted but unfunded since the government came in, will now go ahead with immediate effect. Kerslake also said a small number of schemes which were ready for legal close in the week the election was called and earmarked for £50m grant, will definitiely go ahead. He said they will be signed off in the next two weeks. A list of these schemes, which were agreed but not signed before election purdah began in April, is to be distributed by the HCA this afternoon.

The remaining £200m of the settlement will go to the HCA’s regional offices to decide which projects will go ahead.

Housing associations, councils and private developers with schemes on hold will not be expected to re-bid for the reduced funding. Kerslake said they will be contacted by HCA regional officers to discuss the schemes, and whether any further savings could be made.

Kerslake admitted that yesterday’s announcement means that the coalition government has now made a total of £450m of cuts to housing spending in the current year, meaning a total of 5,000 fewer homes will be built. Spending beyond April 2011 will be determined by this autumn’s planned Comprehensive Spending Review.