Housing sector hails Hammond's raft of new cash

The housing sector has welcomed chancellor Philip Hammond’s decision to put housebuilding at the heart of a £23bn productivity fund announced in this week’s autumn statement.

Treasury documents said the new National Productivity Investment Fund (NPIF) included £7.2bn of new money to support the construction of new homes, as well as money for infrastructure construction and research and development between 2017/18 and 2021/22. It said the boost would take public spending in those areas to £170bn in the period.

Hammond announced the fund while laying out revised economic forecasts predicting slower growth, higher inflation and bigger budgets deficits than previously expected, which forced him to drop former chancellor George Osborne’s pledge to abolish the deficit by the end of the parliament.

The specific housing announcements included an additional £1.4bn for the existing £4.7bn National Affordable Housing Programme, which would deliver 40,000 homes on top of the 153,000 already promised. Following intense lobbying from housing associations, Hammond also said he was giving flexibility to use the existing programme for affordable homes for rent as well as for sale.

In addition Hammond announced a £2.3bn housing infrastructure fund to “provide infrastructure targeted at unlocking new private house building in the areas where housing need is greatest”, which he said would deliver 100,000 homes. Hammond’s announcements came in advance of a forthcoming housing white paper, expected before the end of the year.

Hammond said the announcement meant the government expected to more than double annual capital spending on housing over the course of the parliament.

Terrie Alafat, chief executive of the Chartered Institute of Housing, said: “The measures announced today demonstrate this is a government which recognises housing is a key part of our infrastructure. The extra 40,000 new affordable homes and the greater flexibility to build homes of all tenures are particularly welcome.”

However, representatives of landlords said his decision to abolish estate agents lettings fees, along with his refusal to row back on both stamp duty increases for second home purchases and the abolition of mortgage interest tax relief could jeopardise investment in new homes for private rent. Julian Goddard, partner at estate agent Daniel Watney LLP, said the statement was “depressing.” “The additional stamp duty and cuts to mortgage relief are here to stay it seems, despite evidence it is squeezing the supply of new rental homes at a time when demand for private rented accommodation is growing massively.”

Others criticised Hammond for not doing enough, with Richard Jones, head of residential at Arcadis saying the government was “paying “lip service” to the housing emergency.” He said: “What we need is a co-ordinated approach to the problem rather than just rolling out initiative after initiative.”

The creation of the NPIF also saw Hammond commit £1.1bn to upgrade the local transport network in England, with another £220m allocated to alleviating traffic pinch points and an extra £450m in funding to trial digital signalling on the railways.

Another £1.8bn from the Local Growth Fund will also be given to English regions to fund infrastructure upgrades.

In addition, the chancellor pledged £110m for East-West Rail and a commitment to deliver the Oxford to Cambridge Expressway.

Other big announcements:

• £170m promised for flood defence measures, including £50m to protect rail lines including at Dawlish in Cornwall
• £50m to expand existing grammar schools each year from 2017/18
• Confirmed October announcement of £2bn for accelerated construction of new homes, of which £1.7bn will go to England, and the rest to the devolved nations
• Settlement of £3.15bn to fund affordable homes in London, the largest ever programme in the capital