Gordon Brown announces extra £1bn for housing over next three years, some of which goes to private

Housebuilders have welcomed chancellor Gordon Brown’s comprehensive spending review, which outlined plans to build an extra 10,000 social rented homes a year by 2007/08.

Brown pledged to plough an extra £1.3bn into housing over the next three years, £430m of which will be allocated to the Housing Corporation. This will bring total investment to £7.2bn.

The chancellor plans to allocate an additional £250m of PFI credits for new-build housing, and hopes to make £160m by tightening the procurement of new-build housing.

Alan Cherry, the chief executive of Countryside Properties, said the increase in spending was “very welcome”. He said there were “great opportunities” for private developers to gain access to social housing grants and to work in partnership with housing associations to build and manage developments.

Terry Fuller, partnering director of Taylor Woodrow and chairman of the House Builders Federation’s social housing group, said the extra money for PFI would empower local authorities to decide when and where housing could be built.

He added that private developers were keen to apply for social housing grants. He said: “I know of five developers who want to start building through social housing grants, and there are investment banks keen to help fund the sector.”

I know of five developers who want to start building through social housing grants

Terry Fuller, HBF

Fuller warned, however, that for government investment to be delivered, problems within the planning system had to be solved through the planning act.

As part of the government’s spending announcements, deputy prime minister John Prescott unveiled a £210m investment in the Community Infrastructure Fund.

This is aimed at transport infrastructure in the four growth areas of Thames Gateway, Milton Keynes, Stansted and Ashford between 2006 and 2008.

Prescott said funds for housing market renewal pathfinders in the north of England would treble from £150m this year to £450m in 2008. He added that the annual neighbourhood renewal fund would remain at £525m.

He said: “We’re still a long way from the 17,000-25,000 houses a year recommended by Barker, but it’s a step in the right direction.
We need to ask for more money from the chancellor.”

For England, the housing budget will rise from £5.9bn this year to £7.2 bn by 2007/08, a 4.1% annual real term rise. It means that since 1997, cash investment in housing has more than doubled

The Office of the Deputy Prime Minister plans to make £620m in efficiency savings, which will be reinvested in the sector. The ODPM will also axe 400 jobs, including 200 at its headquarters.

Jon Rouse, the Housing Corporation chief executive, said that Brown’s spending review was good news for the industry. He said the number of completed properties this year would be 26,000, that it would rise to 30,000 next year and that it would continue to climb.

Rouse warned that the industry’s capacity to deliver extra homes would depend on the commercial market and how much the public sector had to compete with it.

Rouse said the PFI market had to raise its output to justify the additional investment that the government had given it.

He said: “The government has given half its money to expand the PFI and to reinvigorate local authority estates, but for this to be achievable they are going to have to pick up the pace.”

Gershon's review

These are the main points of Sir Peter Gershon's public sector efficiency review, which is to supply some of Gordon Brown's extra funds:

  • ODPM to save £620m by 2007/08, with two-thirds to be ploughed back into spending

  • £160m annual efficiencies through improved social housing procurement

  • Savings of £1.1bn if councils use e-procurement

  • Regional centres of excellence to get £50m (2004/06) and £40m (2006/08) for procurement best practice