ODPM to go ahead with grant payment to developers

The government has confirmed that it intends to go ahead with a plan to pay social housing grant to developers.

The controversial move – which would allow developers to bid for a slice of the £1.7bn available for 2005/06 – will be included in the Housing Bill, which will be part of the Queen's Speech on 26 November.

The long-expected announcement was made on 10 November in the ODPM's 31-page response to criticisms levelled at the draft bill by a select committee of MPs.

An ODPM spokeswoman said: "We cannot go on accepting the delivery of fewer affordable homes for more money – more of the same is not going to be enough."

Jon Watson, director of business strategy at Home Group – the recipient of the largest slice of corporation funding last year, £54.1m – said he was "strongly opposed" to the idea.

"The potential for getting this wrong is huge," he said. "The government is pressing for a short-term boost in housing supply in exchange for long-term grief around the management of the homes."

The National Housing Federation will lobby against the ODPM's intentions, as there is no evidence to suggest private developers will offer better value for money than RSLs.

There are also concerns over the way developers bidding for grant will be held accountable over their use of public funds.

Watson said: "I have no problem with competition, as long as the rules are fair. But if developers get lighter-touch inspections, the same would have to apply to associations, otherwise it would be a no-starter."

Terry Fuller, chief of the affordable housing group at the House Builders Federation, said developers would have little problem meeting the key ODPM requirement – that they produce more homes more quickly.

"We already deliver the vast majority of affordable housing in the UK and definitely feel we will be able to build homes faster and more cost-effectively than associations."

Fuller pointed to examples where both Taylor Woodrow and Bellway – a developer considering whether to bid for grant – have received public funds and exceeded what was required while giving the corporation full disclosure of related accounts.