Social housing loses £50m to first-time buyers

The government has siphoned off £50m earmarked for social housing to pay for its new first-time buyers scheme.

The funding reshuffle came to light when the £5.5bn of social housing funding to be split between the nine English regions in 2006-8 was announced on Tuesday.

The final announcement was £34m less than the version consulted on last December.

The consultation paper issued at the end of last year outlined a formula for working out how the money should be split between the regional housing pots (HT 10 December 2004, page 7).

The ODPM told Housing Today on Tuesday that £50m had been cut and given to the first-time buyers initiative for 2007/8. However, £8m a year has been added in 2006/7 and 2007/8 for improvements to Gypsy and Traveller sites, reducing the loss to £34m.

The ODPM stressed that, overall, the fund is treble the amount available to the regions for housing in 1997.

The final announcement toned down some of the radical funding shifts of the consultation paper.

The ODPM has given a large boost to the South-west and the East of England – areas that had lost out in the government’s 2003 Communities Plan.

The undoubted winner was the South-west, which had been expecting a 4% increase but got 48% more cash. Its allocation for 2007/8 is £203m, £66m more than in 2005/6. However, the 44% rise the East of England received was less than the 52% it had expected. It got £241m for 2007/8, £14m less.

The North-west got no increase, and the North-east got a mere 6%, to £91m for 2007/8. However, this was more than the 0% it expected.

It does seem strange to take money out of an existing programme to support a new initiative

Berwyn Kinsey, head of the LHF

London lost out – its expected increase fell four percentage points from 14% in the December consultation paper to 10% in the final announcement. It was allocated £1.17bn for 2007/8.

The ODPM said the figures for the regions had changed because it used three-year averages rather than one-year figures to measure housing affordability, which is part of the funding formula.

It added that the North benefited from other types of housing funding.

Berwyn Kinsey, head of the London Housing Federation, said: “The increase in funding nationally is welcome but we are disappointed that the growth in the level of funding for London is slower than we hoped. We do not think it takes account of overcrowding and the number of people in temporary housing.”

He added that he was dismayed that money had been top-sliced from the fund to give to first-time buyers. He said: “They are getting a lot of funding directed at them but there is a lot of backed-up need for families in temporary accommodation so they are not the only group who need government support.

“It does seem strange to take money out of an existing programme to support a new initiative. We had hoped the first-time buyers initiative would be new money.”

Commenting on the funding freeze for the North-west, Richard Kemp, a Liverpool councillor, said: “I find it amazing, but not surprising. The government is putting increasing emphasis on housing pressure in the South-east and South Midlands, but this is short-sighted. There is a lot of pressure in the North-west.”

Wayne Morris, chief executive of Western Challenge Housing Group, said he was delighted that the South-west had received such a large increase after hard lobbying of government.

He said: “Affordability and lack of decent accommodation are every bit as pressing in the South-west as the South-east.”