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Wed October 28 2020

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Spending review: Alarm bells ringing in housing sector

21 Oct 10 The house-building sector has given a mixed response to Chancellor George Osborne's Comprehensive Spending Review.

The house-building sector has given a mixed response to Chancellor George Osborne's Comprehensive Spending Review.

The investment of £4.4bn into social housing, to support the construction of up to 150,000 new affordable homes was broadly welcomed – but there remains disquiet at how the Government will stimulate private house-building.

Home Builders Federation executive chairman Stewart Baseley said: “The Government needs to act decisively now to reduce red tape and regulation. In such austere times house building can simply no longer support the wish lists of central and local Government. Regulatory requirements must become realistic and affordable.

“House builders and local authorities also urgently need clarity on the planning system and the incentives on offer. Having seen their budgets slashed by 30%, councils need to see the potential income generated from building new homes. Without further decisive action the Government risks worsening an already acute housing crisis.”

Michael Ankers, chief executive of the Construction Products Association, said: “Where we urgently need greater clarity is the mechanism to encourage investment in private housing and this will not happen until we have agreement over the New Homes Bonus incentive and reforms to the planning system.’

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Rosemary Beales, national director of the Civil Engineering Contractors' Association, said: “150,000 affordable homes over the next four years is good news for those contractors who deliver the preliminary works for housing developers. This is has been a particularly hard hit area of civils workload since the start of the recession. However, the Communities and Local Government budget has been hit quite severely and it is hard to see how this will help the wider construction industry.”

Alan Aisbett, partner at Pinsent Masons, said: “There are basically two things which currently inhibit local authority housing provision. The first is the current housing finance system, which rather like business rates involves the pooling of surpluses on housing accounts and a redistribution to those authorities in deficit.

“The other constraint is rental levels or rent convergence as its called which keeps social rents to certain levels. Greater rents could be used to fund new housing without subsidy or reduced subsidy. This diversion of rents for housing would be much the same in concept to diverting business rates to fund infrastructure.”

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