Budget leaves housing frozen out

Originally written as a column for Inside Housing.

In a Budget where everything had to begin with E there was little hope for housing.

Neither Rishi Sunak’s economic priorities nor Jeremy Hunt’s e-list (enterprise, employment, education and everywhere) left much room for an issue on which the Conservatives appear to have given up.

On energy, there was good news for tenants on pre-payment meters and for everyone with the extension of the price guarantee.

However, there was no more support for a policy that would do more than anything else to reduce dependence on unreliable overseas energy supplies and Vladimir Putin.

Investment in the decarbonisation  of existing homes would cut energy demand at the same time as it cut carbon emissions and bills for tenants and home owners and delivered on the government’s new priority of energy security.

Energy efficiency even begins with the right letters but that either counts as a double negative or was quietly forgotten.

In one of the most housing-free Budgets for 30 years, new announcements were few and far between.

There was confirmation that strategic decisions over Affordable Housing Grant will be devolved to Greater Manchester and the West Midlands as well as London along with even more autonomy in the next Affordable Homes Programme.

There was a more surprising move to offer local authorities a temporary discount of 40 basis points for borrowing for their Housing Revenue Account from the Public Works Loans Board. Coming less than five years after the Treasury imposed a premium for HRA borrowing that is a welcome development.

But that’s as good as it got. In another indication of housing’s declining importance, there were not even enough minor announcements to allow for a discrete section in the Budget Red Book. Instead housing had to be combined with infrastructure in a section that gave top billing to a fund to fix potholes.

There also appeared to be confirmation that the Treasury has reclaimed billions in capital spending from the Department of Levelling Up, Housing and Communities (DLUHC).

The Autumn Statement in November put the DLUHC capital spending budget at £9.5 billion for this year (2022/23) plus a further £900 million for the Levelling Up Fund. That has now shrunk to just £7.2 billion, with just £600 million of the difference reallocated for 2023/24 and 2024/25.

Exactly how much money has disappeared, what it’s for and for how long, remain unclear. The total underspend tallies with figures reported by the Financial Times earlier this month, although the reallocation to future years is lower.

Social landlords will need no reminding that this comes at a time when total funding for new homes is already under pressure from higher inflation, costs for building safety and investment in the existing stock and plans to replace Section 106 with the Infrastructure Levy.

No departmental spending plans were set out for beyond the next election. However, with the DLUHC’s capital spending set to fall over the next two years even before allowing for inflation, the costs of the announcements that were made on Wednesday imply that they will be eye-wateringly tight.

In a Budget that was supposedly focussed on growth there was no support for housebuilding of any kind apart from a concession on neutrient neutrality rules that have blocked new homes in some areas.

Development seems certain to shrink instead thanks to the housing market downturn and the government’s surrender to its backbenchers on planning.

And, needless to say, there was no hint of the sort of radical reform that might generate growth by shifting taxes from incomes to assets.

The Budget actually did the opposite, with a massive tax giveaway on pension contributions for the wealthy matched by a freeze in income tax thresholds for everyone else.

Finally, there was disappointment if not surprise as the Budget confirmed plans to continue the freeze in Local Housing Allowance (LHA) rates for another year despite rising rents.

In a Westminster Hall debate that followed the Budget, MPs from across Britain lined up  to outline the malign consequences for their constituencies.

With living standards still set to go through their biggest two-year decline since records began in the 1950s, the result will inevitably be increased rent arrears and – another sort of E – evictions.


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