Councils and housing associations are facing a possible “doomsday” scenario for housing funding after England’s housing quango was told that it should prepare for cuts totalling £1.1bn this year.
LGC understands that the Homes and Communities Agency (HCA) has been told by ministers that £780m of funding pledged last year as part of the outgoing government’s £1.5bn housing stimulus package will now not be available in the form of the departmental underspends earmarked, because sources for the funding have not been realised.
The loss of the £780m in funding is on top of £230m in cuts to the HCA announced last week as part of the Treasury’s £6.2bn in cuts across Whitehall. That brings the total hit to the HCA’s 2010-11 budget to £1.1bn.
However, former chief secretary David Laws did announce that £170m of the £6.2m in cuts would be recycled back into housing, bringing the total funding cut down to £840m. With £230m of that total already confirmed, that means the agency is now facing a funding black hole of £610m.
The HCA has already told all the Housing Market Renewal pathfinders to freeze spending, pending the outcome of the 22 June Budget. If the worst occurs that freeze could be extended for the rest of the year.
LGC has also learned that 108 Kickstart Round 2 schemes that have been approved but not contractually confirmed would not get their allocated £263m in funding and there would be no more funding for Kickstart this year.
The Local Authority New Build (LANB) programme would also be frozen, meaning 91 council schemes, approved but not contractually agreed, would also have their allocated £59m in funding withdrawn and there would be no more spending through the LANB scheme this year. In addition there would be no new spending through the National Housing & Planning Advice Unit for the rest of this year, LGC has been told.
A Department for Communities & Local Government spokesman would not comment on the £610m shortfall, but admitted that the situation of public finances was “severe”.
He said this “inevitably means we have made some difficult choices”.
Impact of £610m ‘blackhole’
£263m for 108 Kickstart Round 2 schemes scrapped; no more funding in 2010-11
- 78 councils affected, including Durham CC (5 schemes), Liverpool (5 schemes) and Tower Hamlets LBC (4 schemes)
£59m for 91 Local Authority New Build schemes scrapped; no more funding in 2010-11
- 43 councils affected with plans for 912 homes, including Bristol City Council (11 schemes), Fareham BC (4 schemes), Charnwood BC (4 schemes) and Newark & Sherwood DC (4 schemes)
Housing Market Renewal pathfinders frozen; “potentially” no more funding in 2010-11
- All 12 HMR pathfinder areas in the north and the midlands affected, including plans to renovate 6,500 homes for about 15,000 people