Housing quango suspends all spending decisions after Treasury refuses to confirm previous funding promises

The government’s housing and regeneration quango is facing a funding black hole of over £600m and has suspended all spending decisions following George Osborne’s announcement yesterday of £6bn of cuts, Building understands.

The Homes and Communities Agency’s black hole has emerged, according to sources close to the issue, because the Treasury is refusing to confirm that £780m promised from other government departments to fund last year’s £1.5bn Housing Pledge will actually be delivered.

Osborne’s announcement contained a surprise £170m of funding for social housing, however it is understood the Treasury’s refusal to confirm the previous funding promises from other departments means this merely reduces the size of the hole in the finances from £780m to £610m

In response the HCA has decided to suspend all spending decisions until the new chancellor’s emergency June 22nd budget at the earliest. One of the sources said: “The CLG was given certain assurances last that the departmental transfers would go ahead, but since the Treasury is now refusing to confirm them.”

The Home Builder’s Federation confirmed it had been told that “the balance of the as-yet uncontracted Kickstart money will be on hold until after the Budget on 22nd June when the extent to which this funding is to made available in the current year is confirmed.”

In addition £230m of further funding cuts will have to be found from this year’s budget. This includes £100m for new social housing, £50m for the housing market renewal pathfinder scheme, £30m for Gypsies and Travellers, and £50m for the Kick Start scheme to re-start stalled private schemes.

The news means that, as well as a number of social housing schemes, all kick-start schemes will remain on hold, with any un-contracted schemes likely to be re-examined to see if they will still go ahead.

HBF chairman Stewart Baseley said cutting kick start was a cut in investment not waste. He said: “Public money invested through Kickstart pulled in many more times that in private sector investment - which will now be lost to the economy. The announcement is extremely disappointing when we are in the midst of an acute housing crisis and a shortage approaching a million homes, yet building less than in any peacetime year since 1923.”

 

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