Spending review could freeze funds for housing, think tank warns

It said "tough choices" would have to be made about areas other than health, to which the government has already committed 7.9% of its spending, a 0.2% increase.

"Housing budgets will need to be frozen," concludes the report, written by senior IPPR economist Peter Robinson.

"In terms of the 2004 spending review, it is inconceivable in the context of all the pressures facing public finances that housing's share as a proportion of GDP will rise."

Kate Stanley, head of social policy at IPPR, said: "The outlook is certainly not great for housing. The biggest challenge for the sector is how it now approaches government. It has to make the case for why spending on housing is important when compared to other areas such as health or education.

"The buttons people have to press are the link between housing and key areas of policy such as child poverty and health inequalities. But they have to get one and do this now," she added.

Housing has enjoyed something of a return to the top of the Whitehall agenda in the past 18 months with the £22bn Communities Plan and the Treasury-commissioned review of housing supply by economist Kate Barker, which is due to be published on Wednesday before the Budget.

In 1989/90, spending on housing was 1% of the UK's GDP. This fell to 0.3% in 2001/2, but has risen over the past couple of years.

A senior housing source said: "It is simply not plausible to fulfil the large increase in housebuilding that Barker and the Communities Plan are talking about without a continued rise in the available resources. If the resources stand still, that's a cut.

"If this is the case, then the government is on very thin ice as to whether it will deliver on its promises."