Housing Benefit Bill Could Make It ‘Tougher To Build New Homes’

The industry has reacted to chancellor George Osborne’s ‘mixed-bag’ budget announcement with criticism that it fails to deliver on housing and energy efficiency.

Terrie Alafat, chief executive of the Chartered Institute of Housing, said she was concerned that some of the measures announced today are going to make it more difficult for people to keep a roof over their head and affect the number of new homes built.

She said: “We support the government’s ambition of building more homes and helping people realise their aspirations of home ownership and work – but not at any price.

“We know the government wants to tackle this issue, and housing professionals across the UK are ready to work with them on the solutions that could make a real difference.

“But we’re concerned that some of the measures announced today are going to make it more difficult for them to play their part in building the new homes we need and supporting people into work or training.”

“Social landlords built almost 60,000 homes in 2014/15 and have also made significant investment in employment and training support.

“We understand the government’s desire to manage the cost of the housing benefit bill – but undermining their income by cutting social housing rents by one per cent a year over the next four years is going to make it much tougher to build new homes at a time when we desperately need to do so.”

Dr Anthony Lee, Senior Director at BNP Paribas Real Estate Agreed with Alafat.
He said: “The government’s plans to reduce rents paid by tenants will have an adverse impact on both housing associations and developers.

“Social housing rents have – until now – increased annually by RPI plus 0.5% per annum, underpinning housing associations’ business plans and making social housing an attractive investment proposition.  This announcement is likely to undermine housing association finances and risks making bond issues less attractive.

“There is also likely to be an adverse impact on the viability of new developments.  The rent reduction will reduce the amount housing associations can pay developers for the affordable housing element in their schemes.  This will put pressure on viability and ultimately reduce the overall percentage that schemes can provide. “

Steve Sanham, development director at HUB said this was another budget stoking demand in an already bloated housing market.

“Encouraging people into further debt in order to buy overpriced homes, even after a ‘discount’, cannot be the answer to the housing crisis,’ Sanham said.

“Ultimately, buyers want to buy in the open market at a sensible price – not in some artificially suppressed and relatively small ‘submarket.

“Deregulating the planning system, releasing public land at sensible prices for housing development, and being flexible about the types of and deliverers of affordable housing should be the priorities if we want to create a balanced and resilient housing market.”

John Alker, director of policy and communications, UK Green Building Council spoke of his disappointment that energy efficiency, which should be seen as one of the UK’s biggest infrastructure priorities, failed to even get a look in.

Alker said: ‘Energy efficiency is an economic no brainer – cutting bills for households, creating jobs and growth, and improving our energy security. Government’s failure to support this industry at a time when uncertainty about the future of ECO and Green Deal is rife, represents a major missed opportunity for the economy.”

Mark Naysmith, UK COO and MD for transportation, infrastructure and property, WSP | Parsons Brinckerhoff described today’s budget as ‘a mixed bag for the construction industry.’
“The start of a new Parliament is a significant opportunity for the government to present an ambitious programme to take the UK forward,” he said.

“On the one hand we welcome the priority that has been given to essential infrastructure funding and apprenticeships.

“It’s great to see more attention for tackling the skills shortage, so that industry and the supply chain have the capacity to deliver on projects.

“On the other hand we still lack a coherent vision for how we are going to build our way out of a housing crisis. The stakes are high. The nation’s need for new housing and infrastructure remains urgent and we should already be looking beyond where Crossrail 2 and HS3 might go, and how this will drive associated developments.”

However Paul Shepherd, marketing director at Hello Soda, was pleased to hear more mention of the Northern Powerhouse plans.

He said: “Electing a mayor will help ensure these promises are kept and fuel up the ‘Northern Powerhouse’. A Royal Bank of Scotland report yesterday showed The North to be the fastest growing region this year by 1 GDP but this can improve even further.

“Better transport links, oyster-style ticketing and devolution of powers throughout the North and the country will improve nationwide tech and enterprise hubs, employment and our economy.”

Commenting on Chancellor George Osborne’s decision to create a new Roads Fund based on revenue raised by the Vehicle Excise Duty, Matthew Pryor, managing director of Toppesfield said: “We welcome the new Roads Fund as it clearly underlines the government’s long term commitment to radically improving the strategic road network. This additional investment to the £15bn already allocated by the government over the rest of the decade will have a transformational impact on the condition of our roads and support the growth of our wider economy. The industry has consistently called for a long term road investment plan and the Roads Fund is an important milestone to achieving this.”

Chris Wood, chief executive of training specialist Develop Training added that British industry no longer has an excuse to avoid making a massive commitment to training to tackle a looming catastrophic skills shortfall.

He said the Chancellor’s announcement of a new lower corporate tax rate would free up profit to invest in training and said if major organisations didn’t tackle the skills crisis voluntarily, the government should make them do so.

“The scale of the skills crisis is hard to exaggerate,” said Wood. “We heard in this Budget that business investment is more than 30 per cent higher than five years ago and on the up, but investment in training in critical industries is nowhere near where it needs to be.”

Wood warned: “We need more organisations to accept responsibility for the issue, not just in the utilities but across industry. With a growing economy and lower taxes there is no excuse for anyone who avoids paying their share of the training investment bill. The government must recognise the scale of the problem and, if necessary, take steps to ensure that large companies come together to ensure that vital services and industries continue to run in the future.”

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Last Updated on April 24, 2021
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