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

The industry has reacted negatively to chancellor George Osborne’s’mixed-bag’ budget announcement, claiming that it falls short on housing and energy efficiency.

Terrie Alafat, CEO of the Chartered Institute of Housing, expressed concern that some of the measures announced today will make it more difficult for people to keep a roof over their heads and reduce the number of new homes built.

“We support the government’s ambition of building more homes and assisting people in realising their dreams of home ownership and employment – but not at any cost,” she said.

“We know the government is committed to addressing this issue, and housing professionals across the UK are eager to collaborate on solutions that can make a real difference.”

“However, we are concerned that some of the measures announced today will make it more difficult for them to play a role in building the new homes we require and supporting people into work or training.”

“In 2014/15, social landlords built nearly 60,000 homes and made significant investments 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 1% a year for the next four years will make it much more difficult to build new homes at a time when we desperately need them.”

BNP Paribas Real Estate Senior Director Dr Anthony Lee agreed with Alafat.
“The government’s plans to reduce tenant rents will have a negative impact on both housing associations and developers,” he said.

“Until now, social housing rents have increased annually by RPI plus 0.5 percent per year, supporting housing associations’ business plans and making social housing an appealing investment proposition.” This announcement is likely to jeopardise housing associations’ finances and make bond issues less appealing.

“There is also a risk of a negative impact on the viability of new developments.” The rent reduction will reduce the amount of money that housing associations can pay developers for the affordable housing component of their projects. This will put a strain on viability and, as a result, reduce the overall percentage that schemes can provide.

According to Steve Sanham, development director at HUB, this is yet another budget stoking demand in an already overheated housing market.

“Encouraging people to incur additional debt in order to purchase overpriced homes, even after a ‘discount,’ cannot be the solution to the housing crisis,” Sanham stated.

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“In the end, buyers want to buy on the open market at a reasonable price, not in some artificially suppressed and relatively small’submarket.”

“If we want to create a balanced and resilient housing market, we should prioritise deregulating the planning system, releasing public land at reasonable prices for housing development, and being flexible about the types and providers of affordable housing.”

John Alker, director of policy and communications at the UK Green Building Council, expressed his disappointment that energy efficiency, which he believes should be one of the UK’s top infrastructure priorities, did not even get a mention.

‘Energy efficiency is an economic no-brainer,’ according to Alker, “cutting bills for households, creating jobs and growth, and improving our energy security.” The government’s failure to support this industry at a time when the future of ECO and the Green Deal is uncertain represents a significant missed opportunity for the economy.”

WSP | Parsons Brinckerhoff’s UK COO and MD for transportation, infrastructure, and property, Mark Naysmith, described today’s budget as “a mixed bag for the construction industry.”


“The beginning of a new Parliament is a significant opportunity for the government to present an ambitious plan to move the UK forward,” he said.

“On the one hand, we applaud the priority given to critical infrastructure funding and apprenticeships.”

“It’s great to see more focus on addressing the skills shortage so that industry and the supply chain can deliver on projects.”

“On the other hand, we continue to lack a cohesive vision for how we will build our way out of a housing crisis.” The stakes are extremely high. The country’s need for new housing and infrastructure remains pressing, and we should be thinking beyond where Crossrail 2 and HS3 might go, and how this will drive associated developments.”

However, Hello Soda’s marketing director, Paul Shepherd, was pleased to hear more about the Northern Powerhouse plans.

“Electing a mayor will help ensure these promises are kept and will fuel the ‘Northern Powerhouse,'” he said. According to a Royal Bank of Scotland report released yesterday, the North is the fastest growing region in terms of GDP this year, but this could change.

“Better transportation links, oyster-style ticketing, and power devolution across the North and the country will improve national tech and enterprise hubs, employment, and our economy.”

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“We welcome the new Roads Fund as it clearly underlines the government’s long-term commitment to radically improving the strategic road network,” said Matthew Pryor, managing director of Toppesfield, in response to Chancellor George Osborne’s decision to create a new Roads Fund based on revenue raised by the Vehicle Excise Duty. This additional investment, in addition to the £15 billion already allocated by the government for the remainder of the decade, will have a transformative impact on the condition of our roads and support the growth of our broader economy. The industry has consistently advocated for a long-term road investment strategy, and the Roads Fund is an important step toward that goal.”

Chris Wood, CEO of training firm Develop Training, added that British industry no longer has an excuse to avoid making a massive investment in training to address a looming catastrophic skills shortage.

He said the Chancellor’s announcement of a new lower corporate tax rate would free up profit to invest in training, and that if major corporations did not address the skills crisis on their own, the government should force them to do so.

“The magnitude of the skills crisis is difficult to overstate,” Wood said. “We heard in this Budget that business investment is up more than 30% from five years ago, but investment in critical industries is nowhere near where it needs to be.”

“We need more organisations to accept responsibility for the issue, not just in utilities, but across industry,” Wood warned. With a growing economy and lower taxes, there is no reason for anyone to avoid footing their fair share of the training investment bill. The government must acknowledge the magnitude of the problem and, if necessary, take steps to ensure that large corporations band together to ensure that vital services and industries continue to operate in the future.”

Last Updated on December 30, 2021

Indra-Gupta

Author: Indra Gupta

Indra is an in-house writer with a love of Newcastle United and all things sustainable.

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