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Could have been worse Matthew Warburton - 06/12/2012

cutting_costs_300Well, it could have been worse. That's about the best thing that can be said about the Chancellor's Autumn Statement.

 

Although most working-age benefits will be cut further in real terms from next year, there was no confirmation that under-25s would lose entitlement to housing benefit.

Faced with the news that the economy has failed to come close to the growth forecasts which underpinned the government's original deficit reduction strategy, the government has opted to wait an additional year before national debt begins to fall as a percentage of GDP rather than look for a new round of even savage cuts to meet the original target of debt falling by the end of this Parliament.

The new benefit cuts are designed to save £3.7 billion by 2015, a lot less than the £10 billion previously mooted as a possibility.

The government has changed speed, but not direction. It still sees cutting public spending as the best way to restore economic growth, so the consequence of fewer cuts in this Parliament is more in the next.

Among the implications of an extra year of austerity, the Social Market Foundation has estimated, is £31 billion more cuts in public services in 2014-18, 19 per cent in real terms if schools and the NHS remain protected.

Government departments are being asked to look for an additional 1 per cent a year in savings. Councils have been exempted from the first year in the expectation that they will freeze council tax for another year, but will be hit with a 2 per cent cut in 2014.

Some of these savings will be recycled into public infrastructure investment, but housing has not been a significant beneficiary. It looks as though the Chancellor decided that the package announced in the September was enough on housing for now.

It would have been unrealistic to expect the Chancellor to choose this moment to announce a Damascene conversion to Keynesianism, but he could have done much more for housing without departing from the basic parameters of the Coalition's fiscal strategy.

His announcements on infrastructure investment included nothing new on social housing, whether provided by councils or housing associations. Nothing on HCA programmes, nothing on debt caps.

The government's approach remains confined to action which is meant to make it easier for private investment in new housing. But what if the response is slow, tentative or patchy? And there is lots of evidence to suggest that it could well be.

In such circumstances, old-fashioned public investment is a quicker and more reliable route to getting construction under way and the economic boosted. We know that councils are willing and capable of building many more homes. Why not give them the chance?

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