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No Budget surprises for housing Matthew Warburton - 20/03/2014

Budget300Yesterday's budget may have included some unexpected announcements on savings, beer and bingo, but there were few surprises on housing. 

Most of what the Chancellor mentioned in relation to housing had been pre-announced or widely expected. 

£150 million in loans for estate regeneration - mentioned in the Autumn Statement; a new garden city (more accurately a small town) at Ebbsfleet - previously announced in December 2012.

The extension of Help to Buy had been widely expected, although the extension for a full five years was rather more than the development industry had dared to hope for.  A City Deal decision for Cambridge had been in the pipeline for a while and did not need to be saved up for Budget day. 

One new proposal buried deep in the paperwork was a consultation on a Right to Move for social tenant who need to move for work reasons.

Despite some heroic arithmetic totalling the impact of these announcements to 200,000 new homes, the overall impression is that the Government is content to press on with business as usual in housing policy, hoping beyond hope that economic revival and market forces will bring the much-needed improvement in housing supply.

The shadow hanging over this Budget was, of course, the fact that the Government has so far only achieved half of its planned public expenditure cuts.  Despite the improvement in economic prospects, new savings will need to be found both before and after the General Election, and any new spending commitments will have to be financed from additional cuts elsewhere. 

One area where further cuts have been clearly signalled is welfare spending, with a proposed cap on spending on tax credits and housing benefit for the next four years imposed by a legally enshrined charter.  Quite how this is intended to work is not at all clear. 

Social rents are set to rise by more than inflation for the next decade, with the majority of new supply being let on "affordable" rents.  Private landlords cannot be expected to observe the Chancellor's cap in setting rents, and the trend over the last four years has seen the number of private tenants needing help from housing benefit rise by 400,000. 

There are only two ways the Government can overcome this contradiction.  One is by praying that enough tenants on benefits find work to keep spending within the cap; the other is by further decoupling benefit entitlement from the rents tenants actually pay. 

Yet, as Jonathan Portes, Director of the National Institute for Economic and Social Research is quoted as saying, the move may be no more than a gesture. "Parliament already votes on measures to change social security budgets, so a charter makes little real difference", he said.

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