First cuts fall on construction

Published:  14 May, 2010

LONDON: Housing is likely to suffer as the new Conservative-Liberal Democrat coalition government eyes up spending cuts.

The Homes and Communities Agency, which spends between £5bn and £6bn a year, has been allocated funding until next April. Although immediate cuts have not been threatened, a senior HCA source said there were "no guarantees".

The Conservatives have not made any commitment to preserving spending on social housing, and many are expecting cuts of up to 20% in 2011.

Housebuilders are also concerned about how negotiable elements of the Tory's recent planning green paper are. These include the removal of planning targets as part of the party's localism agenda and the introduction of a third-party right of appeal.

More alarmingly for the industry, the Lib Dems have talked about imposing VAT on new housing.

John Stewart, director of economic affairs at the Home Builders' Federation, said he thought the abolition of planning targets was sure to go ahead, but there might be flexibility on the right of appeal. "Removing the targets is a big leap of faith and puts enormous onus on local authorities to come up with sufficient housing. There need to be some disciplines to encourage councils to perform.

"One area where we hope they are willing to cede ground is the third-party right of appeal, which we find vexatious and hope is not fundamental to their plans."

In relation to the Lib Dems' proposal for VAT, Mr Stewart said: "We'd oppose that very strongly. It could only be done at the expense of something else, like affordable housing, or it would force the value of land down."

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