Spending cuts: HCA axes £230m and halts kickstart

Aaron Morby 14 years ago
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Hundreds of millions of pounds of funds allocated to house builders for new developments have been pulled or frozen by the Homes and Communities Agency.

The housing quango has revealed the full extent of the housing cuts as part of the Communities and Local Government departments’ £780m budget cuts for this year.

Chief executive Sir Bob Kerslake said that £100m will be chopped off the budget for low-cost home-ownership schemes and £50m from its kickstart programme. A further £50m is going from housing renewal programmes.

On top of the immediate cuts hundreds of million of pounds of future spending commitments remain on hold until the Government’s 50-day Budget on 22 June.

Housing developments that are most likely to suffer are those that are not yet contractually agreed. Galliford Try, Berkeley Homes, Persimmon and Keepmoat are among house builders hit hardest by the cuts.

Sir Bob said he would be contacting developers and local authorities affected by the cuts shortly.

The cuts are a bitter blow to house builders who are currently bidding for kickstart funding. Many bids for Kickstart are at an advanced stage, with £214m worth having gone through the due diligence process.

HBF chairman Stewart Baseley said: “Cutting Kickstart money, that creates immediate benefits in terms of local jobs and for the wider economy is a cut on investment not waste.

“Public money invested through Kickstart pulled in many more times that in private sector investment – which will now be lost to the economy.

“The announcement is extremely disappointing when we are in the midst of an acute housing crisis and a shortage approaching a million homes, yet building less than in any peacetime year since 1923.”

HBF is now seeking urgent clear guidance from HCA on exactly which sites the planned cuts will affect so that house builders can make decisions about labour, materials and contracts.

Housing market renewal programme allocations announced in December will be reduced, although the NAHP money had not been allocated.

A full list of Kickstart Round 2 schemes affected.

List of LANB schemes, where legal agreements were not concluded.

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