Budget delivers £1bn for housing
The verdict on what the budget has to offer on housing? £1bn of new money, around half for new building and half to support homeowners, is definitely a step in the right direction, although it falls short of the boldness needed to tackle the full extent of the housing crisis. Still, if the money is all to come within one year, it represents one-third of the package the TUC and others have been calling for (albeit differently distributed ) – a welcome starting point.
The headline is a £600 million package for home building. The bulk of this is focussed on getting housing projects going that have ground to a halt because of the credit crunch (projects that are “underwater”, in the industry jargon). £100 million is earmarked for local authorities to build new energy-efficient housing (plus half as much again for modernising armed forces housing). The package also includes an £80m extension to the Government-backed shared ownership scheme, HomeBuy Direct. The Government estimates that the package as a whole will deliver an additional 100,000 homes.
The TUC and partners including Shelter and the Local Government Association have been calling for a major stimulus to get house building going, targeted at addressing the dire shortage of decent affordable and social housing in the UK, protecting and providing jobs in the construction industry, and ‘greening’ our housing infrastructure. In the TUC’s Budget submission we called for a total of £6bn including funding for local authorities and registered social landlords to build 100,000 new social homes over the next two years – saving 30,000 jobs in the house building industry and preventing the loss of vital skills.
There were also welcome moves to support home owners and buyers, including an extension (to the end of the year) of the stamp duty holiday for all houses costing up to £175,000; a six-month extension to the Support for Mortgage Interest scheme (which was increased and extended last year to give a higher level of support for interest payments for people who’ve lost their jobs); and a new scheme to guarantee securities backed by mortgages.
Another welcome measure that will impact on housing is support for energy efficiency measures, which Philip has blogged about in the ‘green’ corner.
Tentative signs from the Council of Mortgage Lenders this morning show mortgage lending starting to recover, with a 16% rise to an estimated £11.5 billion in March (from £9.9 billion in February) – but this is still only 52% of the amount lent in March 2008.
We’ll also been keenly anticipating the progress report and housing strategy promised for the 2009 PBR (page 105 of the Budget)- another chance to advance longer term policy goals for housing. So, tough times for housing and construction are not over yet, but the Budget measures could be steps towards recovery.