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Memorandum from Communities and Local Government (DAR 09 -01)
HOUSING BUDGET PACKAGE DELIVERY PLANS
On 1 June, my predecessor Margaret Beckett appeared before the CLG Select Committee along with Richard McCarthy (CLG) Bob Kerslake (HCA) and Peter Marsh (TSA) for the second time on Housing and Credit Crunch. Since this appearance I understand my department has answered a number of follow-up enquiries. In addition, and in recognition of the importance the Government attached to supporting housing through the current recession, on 29 June, the Government published Building Britain's Future which included a £1.5 billion Housing Pledge to deliver 20,000 additional affordable housing starts and up to 10,000 new market housing starts over this year and next.
I enclose a copy of the press release I will issue today setting out further announcements that step up the drive to ensure more new homes are built. It also confirms in outline the sources of funding for the Housing Pledge but I thought your committee would welcome more detail.
At the time of publication we made clear that the resources for the announcements in Building Britain's Future had all been found by tough decisions on priorities within existing budgets.
In the decisions I've taken within our DCLG Budgets, I have taken account of the impact of recession on levels and schedules of growth investment; reduced funding allocations for 2010/11 only in areas which had not yet received confirmed `funding; and rescheduled rather than removed investment for decent homes via ALMOs and only for those that have not yet achieved the eligibility criterion of the two-star standard.
I am protecting funding for all Housing Market Renewal areas, for all ALMOs with decent homes programmes underway, for supporting peoples projects and for disabled facilities grants.
The details are as follows:
· Up to £930m towards the cost of this package will be contributed from underspends in other Departments, including Transport (£350m), Children, Schools and Families (£ 100m), BIS (£50m) and Home Office (£90m) and access in 2010-11 to up to £340m of anticipated capital underspends in my department, DCSF and Health. · Capital funding allocations from the Growth Fund will be re-profiled by £128m in 2010111 to £167m, making a total of £685m resource and capital funding committed over this three year CSR period. We will therefore shortly be consulting local authorities in the Growth Areas and Growth Points on my proposals to reduce their provisional 2010/11 capital funding allocations. This recognises that growth has been slower and more difficult than planned, and that the infrastructure investment needed today is very different to that envisaged when CSR funding decisions and provisional funding allocations were made. The switch allows us to support new homes this year and next, rather than in the longer term. · For the Decent Homes Arms Length Management Organisation (ALMO) Programme, which provides supplementary funding to the Decent Homes programmes for local authorities who set up an ALMO, I have reprofiled funding, over a longer period for those ALMOs that have not yet met the Audit Commission's two-star standard to be eligible for the support, reducing planned funding in 2010/11 by £150 million to £609m. The Government remains committed to completing the Decent Homes programme, as I confirmed to your committee on 13 July. My decision means the ALMOs affected will more likely receive the investment they need for their decent homes refurbishments in 2011/12.
· Re-prioritisation of Private Sector Renewal funds to new provision. This represents a switch of £75m from the PSR budget in 2010-11 with £302m remaining across the regions and no reduction in government funding for disabled facilities grants. · Currently unallocated funding of £50m in 2010-11.
I have written to all Local Authorities and regions affected by these decisions.
In addition, I am setting the Homes and Community Agency a tougher efficiency target of 3% in operational efficiency savings this year and next plus the requirement to find £183m through efficient and flexible management of its housing and regeneration programmes.
Programme savings will come through a combination of effective project management, bearing down on grant requirements, targeting investment on areas and schemes that produce the most cost effective outputs, and slippage on a variety of HCA programmes including CIF and Thames Gateway. Operational savings will come from reorganisation of the Agency's corporate centre and further efficiencies delivered through the Government's operational efficiency programme including CLG's Group Corporate Services Programme. This is clearly important not just in supporting the delivery of the Housing Pledge but also in responding to the general pressure on public finance and delivering better value for money. I will copy my letter to the Agency setting out the efficiency requirements to the Committee.
I also want to
confirm the baseline position for our affordable housing programmes. The
baseline position has been revised to take into account the impact of the
worldwide recession on the
· Our baseline position for affordable housing provided through the HCA's National Affordable Housing Programme is 27,500 social rent homes and 25,000 low cost home ownership homes completions (including 10,000 HomeBuy Direct) in 2009-10 and 30,000 social rent homes and 14,500 low cost home ownership homes completions in 2010-11. Details of the delivery of the programme will be included in the HCA's Corporate Plan which will be published shortly. · In the Budget we announced a further range of measures to deliver affordable housing and we expect them to deliver up to 900 homes developed by local authorities and 4,000 affordable homes developed through the Kickstart initiative across the two years 2009-11. · Building
As the Prime Minister said in launching the housing pledge as part of BBF, in total this now means we will be building 110,000 new affordable homes over this year and next.
July 2009
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