The Chancellor delivered his Pre-Budget Report and said it sets out plans to protect frontline services while halving the deficit.
Alistair Darling presented the report to Parliament, which included plans to help the unemployed, reduce borrowing, and secure growth.
As part of the plan, the Chancellor said that effective immediately, a one-off levy on bank bonuses over £25,000 would be used to pay for measures to help the young and older unemployed back into work.
The Chancellor said he expects the UK economy to return to growth in the fourth quarter of this year, and growth next year is forecast to be between one per cent and 1.5 per cent, he said.
The Chancellor outlined a number of measures in the Pre-Budget Report:
The Government announced that council housing rent increases will be frozen at 3.1% for 2010/11. Housing Minister John Healey confirmed the decision the day following the Pre-Budget Report.
The Department for Communities and Local Government had originally planned an increase of 6.1%.
Sarah Webb, Chief Executive of the Chartered Institute 9of Housing welcomed the decision, saying:
"The reduction of 6.1% to 3.1% for average rent increases in 2010/2011 for local authority tenants will make a difference to millions of people."
Chartered Institute of Housing
The Pre Budget Report by the Chancellor of the Exchequer gives the clearest indication yet that housing will continue to be squeezed in the fight for a share of public spending over the next few years. Health, education and policing appear to be the only areas of Government policy with guarantees of public expenditure growth.
The housing sector can take some crumbs of comfort with the Government's decision to maintain its high levels of public borrowing through to the end of 2011, to safeguard public services and support the economy. The decision means that Government will continue to honour its housing pledge to build 112,000 affordable homes over two years and extend, by six months, the Support for Mortgage Interest (SMI) scheme which helps homeowners who have experienced a fall in income to remain in their homes.
However, the stamp duty holiday which has helped 240,000 new homeowners will end at the end of the year and a further housing supply stimulus package appears to be limited to bringing forward £100 million in 2010/2011 to unlock stalled housing sites.
Some of the most needy and vulnerable people in society will benefit from the announcements to improve home heating and insulation. However, the estimated 200,000 people this may help fall a long way short of the estimated 7.6 million non-decent homes in England alone.
National Housing Federation
The NHF said the Chancellor had missed a key opportunity to slash the UK’s carbon emissions and reduce energy bills by failing to back a major programme of 'greening' more than 250,000 social homes in the Pre-Budget Report (PBR).
Meanwhile, the Federation said that it cautiously welcomed the Chancellor's promise of limited new funding for low carbon projects and renewable energy - but will look for reassurance that lower income households will benefit from the schemes announced today as well as those from more affluent backgrounds.
The Federation, which represents 1,200 housing associations, had called on the Government, in the run up to the PBR, to prove its green credentials by investing £3 billion to improve the energy efficiency of thousands of social homes.
However, despite awareness of climate change being at a record high due to the Copenhagen Summit, the Government has failed to take the opportunity to decisively tackle the substantial level of greenhouse gases emitted from the housing stock - which accounts for 27% of all the nation's carbon emissions.
Even so, the Federation welcomed the Chancellor's pledge to get more young unemployed people back to work - and said the nation's housing associations were ready to meet the challenge of providing many of the proposed training schemes.
The NHF recognised that the number of new shared equity properties delivered by HomeBuy Direct will be increased by 3,000 above the original 10,000 target, as housing for first time buyers is prioritised within the Kickstart Housing Delivery programme.
Federation of Master Builders
The Pre-Budget Report doesn't provide the tools to fulfil the Government's ambition to makes the UK's 26 million existing homes greener and more energy efficient, warns the Federation of Master Builders (FMB).
Brian Berry, Director of External Affairs at the FMB said:
"The Chancellor's decision to increase VAT to 17.5% is a serious blow for both householders and builders wanting to refurbish properties to make them greener and more energy efficient. Given the Government's stated commitment to refurbish every single home by 2030, it is very disappointing that the Chancellor has decided to increase the VAT rate.
"The Chancellor has missed an important opportunity today to announce a comprehensive range of targeted incentives to kick start the retrofitting market, which is worth at least £3.5 billion every year.
"What is encouraging in the short term is the fact that public spending will grow by 2.2% in 2010/2011, as this will help to keep thousands of jobs in the construction sector. Public expenditure in construction is the most beneficial use of public expenditure because every £1 invested in construction generates £2.84 in total economic activity. Such investment should help to tackle the growing housing crisis.
"This year we are only likely to see about 100,000 new homes being built against a target of 240,000 which is bad news for the five million people on social housing waiting lists or those wanting to get on the first rung of the property ladder.
"In short, thePre-Budget Report is essentially a holding statement in the lead up to the general election because the difficult cuts in public expenditure that will have to be made have still to be announced."
National Energy Action
Jenny Saunders, Chief Executive of fuel poverty charity National Energy Action (NEA) commented:
"The £150 million additional investment in the Warm Front Scheme will certainly help some of the poorest and most vulnerable people and restore funding levels consistent with those for previous years. The Government is obviously still aware of the problems faced by millions of fuel-poor households and this extra funding is very welcome.
"NEA also welcomes the Chancellor's announcement of increased resources to reduce energy bills for disadvantaged energy consumers. The ongoing increases in energy prices are hitting the poorest hardest and the Chancellor's announcement that energy supplier support will rise to £300 million by 2013 and assist a further one million households is a step in the right direction.
"The £50 million boiler scrappage scheme, whilst a worthwhile and welcome initiative, does not begin to address the real scale of the problem. Around 125,000 households will receive up to £400 to upgrade their boilers but this must be seen in the context of 4.2 million inefficient systems currently in use in homes in England. We do hope that this programme represents a trial of a much needed incentive for the post-2012 energy efficiency programmes.
"The announcements will cut carbon, preserve jobs in the energy efficiency industry and help some of the most vulnerable households, but NEA believes they fall well short of what is required if the Government is to meet its energy policy targets related to social and environmental objectives, including the 2016 deadline for the eradication of fuel poverty."
The Homes and Communities Agency launched a consultation around options for the recovery and recycling of grant funding that would make it an investor in affordable housing, sharing risk with providers but also benefitting when property values rise.
Such a move - allowable under new powers contained within the Housing and Regeneration Act and due to come into force from April next year - could see part of the Agency's National Affordable Housing Programme allocated to housing associations as an investment rather than grant. This would result in a future return direct to the Agency, which would be re-invested in affordable housing where it is needed most.
It would also align the rules governing housing associations with those applied to private developers and ALMOs.
Section 19 of the Housing and Regeneration Act gives greater flexibility to the HCA in the way in which it funds affordable housing, allowing the mix of equity, loan and gap funding being used in the Kickstart Programme to be deployed through the NAHP.
Sir Bob Kerslake, Chief Executive of the HCA, said:
"We have been clear that in the future we will need to make our funding work harder, to do more with less, and this is one of the ways in which this could be achieved.
"Taking a return on our investment linked to an uplift in property values would maintain the value of taxpayers' money in real terms and allow us to re-invest it in more affordable homes.
"We have absorbed upward pressure on grant rates to help meet our Partners' needs during the downturn, and the current market conditions mean that the time is right for us to look again at the issue of recovery."
Housing associations receiving affordable housing grant currently recycle any receipts from staircasing and sales themselves, through the Recycled Capital Grant Fund, but only the amount of grant originally given, with no link to any uplift in value. For other providers - private developers and ALMOs - under contractual agreements receipts are recovered direct by the HCA and linked to value.
The consultation paper, Investing in Affordable Housing: Principles for Recovery of Social Housing Assistance, outlines how the Agency would make the approach more uniform for all Partners, setting out three options for future recovery:
The document also seeks Partners' views on the potential effects for them on their business plans, and outlines possible ways in which a link to value could be determined, acknowledging that under all three options there would still be a need for associations to retain a proportion of the receipts.
The outcome of the consultation - due to run until 15th March 2010 - will result in a new General Determination on recovery, to be applied in the future not retrospectively; and in respect of homes for intermediate rent and low costs home ownership only. There is no current proposal to change the recycling arrangements which apply to homes for social rent.