Chancellor George Osborne announced details of how the Government plans to make £6.2 billion worth of savings this year, as a first step in tackling the Nation's massive budget deficit.
The Chancellor revealed a package of cuts that included £780 million from the budget of the Department of Communities and Local Government, which among other areas oversees housing. Details of exactly where these savings are awaited.
On the brighter side, Mr Osborne also announced an additional £170 million would be reinvested from the savings in building 4,000 social rented homes in 2010/11. This is seen as part of the Government's intention to investing in frontline services and to build a fairer society.
As a result of the Chancellor's announcement, it is likely that the Homes and Communities Agency budget will be cut by £230 million this financial year, possibly including:
The mortgage rescue scheme and the amount of area based grant given to local authorities under the Supporting People settlement will be maintained.
Funding of homelessness schemes escape from budget cuts.
Being already fully committed, gap funding for this year is unaffected by the cuts.
Housing associations could consider radical ways of raising funds for new affordable homes as the sector faces up to a dramatically different operating environment, according to a new report from the National Housing Federation (NHF).
Facing the Future: Evolution or Revolution? explores a range of financing options and organisational changes that housing associations could adopt as the sector faces up to the unprecedented challenges created by the financial crisis and recession.
The report suggests that unconventional routes to accessing funding, such as issuing shares on commercial parts of their businesses, could be a potential source of raising revenue for investment in affordable housing and neighbourhood services.
Many associations already have non-registered commercial subsidiaries, which in practice could be able to issue share capital. If these businesses were floated, the housing association as the parent company would retain a majority of the shares in these subsidiaries to ensure they could not be bought out. The business would stand as a separate entity to the parent company - meaning the core business would be protected and the risk limited.
These businesses could prove attractive investments for pension funds, according to the report, including providing an opportunity to meet their corporate social responsibility objectives.
Other options identified in the report, are for housing associations to:
The in-depth report stresses it is not recommending any of the proposals to housing associations or making an offer to government, but believes many boards may want to explore the options - given the much changed operating environment for the sector.
The report can be downloaded from the publications section of the NHF website.