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PwC comments on cuts in social housing

While the cuts look significant, none of this is a huge surprise, says Richard Parker, head of housing at PwC.

While the cuts look significant, none of this is a huge surprise. The cuts actually only take us back to the 2004-2007 spending levels. The challenge facing the Government now is how best to work housing grants harder, so they can continue to maintain supply at a reasonable level –particularly when there will also be less cross subsidy from outright sales and planning gain.

The Government is committed to building 150,000 affordable homes over the next four years. This equates to 37,500 new homes a year – which should be achievable if the Government can better align the £4bn of grant funding to other capital contributions including public sector land. The Government will also get ‘more for less’ if grant is used to support shared ownership and intermediate housing which require a lower capital subsidy.

Rent increases for new tenants will increase the sums available to invest in new homes –but the Government needs to be alert to the fact that 65% of tenants in social housing are on benefits. So new tenants need to be better off than today’s - otherwise rent increases will simply add to the benefits bill.

The introduction of ‘flexible tenancy’, for people who move into council housing for the first time, represents a paradigm shift in housing policy. But it could backfire if it’s not supported by a new approach to housing allocations.

If social housing continues to be allocated to those in greatest need, the Government will in the first instance be housing people that will find it hardest to improve their circumstances. Rather than creating flexible tenures, the Government could end up reinforcing residualisation.

The National Home Swap Scheme could help Government make better use of the existing social housing stock. However, matching supply with demand and need to availability will require a major effort, increased customer focus and incentives that are carefully structured.

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