Budget 2010: Housing Industry Fear the Worst – By Marc Da-Silva

Chancellor George Osborne says that Britain is "on the road to ruin" unless drastic cuts are implemented to tackle the "awful financial situation" in the Budget tomorrow.

Although Mr Osborne has not given full details of the coming Budget, it is expected that the housing sector will take a big hit, and this could lead to thousands of construction job losses, longer housing waiting lists, fewer new homes and affordable homes.

The National Housing Federation (NHF) estimates that the housing budget could be cut by up to 32% over four years.

This could lead to 200,000 construction job cuts and an additional 350,000 people added to housing waiting lists in England, it said.

Affordable Homes

The affordable housing sector, in particular, could be subject to large scale spending cuts, which would be a concern.

Affordable homes play a big part in the housing market today, ensuring that more people are housed and are able to get a foot on the housing ladder.

Talking on the BBC's Politics Show London yesterday, deputy leader of the Lib Dems Simon Hughes highlighted the "need for more [housing] stock, particularly more affordable housing".

He said: "The problem we have is a lack of housing, particularly in London. The lack of affordable home funding is of concern."

The NHF, which represents England's housing associations, fear that around 142,000 planned affordable homes will not be built in the period up to 2020, and housing waiting lists would grow by 354,000, due to the probable cuts.

Waiting lists for affordable housing are at a record level of 4.5m, the federation said.

Federation chief executive David Orr said: "It is clear to everyone that the amount of public money available to fund various activities in the future is going to be tight. However, it is critical that the nation keeps building affordable housing."

Every home built creates 1.5 full-time jobs plus up to four times that number in the housing supply chain. Increasing output by 100,000 new homes would generate around 750,000 real jobs, according to the Home Builders Federation (HBF).

New Homes

The HBF is also urging the government not to do anything to destabilise the fragile recovery in the housing market in tomorrow's Budget.

The economic benefits and significant number of jobs created by increasing new home building will contribute to the wider economic recovery.

Stewart Baseley, executive chairman of the HBF said: "This is a critical budget for the home building industry. House building is vital to the economy and a key provider of jobs and there are clear benefits from measures to nurture the embryonic recovery. We already have a housing shortage approaching a million and are building less than any time since 1923. The Chancellor must be careful not to do anything to exacerbate the already acute housing crisis and risk hundreds of thousands of jobs."

However, despite pending financial cuts, the Housing Minister Grant Shapps said the government was "determined to build the new homes this country needs" despite "the very difficult economic situation we are in".

Mr Shapps wants to free up councils to build more new homes, in accordance with local needs.

Unfortunately, too many local communities adopt a ‘not in my backyard' attitude to new build homes being built in their areas, and this is likely to restrict housing supply even further.

The lack of new homes is so acute that almost 70% of parents with children living at home believe their offspring will not be able to afford to live locally when they leave home, according to a new report by the Chartered Institute of Housing.

Spokeswoman Ceri Lewis of the Chartered Institute of Housing in Yorkshire comments: "The shortage of homes for sale and rent at affordable levels in almost every community is already hitting younger people hard, the average age of first- time buyers now being 31 with help from mum and dad, and 37 without their help."

The chief executive of the Chartered Institute of Housing Sarah Webb, said: "We need to continue to invest in housing and as we make the tough emergency Budget decisions we must remember that the 100,000 homes we aren't building equate to 250,000 jobs and £6 billion in tax receipts back into government.

"If children are to have a chance to live in the neighbourhoods they've grown up in then we must make housing reforms and investment a priority."