ROOF Blog

The government will struggle to build even half of its target of a million affordable homes by 2020 if the housing budget is not exempted from public spending cuts, a housing campaign group says. If the cuts to the house-building budget suggested by November’s pre-budget report go ahead, the number of affordable homes built by 2020 will be 444,000, says the National Housing Federation. The NHF is calling on Gordon Brown to make the house building budget ‘untouchable’ and give it the same status as hospitals, schooling and policing, areas the government said in November it would ringfence while it cut back spending in other areas.

Windsor and Maidenhead council will announce today a four per cent cut in the charge from April. This will bring the average council tax for a band D property to £996 2010/11, down by £41 from 2009/10. The Local Government Association said that Windsor and Maidenhead’s tax cut was the biggest ever. Most councils are set to increase the charge by between 2.5 per cent and 3 per cent from April. The RPI measure of inflation is currently 2.4 per cent. The local authority has cut more than £1million off the local authority’s budget between 2009/10 and 2010/11 - and handed the saving directly onto council tax payers. Windsor and Maidenhead councillors said they were hoping that the radical overhaul of its finances could form a blueprint for other councils across the UK to cut council tax. David Burbage, the council’s leader, said: ‘We are showing that council tax can go down as well as up. For too long council tax bills have inexorably risen, and there is no correlation between high council tax and good services.’

Frontline services such as social work, meals on wheels and road maintenance may have to be cut to cover the cost of controversial plans for elderly care at home, local authority leaders have warned. The £670 million required to provide free care for those most in need in their own homes — a key government policy — will add pressure to councils already trying to find multimillion-pound savings. A rise in council tax of between 1 and 2 per cent will be needed to meet the cost, while cuts in adult and childrens’ social care services are an ‘unwanted but very real possibility’, council chiefs have said. The draft Bill, set out in the Queen’s Speech in November, was described by Labour peers as an ‘exocet’ on social-care reform and ‘a demolition job’ on budgets, while MPs and care providers have also criticised it for being ill-conceived and uncosted.

Crisis has warned that despite the budget deficit, 75% of the British public want the Government to address the growing gap between rich and poor. A YouGov poll commissioned by Crisis also shows that the majority of people in UK (60% of those with an opinion) say that the recession has made them more worried about the gap between rich and poor and the same proportion want to see the poorest protected from budget cuts as they can least afford to pay. Leslie Morphy, Crisis chief executive said: ‘With the election looming, politicians vying for votes must recognise people’s desire for a fairer society. They must not forget those who are poorest, amongst whom homeless people are some of the most vulnerable. They must pledge to protect them.’

Figures in last week’s pre-Budget report reveal 60,000 low-income families now face paying 90 per cent of any earnings directly to the taxman.

The number of affected families is up from 30,000 last year and is forecast to rise again to 70,000 next year.

The very high tax rates arise from complex rules that mean low income families have their benefits slashed if they take up work.

These so-called marginal tax rates – far higher than those faced by top earners – are blamed for discouraging thousands from seeking work.

The true extent of the financial pain that will be felt by households and public services over the next few years has been laid bare by the Institute for Fiscal Studies (IFS).

Even those on half typical earnings will see their living standards suffer as a result of the Chancellor’s policies, the think-tank warns. 

To protect the ‘ringfenced’ areas of hospitals, schools and the police, there will have to be savage cuts to defence, housing, transport and higher education budgets.

Cuts of almost seven per cent a year, 20 per cent over three years, mark the severest squeeze since the Second World War, tougher than anything in the austerity years of the 1970s or early 1980s.

The IFS analysis of the Chancellor’s pre-Budget report also shows a £76bn ‘black hole’ in the public finances; that fixing it will cost every family £2,400 a year; and that only those on less than £14,000 will be better off as a result of the changes.

Tax rebates for people who ‘go green’ by installing solar panels or wind turbines on their homes or swapping their company car for an electric vehicle will be announced by Alistair Darling tomorrow.

Although his pre-Budget report will include few giveaways as he promises to rein in a £180bn budget deficit this year, the Chancellor will give householders and drivers a financial incentive to play their part in saving the planet.

At present, people who sell electricity to the National Grid are taxed on the income. In future, it will be exempt from tax.

A householder on basic rate tax selling £900 of electricity to the grid from April would receive the full amount, instead of £720 as at present.

In the build-up to the pre-Budget report this Wednesday, Pricewaterhouse Coopers (PWC) says the typical British family already faces a decline of 2.4 per cent, or £300 a year, in its discretionary spending power, after tax, mortgages, food and other essentials.

The best-off will see their spending power cut by as much as nine per cent, almost £5,000 a year, the most vicious assault on their living standards in three decades.

The impact of swingeing income tax and national insurance hikes, VAT increases, expected moves back to more normal mortgage rates and higher petrol and transport costs, thanks to the latest boom in world oil prices, will all conspire to devastate the household budgets of the better-off.

Government spending cuts on construction risk deepening the recession and making it harder for the economy to recover in future, the CBI employers’ organisation have warned.

Every £1 spent on construction generates a £2.84 increase in national income according to a report by the CBI’s UK Contractors’ Group, and cuts would diminish gross domestic product (GDP) to the same extent.

John McDonough, chief executive of Carillion and chairman of the CBI’s construction council, said the sector was likely to be in the line of fire when the government attempts to narrow its yawning budget deficit:

‘The public purse can’t afford what it has afforded in the past, but we need to be prepared for what’s going to happen in the next 12 months,’ he said.

‘Construction makes up around 8 per cent of UK GDP and a similar proportion of employment, but it has been hit hard by the recession.

‘Its rate of redundancy, at 28 per 1,000 employees is the highest of any sector, and the short-term nature of much construction work means that the true decline in employment is likely to be greater.’

Communities and Local Government will reveal before 21 July which of its programmes’ budgets are to be cut to help fund the £1.5 billion housing package, and has suggested the Homes and Communities Agency may bear the brunt. Director-general of housing and planning at the department has insisted that reports that the Decent Homes programme would be plundered are not true. He said he would give details before the summer recess of parliament starts.