Jim Pickard Cut of the Day: National Affordable Housing Programme

John Healey, shadow housing minister, reckons that £450m has already been chopped from the government’s spending on housing since the election. That, he says, will cost about 6,000 new homes and a similar number of jobs.

Some free market Tory MPs may want to go even further. Why not cut the entire “National Affordable Housing Programme”, designed to produce more social housing* via grants to housing associations? The NAHP also provides five different “HomeBuy” schemes which subsidise first-time buyers and low-income workers to purchase homes.


DCLG has £6.2bn a year of capital spending, most of which goes towards housing. The National Affordable Housing Programme is £2.48bn of that in the current year.

The case for keeping it

Key workers and first-time buyers struggle to afford their own home after UK house prices soared in the last decade. That can have a damaging impact on labour markets. With councils having failed to build many new houses in recent years, housing associations have taken up the slack.

Arguably the government has a moral responsibility to provide shelter for those too poor or infirm to access the private market. Long waiting lists (about 3m) suggest that supply has not met demand.

As for HomeBuy schemes, the theory is that greater home ownership, even partial, instals a sense of civic duty in people – as Margaret Thatcher argued when she sold off Britain’s council housing stock. The housing shortage is a key concern for voters.

The case for scrapping it

Labour’s attempt to influence house prices by encouraging more housebuilding was always doomed to failure because its efforts would always be dwarfed by the sheer size of the overall housing market. While more social housing is an admirable goal, it is arguably a less urgent priority than, for example, police or schools. The newbuild programme could be paused and then restarted when financial conditions allow.

If there is a genuine shortage of homes the housebuilders will eventually produce more stock, a proportion of which will – by law – be “affordable”.

Meanwhile HomeBuy schemes have created moral hazard. By giving a leg up to people to buy a home, the state has effectively bribed people to enter the housing market at a time when prices seem as likely to fall as to rise. Will they all be grateful? As for “key workers”, there is always another option; renting from the private sector.

* The NAHP is administered by the Homes and Communities Agency, a large quango