English | Cymraeg Tel: 029 2076 5760 Connect: Twitter

Spending Review implications for Wales

Housing escaped the deep cuts that everyone feared in a UK Spending Review dismissed as ‘smoke and mirrors’ by Welsh Government.

Chancellor George Osborne announced a funding floor for Wales of 115% of comparable spending per head in England but only for this parliament. He said the Spending Review would deliver an extra £900m for capital spending in Wales and also announced an in principle commitment to an infrastructure fund for the Cardiff region.

However, Welsh finance minister Jane Hutt said he was giving with one hand and taking with the other:

‘The mix of negative as well as positive consequentials means our spending power will fail to keep track with inflation.  Overall, between 2015-16 and 2019-20 there will be a real terms reduction in our total Budget of 3.6% – a cut of 4.5% in real terms for revenue and an increase in capital in real terms of 4.7%.’

She added:

‘We haven’t got fair funding yet and it is essential that there is an inter-government agreement on the way forward.  The devil is very much in the detail as to how this will work in practice.’

On housing, the Spending Review saw Osborne announce a £6.9 billion investment programme for England focused squarely on home ownership. He also extended the Help to Buy equity loan scheme to cover 40 per cent of the cost of a new home in London.

Some of the funding will come from an increase in stamp duty on buy-to-let landlords and second home owners.

Thanks to projected extra tax revenue, Osborne was able to abandon his cuts in tax credits without making the deep cuts in housing benefit that were feared.

However, housing benefit in the social sector will be restricted to local housing allowance rates for new tenants. This will include applying the shared accommodation rate to single tenants under 35 without children, potentially putting social rents out of reach and hitting supported housing projects.

Community Housing Cymru chief executive Stuart Ropke welcomed the increase in capital spending but stressed that priorities were different in Wales and went beyond home ownership. He went on:

‘Although we welcome the Chancellor’s U-turn on tax credits, all this will do in the long term is delay cuts until the full introduction of Universal Credit. We are especially concerned about the impact of aligning Housing Benefit with Local Housing Allowance for new social housing tenants. Capping the rent at shared accommodation rate for under 35s will have a significant impact on single young people without children who require access to supported or social housing.

‘We will continue to work with Welsh Government ahead of the Welsh Draft Budget announcement on 8th December.’


Sign up to our email newsletter

Every two months we'll email you a summary of the latest news & articles on the WHQ website. Better still, if you're a fully paid up magazine subscriber, you'll get access to the latest members-only articles as well.

Sign up for the email newsletter »

Looking to advertise in our magazine?

Advertising and sponsored features are a great way to raise your profile with our readership of housing and regeneration decision makers in Wales.

Find out more »