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Impact for housing

Emergency budget 2010

Housing has taken the brunt of austerity measures designed to reduce Britain’s fiscal deficit in the Emergency Budget announced on the 22 June

Housing benefit

In singling out Housing Benefit for cuts of up to £1.8 billion a year, George Osborne spoke of the need to control costs that are currently “completely out of control”.

Measures to reduce Housing Benefit include:

  • Changing the percentile of market rents used to calculate Local Housing Allowance rates and increasing these by CPI from 2013-14.
  • Capping the maximum Local Housing Allowance for each property size (£250-400 per week depending on number of bedrooms).
  • Time limiting the receipt of full housing benefit for claimants who can be expected to work.
  • Restricting housing benefit for working age claimants in the social sector occupying a larger property than is warranted.
  • Increase of £40m in discretionary housing payments.

Capital spending

The Coalition Government has pledged to maintain overall capital spending levels on “projects that offer significant economic returns to the country”. It is unclear if housing fulfils this definition or not.
Government departments

All government departments will face real term cuts of 25 per cent over the next four years (except health and foreign aid, which have been ringfenced).


Measures likely to impact on residents

  • The standard rate of VAT will rise from 17.5 per cent to 20 per cent from 4 January next year. The Labour Party argues that any VAT increase would hit the poorest in society the hardest.
  • The tax-free personal allowance on income tax will increase by £1,000 in April 2011 to £7,475. This is expected to give earners up to an extra £170 a year and take 880,000 people out of the tax system altogether.
  • The Basic State Pension will be linked to earnings from April next year. It will rise in line with earnings, prices or 2.5 per cent, whichever is the greater.
  • The Saving Gateway, a scheme proposed by Gordon Brown to help lower income families by adding 50p for every £1 saved, is to be scrapped by the Coalition Government.