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19 September 2018

With £2bn for pledged housing associations, could the Autumn Budget topple the government?

Having already announced £20bn for the NHS, the Chancellor is going to struggle to find the money for the extra spending commitments.

By Stephen Bush

Theresa May will announce £2bn of extra funding for housing associations to build more social and affordable housing units. In a major step forward for housing associations, the announcement provides a measure of certainty about funding arrangements for a full decade. That’s almost as important as the extra capital from the government, because it gives housing associations a greater ability to plan for the future and to raise funds elsewhere as a result.

It’s the biggest visible sign of why housing associations are the only third sector organisation to feel more warmly disposed to May’s government than they did to David Cameron’s. Don’t forget that it was only a few years ago that housing associations and Downing Street were at loggerheads over Cameron’s plan to force them to sell off their housing stock.

Part of the background to today’s speech is May’s ongoing need to uproot whatever David Cameron and George Osborne did. But the result is still a significant improvement for housing associations, albeit one that falls short of the expansion in house-building planned by Labour.

There are two other political calculations here. The big one is, of course, timing: as with the extra £20bn for the NHS, announced in advance of the health service’s 70th anniversary in order to prevent the milestone being marked by stories about whether or not the NHS would make it to its 80th birthday, this announcement is partly about trying to spike Labour’s guns on housing in advance of their conference.

Which seems like a misstep for three reasons.  Firstly, Labour are going to have a number of popular policy announcements at conference and May’s housing announcement, however worthy, is not going to stop the opposition having a good news cycle. (The opposition might well stop the opposition having a good news cycle, but that’s a topic for another time.)

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Secondly because it further increases the amount of unadulterated bad news that Philip Hammond is going to have to announce in his budget in the autumn (these extra spending commitments are going to have to come from somewhere). That there’s a real risk the government will keel over thanks to Chequers means we’re perhaps forgetting the equally real risk the government keels over as a result of its budget.

But the third problem strikes at the heart of Conservative messaging and indeed their planned conference slogan; Opportunity for All. Almost everything the Conservative leadership says makes it sound as if the United Kingdom is heading for the sunlit uplands and that the time of public spending cuts is over. The reality is, we are almost certainly closer to the next recession than the last one, even assuming there is no immediate economic hit from Brexit, there are still painful cuts to come. The government may live to regret the raised expectations of its “happy days are here again” tone.