Treasury to look at use of state guarantees for infrastructure and housing projects as latest housing figures reveal 11% fall
Homebuilding slumped 11% in the first quarter of the year, with housing associations starts plunging 21%, official figures have revealed.
The figures came as the prime minister used his speech on the economy to indicate he had asked Treasury to look at the possibility of using state guarantees to boost investment in housing and infrastructure.
The Department for Communities & Local Government housing figures for the period from January to March showed the number of housing starts fell 11% to 24,140 on the previous quarter - a drop of 15% on the same period in 2011.
The fall in housing association starts was even deeper, with a drop of 21% to 3,950 compared to the previous quarter and a 40% fall compared to the first quarter of 2011.
Jack Dromey, Labour鈥檚 shadow housing minister said the figures were further evidence of the government鈥檚 failure to 鈥済et to grip with the housing crisis鈥�.
He said: 鈥淸Housing minister] Grant Shapps said in opposition that headlines were easy but that it was much harder to build homes. As housing minister he has been true to his word, great at sending press releases but dreadful at building homes鈥�.
Shapps said the government was 鈥渓aying the foundations for further growth鈥�.
Yesterday in a speech to the Institute of Directors, David Cameron said he had asked the Treasury to consider using state guarantees to 鈥渂oost credit for business, housing and infrastructure鈥�. The move could see the government guaranteeing the risk for specific projects, enabling the private sector to raise finance more cheaply and thereby boosting investment without adding to public spending.
The prime minister said using guarantees was a way of using the 鈥渉ard-won credibility of the government鈥檚 balance sheet to help the economy grow without adding even further to our debt鈥�.
National Housing Federation chief executive David Orr said 鈥渂old and decisive action鈥� was needed to fix the 鈥渂roken housing market鈥�.
鈥淲e are pleased that the prime minister has now asked the Treasury to examine what more can be done to boost credit for business, housing and infrastructure,鈥� he added.
Meanwhile, figures released by the Home Builders Federation yesterday showed that 400 people have made reservations through the Newbuy mortgage guarantee scheme during its first nine weeks of operation.
This is after a sluggish start to the scheme with lenders not signing up as quickly as had been expected.
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