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Take 400,000 homes pledge with a pinch of salt

In terms of construction, the biggest elements of the Spending Review were around housing and infrastructure.

George Osborne trumpeted 400,000 new ‘affordable’ homes, but 200,000 of this is the previously announced Starter Homes scheme and 135,000 will come from the Help to Buy Shared Ownership scheme, which was already in existence but will now be available for households with an income of £80,000 (or £90,000 for London).

In addition, the numbers of new homes from both policies also assume no substitution effects, which is highly dubious to say the least.

“For infrastructure, it’s good news overall”

Starter Homes and new homes purchases under the Help to Buy Shared Ownership scheme are likely to be, to some extent, covering purchases that would have occurred anyway.

So take the 400,000 figure with a large pinch of salt.

In addition, the chancellor announced London Help to Buy, providing a 40 per cent equity loan interest-free. This will help keep demand and house prices rising in the capital.

As for infrastructure, it’s good news overall.

Lesson learnt

My main concern coming into this Spending Review was that capital investment would take a hard hit under the banner of austerity.

However, the government appears to have learnt from when it first came to power with the coalition, cutting capital investment and then, unsurprisingly, finding that UK economic growth was adversely affected.

“Some dark clouds linger on the horizon that are worth noting”

Capital budgets for most departments appear to have been maintained and increased considerably for the Department for Transport, due to a combination of the previously announced £15bn Roads Investment Strategy and High Speed 2.

However, some dark clouds linger on the horizon that are worth noting.

Excluding HS2, capital funding of Network Rail will fall from £7.4bn in 2016/17 to £4.3bn in 2018/19 and the public sector grant to Transport for London will be phased out by 2019/20, saving George Osborne around £700m.

Noble Francis is economics director at the Construction Products Association

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