The government and the Housing Corporation are at loggerheads over a request by the ODPM that 拢200m in development grant be set aside in 2005/6 to pay housebuilders for social housing.
The development funds would come from an overall pot of 拢350m that ODPM ministers have requested be held back from the corporation's 2005/6 拢1.67bn development budget.

An ODPM spokeswoman said the 拢150m left over would be used "as a precaution to cover any problems arising from the corporation's new approach to investment."

Senior housing sources branded the ODPM plan to retain 拢350m "ludicrous" and "bonkers". One said: "The corporation thinks this is totally unrealistic. It would represent over 10% of its total 拢3bn pot for the next two years."

The controversial proposal to pay social housing grant to housebuilders is set to be included in the Housing Bill, due to be published before Christmas.

The ODPM this week dropped a broad hint that arm's-length management organisations would also be able to bid for the 拢200m, saying it was open to "non-RSLs and self-financing ALMOs".

In a separate twist, it also emerged this week the ODPM has held a series of discussions with senior private sector figures that would see the government pay a subsidy to encourage housebuilders to use off-site manufacturing techniques.

A source close to the discussions said: "It is an idea that has been floated. Some modern methods of construction are more expensive.

The view held by housebuilders is that the ODPM is already encouraging RSLs to do this, so why not them as well, given they have much bigger programmes than associations. The ODPM concern is that it will be seen as subsidising private sector research and development spending.

An ODPM spokeswoman said: "We have been looking at the barriers to the delivery of OSM housing, but we haven't drawn any conclusions yet."

Housing builders and developers are also gearing up to launch a series of housing associations and not-for-profit bodies to get social housing grant.

It is understood that a number of the bigger builders have been thinking about this for a few years.

Taylor Woodrow, the country's fourth-biggest housebuilder with a turnover of 拢1.1bn last year, released a statement which said: "We are seriously considering launching a housing association arm."

Meanwhile, today's deadline for housing associations to submit bids for the next two years of corporation development funding has been extended to Sunday.

Source

Housing Today