Chancellor Philip Hammond made a point of ‘hamming it up’ for the Tory gallery during his budget speech this afternoon, pausing frequently to allow clearly pre-planned cheers and cries of ‘more’ from the Tory back benches.
Perhaps these unaccustomed attempts to portray a personality put him off – because his maths when he reached a supposed ‘boost’ to housing was a million miles away from the arithmetic he used less than two years ago.
And this was not some peripheral matter. According to Hammond, it was in an area that is apparently so vital that he claimed that without it, it’s impossible for the government to solve the UK’s productivity shortfall or to give ‘British people the high standards of living [they] deserve‘:
£500 million sounds a lot – but to ‘unlock’ six hundred and fifty thousand homes? That works out at only £769 per home.
Had Hammond come up with a new form of ‘affordable housing’? No.
But Hammond said the cash would ‘unlock’ the homes via the ‘Housing Infrastructure Fund‘ (HIF) – so if he’s just talking about laying roads, pipes and cables to areas where housing can be built, perhaps that’s a reasonable amount?
No – according to the ‘2016 Hammond’.
When Hammond announced the creation of the HIF in late 2016, the fund was allocated an initial amount of £2.3 billion – and the government said this would ‘help to deliver up to 100,000 new homes‘:
So the maximum expectation for what £2.3 billion would ‘unlock’ was 100,000 homes. The simple arithmetic makes that an amount of £23,000 per home – to build roads and schools, lay pipes, cables, rail track and whatever other infrastructure is needed to make new housing viable.
Yet today, Hammond announced just over a fifth of that amount in additional spending – £500 million – but claimed it would unlock six and a half times as many homes.
£769 per extra home, compared to an initial allocation of twenty three thousand pounds in the initial plan.
Clearly there was a major problem with this Budget claim.
But the reality of the Chancellor’s claim – in an area Hammond himself described as absolutely essential for the UK’s productivity and the living standards of our citizens – was considerably more murky than mere shoddy arithmetic.
The SKWAWKBOX contacted the Treasury for an explanation of this enormous difference between the originally-claimed efficiency and Hammond’s vastly lower cost per claimed home now.
After considerable confusion at the Treasury end – the initial response was ‘there’ll be a formula somewhere for it’ – a Treasury spokesperson called back with an explanation that actually explained very little:
What the Chancellor meant today was that the additional £500 million promised – together with the original £5 billion allocated – would unlock 650,000 new homes in total. He misspoke when he said the 650,000 homes would be on top of those the existing fund would already unlock. We’ll have to change the written record.
When asked where the £5 billion figure came from when the government’s own introduction to the RIF only mentions £2.3 billion, or how 100,000 homes for that £2.3 billion would morph into six and a half times as many new homes for an investment of only just over twice as much, the spokesperson was unable to provide any clarification.
Whichever version of Philip Hammond’s claim you look at, the maths doesn’t add up. Was he simply hoping £500 million and 650,000 new homes would sound impressive and nobody would scrutinise too closely?
And why did the Treasury’s subsequent ‘explanation’ rely on a funding figure more than twice as high as the government’s documentation states – and why was the Treasury unable to explain either that difference or the sudden leap from 100,000 new homes to a current claim of 650,000 from a spend that basically only doubled, even if the figure is reliable?
If Hammond so seriously ‘misspoke’ on such a crucial – Hammond’s own claim – matter, how many other times did he ‘misspeak’ and mislead the nation?
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