Any government cuts to housing investment will lead to widespread job loss and plunge the country into an even deeper housing crisis, Shelter has warned.

New analysis by Shelter shows that for every pound cut from public investment in housing, the wider economy will take a hit of at least £3.50.

As the Treasury prepares to announce deep spending cuts across government, Shelter is warning that £610 million of funding for new homes this year is at risk.

This, coupled with the £150 million of cuts to housing announced by the Chancellor in May, will mean 12,625 less homes built, 19,000 job losses and a cost of £2.7 billion to the economy.

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Campbell Robb, Chief Executive of Shelter, said: "On top of the 1.8 million households on waiting lists and the million children in overcrowding who desperately need new homes, this research also shows how crucial house building is to our economy, providing vital jobs and economic growth.

"With the private sector hit hard by the recession, public housing investment has been critical in getting homes built. Cuts now would cause one of our key industries to continue to flounder, bringing house building to a standstill at a time when the need for more homes has never been greater.

"As Government decides where the axe will fall, it must consider the colossal impact that cutting housing investment will have. If the overarching aim is to stabilise our already fragile economy, cuts now just don’t make economic sense."

(CD/GK)