The National Housing Federation has cautiously welcomed the Government's decision to reduce the level of cuts to the 2010/11 Communities and Local Government (CLG) budget,by around £400m.

Chief Secretary to the Treasury Danny Alexander announced yesterday that only £220m will be cut from the CLG budget, to make up for a £780m black hole in the previous government's commitments', instead of a feared reduction of around £610m.

The lower than expected level of savings will be found from the Homes and Communities Agency's budget, with George Osborne and David Laws having promised in May only to safeguard £170m of the £780 million deficit.

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The cuts of £220m are being made to the previous government's £1.5bn housing pledge, announced last summer, which was meant to channel funds from other departments into housebuilding.

The Coalition Government claims £780 million of this funding has never been received.

Federation Director of Campaigns and Neighbourhoods Ruth Davison said: "Ministers have clearly listened to the concerns raised by the Federation, and others, about the damage huge in-year cuts would make to the building of affordable homes and decided to reduce the housing budget by less than feared.

"While any cuts to the budget are unfortunate, we understand that public money is tight – and we are keen to work with ministers and others to ensure that through flexibility and innovation we are able to safeguard the provision of affordable housing."

(CD/GK)