The Government is putting short term political and economic considerations before the interests of some of the poorest in society, the National Housing Federation (NHF) has said.

Representing England's housing associations, the Federation says the Government's plans to cut the income for social housing by up to £260 million next year could lead to a reduction of 4000 new affordable homes every year – at a time when five million people are languishing on waiting lists.

And the plan to cut the income of associations comes just weeks after Prime Minister, Gordon Brown, announced that £1.5 billion had been found to fund the delivery of 20,000 additional homes – the vast majority of them by housing associations themselves.

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NHF Chief Executive David Orr said: "We know that public spending is tight and you get a sense that in order to fund Building Britain’s Future the Government shook every sofa in Whitehall to see what fell out. But then, having accumulated enough to make an impact, they undermine the capacity of the people they need to deliver it.

"Reducing rents by 2% next year won’t just leave a hole in capacity for one year, but for ever. Not everyone will pull back from building – they will find the cuts from elsewhere – but that hole in capacity translated into homes is 40,000 in a decade. That's 40,000 safe secure places for 40,000 families to thrive."

The rent increases that housing associations can levy on their tenants are limited by a formula of September's Retail Price Index (RPI) plus a half a percent each year. Despite the fact that the formula does not mention cuts at all, the Government says it’s being generous by limiting cuts to 2% against a Treasury predicted RPI of minus 3% for this September.

A slowdown in building would also have a knock on effect on the economy, with construction jobs being lost and apprenticeships being cut. The Federation has now written to the Prime Minister to highlight the sector's grave concerns about the threat to the delivery of new social homes.

(CD/KMcA)