Home-building figures could fall below 1923 levels

So many building projects have been abandoned since the coalition Government came to power that the number of new houses built next year could fall below 100,000 for the first time since 1923.

Almost 85,000 homes that were at the planning stage are not going to be built because of the abolition of Labour's regional housing targets, according to a report commissioned by the National Housing Federation.

Most of the houses that were going to be built would have been in the south-west and east of England, where job prospects are better than in the north. Inevitably this will make it harder for people in the north to move to where the jobs are when government cuts start to bite.

Research carried out for the Federation by Tetlow King Planning found that one council alone, North Somerset, had dropped plans for 10,750 homes. In the south-west region as a whole, the number of planned new homes has fallen by 59,750.

Exeter City Council has reduced its target for new homes by 3,000, Bristol council by 6,000, and Torbay by 5,000 homes, while North Hertfordshire Council and Stevenage Borough have suspended plans for 9,200 homes, according to the report.

Plans for 20,540 new homes across the east of England, plus another 1,860 in the south-east have also been shelved. Based on the research, the Housing Federation has estimated that there were plans for another 2,000 more homes in the Midlands and the North of England that have also gone.

The figures are thought to be particularly high in the south because the regional targets were drawn up later there than in other regions, and local councils had not yet had the chance to challenge them.

The only part of England that is not likely to affected is London, where housing is controlled by the Mayor, Boris Johnson, who is committed to building extra homes. But the housing crisis is not directly caused by the need to cut budgets. It arises from a decision made by the Conservatives nearly a year ago to reduce central bureaucracy and give more power back to local councils.

They warned in August 2009 that, if elected, they would abolish the targets which the Government previously set for the number of houses that had to be built in each region.

Defenders of this system say that it is the only way to combat "nimbyism", as local councils are more likely to feel pressure from local residents who do not want new homes springing up near their properties than from the homeless who want to be housed.

But the Communities Secretary, Eric Pickles, denounced regional targets as "a terrible, expensive, time-consuming way to impose house building."

He abolished them on 6 July, but local authorities had already begun tearing up plans for new housing in May, when Mr Pickles wrote to them to confirm that the regional strategies were on the way out. The research commissioned by the Federation found Mr Pickles's letter in May had a "very significant impact" on reducing local authority house building targets.

Only 123,000 homes were built in 2009/10 – the lowest number since 1923 – but that figure could now fall below 100,000 for the first time in nearly 90 years. There are 4.5 million people in England on council waiting lists.

David Orr, chief executive of the Federation, said: "With more than 4.5 million people on waiting lists, and 2.5 million people in overcrowded conditions, this is no time to downgrade the need for new homes. To prevent a slump in the number of desperately needed new homes, the Government should urgently replace the regional planning system with transitional arrangements."