Cuts 'threaten affordable homes in London'

Housebuilder Galliford Try could be the biggest victim of social housing cuts looming this week, an industry analyst warned today.

The National Housing Federation has warned that Draconian cuts to the £8.4 billion budget could virtually halt the building of affordable homes in London and the South-East.

Panmure Gordon analyst Mark Hughes said most major housebuilders were exposed to social housing budgets but added that Galliford Try was the bigger player in the sector.

Affordable housing also accounts for around 15% of business at Barratt Developments.

"Social housing tends to be low margin but good cashflow for the major builders," Hughes said.

A source close to Galliford Try said it was "realistic" about prospects for social housing markets, but added that the firm had anticipated the cuts for the last year.

Social housing accounts for about £50 million of its £1.2 billion revenues.

Construction Products Association economics director Noble Francis said the cuts could cost more jobs in an industry attempting to fight back from its worse year since the 1920s.

He said: "If you are a housebuilder at the moment what incentive is there to increase capacity when you have an uncertain private housing market and the public budget is being slashed?"