CUTS to affordable housing programmes and scrapping local targets will cause a slump in housebuilding and cost thousands of jobs, it has been claimed.

Several local authorities have already postponed work on their core strategies, which set out how many homes they plan to build and where, following the coalition Government’s decision to scrap the South East Plan.

This committed Sussex councils to provide 116,000 new homes by 2026, including 11,400 in Brighton and Hove.

Instead, councils will be expected to set their own targets, which housebuilders fear will be far lower than what is actually needed.

Meanwhile funding to the Homes and Community Agency (HCA) has been slashed, with planned developments put on ice as a result.

A scheme to build 55 homes – 25 of which were affordable – in North Bersted, near Bognor, is on hold after it lost £4.137 million “Kickstart” funding from the HCA.

The number of homes being built will also be curtailed by the decision to outlaw “garden grabbing” – where homes are built on land attached to existing domestic properties.

This accounted for 50% of all new UK homes between 2005 and 2008 and is believed to have been especially popular in rural parts of East and West Sussex.

If housebuilding is allowed to decline, the British Housing Federation claims it will not only drastically cut the number of affordable homes but will have a devastating effect on employment levels. It estimates that for every house built, 1.5 full-time jobs are created as well as up to four more in the supply chain.

Keith Exford, chief executive of housing association Affinity Sutton, the largest landlord in Brighton and Hove outside the city council itself, said: “The combination of low confidence in the economy, a scarcity of mortgage finance, uncertainty about a newplanning system and limited public investment could spell catastrophe for the housebuilding industry.”

Chichester District Council’s core strategy committed it to building 480 homes every year while Mid Sussex aimed for 855.

Both authorities confirmed to The Argus that work on the strategies has been suspended until the Government outlines new planning legislation, which is expected to happen later this year.

Brighton and Hove City Council has asked for public examination of its core strategy, which had provisions for 570 new homes each year, to be delayed for the same reason.

It is believed that, instead of imposing topdown targets, the Government will offer financial incentives to build new homes.

They would be allowed to keep 100% of the council tax generated for new homes for the first three years, which would be matched by central Government.

For affordable housing, this would rise to 125%.

However, Paul Burgess, a director of Hove-based planning consultancy Lewis & Co, which works alongside several housebuilders across Sussex, doubts this will result in enough houses being built.

He said: “While empowering councils in this way sounds like a positive move in theory, it is difficult to envisage a sufficient number of dwellings being built by relying purely on incentives."