THE Tories suffered yet another blow yesterday when the Institute of Fiscal Studies (IFS) criticised plans to extend their controversial right-to-buy policy to housing association tenants.

The extension of the policy to up to 1.3 million householders is a centrepiece of the party’s manifesto — seeking to emulate the electoral success of the original policy that helped sweep Thatcher to power in 1979.

But the IFS warned that the plans could reduce affordable housing and create wider gaps between rich and poor areas of towns and cities.

In particular it said it was concerned over a combination of “considerable uncertainties” over the planned financing of the proposal and the party’s “less than impressive record” of replacing homes bought by council tenants.

The IFS said paying for the potentially multibillion-pounds “giveaway” by selling public assets “would worsen the UK’s underlying public finance position.”

Reducing the stock of housing in the most expensive areas — by selling top-value council properties — could result in a cash boost to social-housing building but would also “create clearer divisions between areas where richer and poorer households are located.”

Defend Council Housing campaign group’s Eileen Short told the Star: “What this is a sign of is the complete lack of underpinning to these announcements.

“If even the IFS starts attacking Tory policy, you know the wheels are coming off.”

She said an estimated £40 billion which should have been ring-fenced for building new homes had been syphoned off by other government departments.

The policy was a “nonsense” and a cynical exploitation of the fears of existing tenants, she claimed.

“They are trying to play divide and rule. Not only is it ridiculous but it is couched in the language of despair.”