England’s affordable housing scheme falls 32,000 homes short of target

A £21bn government programme to build more affordable housing in England is missing its target by 32,000 homes with big shortfalls in rural areas, MPs have said.

The affordable homes programme also risks falling further behind because Michael Gove’s Department for Levelling Up, Housing and Communities “does not seem to have a grasp” of risks ahead including soaring construction inflation, according to the public accounts committee. A new below-inflation cap on social rent increases could also limit new building, it says.

The programme involves grants distributed to housing associations but under the 2016 programme only 241,000 of the target of 250,000 homes will be built. In the latest wave, started in 2021, only 157,000 of the target of 180,000 will be built. About 1.2 million households are on waiting lists for social housing in England, the highest number since 2016, and there are rising concerns about safety after the death of two-year-old Awaab Ishak from mould in a social housing property in Rochdale.

On Tuesday, the housing ombudsman levied its latest fine on a social landlord for mould – ordering Orbit housing to pay a tenant £5,000 over its handling of reports of damp and mould due to multiple failures to complete repairs over two years.

“The human cost of inaction is already affecting thousands of households and now the building programme is hitting the challenges of increased building costs,” said Meg Hillier, the chair of the committee. “This does not augur well for ‘generation rent’ or those in desperate need of genuinely affordable homes.”

Homes England, the main agency that distributes the funds, has made grants for only 6,250 rural homes, about half the number required under the policy. In 2020, there were more than a quarter of a million people on a housing waiting list in rural areas but fewer than 4,500 social homes were built in 2019-20, according to the Country Land and Business Association.

The shortfall identified by the cross-party Commons committee comes as Gove faces allegations of “negligence” from builders in abandoning local housebuilding targets in the face of Tory backbench rebellion this week.

In a move attacked by critics as enshrining nimbyism, Gove’s department said targets would only be “a starting point with new flexibilities to reflect local circumstances” and “new development must have the support of local communities”. Councils backed the move and said it was right that “top-down algorithms and formulas can never be a substitute for local knowledge”.

But the industry lobby group, the Home Builders Federation, fears it could result in 100,000 fewer homes being built annually. Builders started work on 180,000 homes in England in the last year, according to official data.

“If ministers fail to stand up to the anti-business and anti-development section of the Conservative party, it is inevitable that housing supply will fall dramatically, costing hundreds of thousands of jobs, slashing GDP and preventing even more people from accessing decent housing,” said Neil Jefferson, the HBF managing director.

The MPs also highlighted the government’s decision to demand half of the “affordable” homes built under the 2021 programme were for ownership rather than rental, given building homes for social rent offers best value for money by slashing the need for costly temporary accommodation.

In London, a grant to build a new social home is more than paid back by housing benefit savings over 60 years and is 69% repaid in 30 years, according to the government’s own sums.

David Renard, the housing spokesperson at the Local Government Association, said: “The social housing supply is not sufficient to meet the current housing demand, which is why we want to see long-term plans to give councils powers to build 100,000 high-quality, climate-friendly social homes a year.”

A spokesperson for the Dpartment for Levelling Up, Housing and Communities said: “The secretary of state agrees with the committee that we must build more homes for social rent. Increasing the number of genuinely affordable homes is central to our levelling up mission and we’re investing £11.5bn to build more of the affordable, quality homes this country needs.

“Before the pandemic we had reached the highest rate of housebuilding in 30 years and since 2010 we have built more than 630,000 affordable homes in England, including 162,000 for social rent. But there is much more to do and we look forward to working with the committee on their recommendations.”