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DLUHC underspend could have funded 5,000 new affordable homes, says CIH
An analysis by the Chartered Institute of Housing (CIH) estimated that 5,000 new affordable homes could have been funded from part of the £1.9bn underspend reported by the housing department.
The Department for Levelling Up, Housing and Communities (DLUHC) hit the headlines yesterday after The Guardian revealed it had handed back hundreds of millions of pounds budgeted for 2022-23.
For the CIH, the real concern was the £0.5bn that could have been spent on affordable homes and building safety work.
Reports suggested that the government handed back £255m (about 8%) of the programmed spending on the Affordable Homes Programme (AHP) for 2022-23.
There was also a £245m underspend in building safety. The CIH described this as “a devastating blow and a real concern considering the urgent work required to bring all high-rise buildings up to good safety standards after the Grenfell Tower fire”.
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DLUHC maintains that the surrendering of cash in this way and reprofiling are a normal part of government finance.
This is because it provides departments with flexibility to manage their pressures between years and the government with the ability to target funding in areas that need it.
But one source close to the government told Inside Housing that Homes England could be being set up as a fall guy for poor government decisions and Treasury spending controls.
The CIH pointed out that with “record numbers in temporary accommodation”, this is funding that “the social housing sector urgently needs more funding to build new social rented homes”.
The biggest area of underspend at DLUHC was in the Help to Buy scheme at £1.2bn, which the CIH said was “noticeable”.
This is because they are loans that would have been repaid in a few years anyway, so this money could not be reallocated to fund affordable housing in the form of grants under Treasury rules.
This was confirmed by DLUHC. It said: “This programme is time limited and demand led so is not suitable for reprofiling.”
John Perry, policy advisor at the CIH and editor of the UK Housing Review, said: “With record numbers in temporary accommodation, the social housing sector urgently needs more funding to build new social rented homes.
“The underspend of £355m could have financed at least 5,000 new homes. We urge the government to put that back into the Affordable Homes Programme so they can be built soon.”
The government explained that it must classify any funding changes as part of the next spending review as a surrender under the technical reporting guidance. However, it maintains its commitment to funding the AHP and other programmes in full.
A DLUHC spokesperson added: “These are multi-year funding programmes that are being spent flexibly, meaning some money can be moved into future years depending on demand and the wider economic climate.
“We have a strong record on housebuilding – with more than two million homes delivered since 2010. Our target of delivering 300,000 homes per year remains and we are fully committed to funding and delivering our programmes that help us meet that target, including the £11.5bn Affordable Homes Programme.”
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