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New delivery target for Affordable Homes Programme expected shortly as government admits ‘very unlikely’ to hit original aim
The government has blamed the cost of borrowing and materials on the need to revise down its target for its flagship Affordable Homes Programme (AHP) 2021-26.
The admission was made by the Department for Levelling Up, Housing and Communities (DLUHC) in an appointment letter to Emma Payne, who became the senior responsible owner for the AHP last month.
The letter read: “The AHP was launched in September 2020 with a public commitment to invest £11.5bn to deliver up to 180,000 affordable homes right across the country should economic conditions allow.
“We have already identified that the programme is very unlikely to deliver 180,000 homes due to economic changes, and so we note that you will confirm new delivery targets shortly when the overall figures are ready to publish.
“Any proposed changes to scope which impacts on this intent or the realisation of benefits must be authorised by the relevant ministers, HM Treasury and the department’s Investment SubCommittee and may be subject to further levels of approval.”
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In response to the letter, a DLUHC spokesperson said: “The housing sector has experienced an increase in the cost of borrowing and materials due to wider economic pressures.
“The government is working with its partners to ensure that the programme is delivering effectively in light of these economic challenges. We will confirm new delivery targets shortly.”
Concern with how the current AHP is being delivered and whether it will hit its target has been sounded for some time.
Just last month, the UK government’s champion for modern methods of construction told delegates at the MIPIM conference that the AHP needs to be completely reset.
A review of the AHP published in September last year found it had delivered fewer than a third of its completions target so far, with just 4% for social rent.
According to a Homes England-commissioned review, 102,300 – or 79% – of the programme’s completions target of 130,000 had been approved by March 2021.
The majority of these, around 60,000, were allocated via the continuous market engagement route, with the rest delivered through strategic partners.
A total of 34,780 have been completed, 96% of which have been for affordable homeownership and affordable rent. Just 4% were for social rent.
At the same time, there have been 59,300 starts. All housing starts funded by the programme are to be achieved by March 2023, and all completions by March 2025.
This evaluation of the AHP contains similar criticisms to a National Audit Office (NAO) review in September 2022. NAO described the AHP as a poorly designed scheme marred by inadequate oversight, of which the targets set were unachievable and, ultimately, it was a programme that lacked the necessary incentives to deliver homes in areas of highest need or unaffordability.
In its quantitative analysis, this new review found that delivery had not been concentrated in places with more pronounced affordability pressures.
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