DLUHC admits handing £1.9bn of housing funds back to Treasury

The government has confirmed that Michael Gove’s department has handed almost £2bn of housing cash back to the Treasury after failing to spend the funding in the 2022/23 financial year.

The department has confirmed a report in the Guardian that the department had underspent by £1.9bn and was handing the money back to the chancellor, with the cash including £255m of affordable housing funding given back to the Treasury and £1.2bn of Help to Buy money.

However, officials at the Department for Levelling Up, Housing and Communities (DLUHC) said much of the funding will be re-profiled to be spent in later years, and that the government’s overall commitment to funding affordable housing remains the same.

According to freedom of information requests seen by the Guardian, and confirmed by DLUHC to Housing Today, the department underspent by more than £600m on the affordable housing programme in the year and was forced to hand £255m back to the Treasury, with £363m being “re-profiled” for later years.

In addition, the paper reported it had handed back £245m of funding for building safety repairs and £1.2bn of money allocated for Help to Buy. As the Help to Buy scheme has now closed, the money cannot be re-profiled to be spent at a later date and is now lost to the department.

A previous account of the department’s 2022/23 spending provided for the levelling up, housing and communities select committee said the affordable housing underspend happened as “economic volatility led developers to slow or pause work”.

That submission had also revealed the department had underspent in other key capital programmes related to housing, including the Housing Infrastructure Fund, the Brownfield Land Fund, Brownfield Infrastructure Fund and First Homes scheme. However, a “full refresh” of the Housing Infrastructure Fund was being developed.

The news comes as the government last month announced an overhaul to the Affordable Homes Programme rules after revealing that Homes England missed its delivery targets for the 2016-23 programme.

The Labour Party jumped on the latest revelations, with shadow housing secretary Lisa Nandy accusing the government of having “simply given up” on trying to tackle the housing crisis.

She told the newspaper: “Not content with slashing housebuilding by scrapping housing targets, stalling on renters’ reform or rowing back on their promises to leaseholders, ministers are either too incompetent or too out-of-touch to consider it a priority to fix dangerous buildings or build new affordable homes in the middle of a housing crisis.”

A DLUHC spokesperson said: “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 2 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.”

Officials said that £700m of Affordable Homes Programme funding is being moved to later years within the current spending review period, to 2024/25, with a further £500m having been moved into funding the construction of homes in the next spending review period.

Joshua Bond, founder and managing director of Bond Land, said: “Today’s revelations repeat the message that housing is simply not a priority for this government.

“It is the latest blow to housing developers following scrapped housing targets and a failure to tackle a planning system that’s not fit for the modern age head on. Projects simply won’t get built without central government support for the sector and, in particular, freeing up high-quality land for development.”