Government insists it has not cut affordable housing funding

The government has sought to calm fears raised after official documents published today appeared to suggest it had significantly watered down planned spend on new affordable housing.

A press release issued alongside prime minister Boris Johnson’s covid recovery speech today, in which he urged the country to build its way out of the economic crisis, said that £12bn of funding for affordable housing would be spent over the next eight years, rather than the next five, as previously announced.

That would have equated to a real terms cut in annual spending of almost 40%, down from £2.4bn to £1.5bn, and led to the chief executive of Shelter branding the announcement a “bad deal”.

However, government officials have now made clear that the spending profile of the £12bn funding package, originally announced in the March Budget, has not been changed, and that the confusion comes from a discrepancy between when the money is officially “spent” by government, and when homes are delivered.

This is despite the fact the government’s Planning for the Future document clearly referred to a £12bn five-year funding package, while today’s press release referred to an eight-year settlement.

The £12bn package announced by Rishi Sunak in March included £9.5bn of new money to be spent between 2020/21 and 2025/26, alongside other previously announced funding, including a £2bn spending round announced by former prime minister Theresa May, which will fund homes to be delivered up until 2028/29.

A government spokesman said in a statement: “The £12bn will be spent over the next five years and this will deliver up to 180,000 new affordable homes. The majority of homes will be built within the first five years and the rest by 2028/29. This is in line with what was announced at Budget - there has been no cut in funding or delay in delivery.”

The government was forced to send out the clarification statement after Shelter chief executive Polly Neate led an outcry against the presumed cut, with the Labour Party Campaign for Council Housing also criticising the move. Neate had said: “With the housebuilding sector teetering on the brink, we need rapid investment but instead the government has slowed the Affordable Homes Programme for three years. This isn’t a new deal, this is a bad deal. Hundreds of thousands of new homes and jobs are at risk.”

The £12bn programme formed part of Johnson’s announcement today, despite not being new money. However, the government did make clear for the first time that it expected 180,000 affordable homes to result from the funding round.

In addition, the government said it will launch a 1,500-home pilot of its First Homes programme of houses sold to first time buyers at a 30% discount, and put an extra £450m into the Home Builders Fund. It also said it had allocated £400m from the brownfield land fund for projects in the West Midlands, Greater Manchester, West Yorkshire, Liverpool City Region, Sheffield City Region, and North of Tyne and Tees Valley to support around 24,000 homes.

The housing funding was announced alongside a series of planning reforms, and a promise to boost infrastructure construction with an investment of £5bn.

Johnson (pictured, right) said in his speech that an infrastructure revolution “will allow us to end that other chronic failure of the British state - decade after decade in which we have failed to build enough homes.”

London’s Labour deputy mayor for housing, Tom Copley, criticised the First Homes announcement, saying that First Homes would be available to just 2% of Londoners, calling on the government to spend money instead on social rented housing.