Government is likely to fall short on its affordable homes housebuilding targets, says the Public Accounts Committee in a new report.
The Government is likely to deliver 32,000 homes short of the aims of its 2016 and 2021 affordable homes building programmes.
The Department for Levelling Up, Housing and Communities admits it does not expect to deliver the intended benefits of the 2021 programme and has already downgraded its forecast, expecting to achieve 157,000 new homes in its 2021 programme of house building against a public target of up to 180,000.
The Committee says that DLUHC does not seem to have a grasp on the considerable risks to achieving even this lower number of homes, including construction costs inflation running at 15-30% in and around London.
Chair of the Committee, Dame Meg Hillier MP, said: “The Government knows affordable rented homes offer the best value for money. Many people in high-cost areas simply can’t afford to rent privately or buy their own home and there’s a desperate need for affordable, secure rented homes. But amid all the building targets there isn’t one for affordable or socially rented homes as part of government’s overall housebuilding targets.
“Local authorities know where and what homes must be built to address the national housing crisis but don’t have the power to act. The human cost of inaction is already affecting thousands of households and now the building programme is hitting the challenges of increased building costs. This does not augur well for ‘generation rent’ or those in desperate need of genuinely affordable homes.”
Government has committed to building 300,000 new homes overall every year by the mid-2020s. It says some of these homes will be delivered through the Affordable Homes Programme, but there is no target for how many of the new builds should be affordable.
Homes for social rent are the only affordable option for many people and provide the highest value for housebuilding money. Government recognises the saving on future housing benefit costs of building homes for social rent. But a ministerial decision means that half of the homes in the 2021 programme will be for ownership rather than rent.
Government has not calculated potential savings from reducing the number of people in temporary accommodation, though it is costly for taxpayers and potentially disruptive for families. It is also set to miss targets to deliver 10% of homes in rural areas and may struggle to deliver 10% of homes as supported homes - though that would save on social care costs. The failure to set any standards for homes to be net-zero may necessitate “expensive retrofitting in the future”.
Councils face penalties have few powers to insist that housing providers build the right type of homes for local people The committee has called on DLUHC to publish transparent data on where homes are built by local authority, or information about the type or size of homes in annual reports to the Committee.
The Government was already facing growing criticism about housebuilding targets after it announced a re-set of the Levelling Up agenda earlier this week.
The National Federation of Builders (NFB) has claimed that Michael Gove is giving in to the Conservative backbenchers in ending mandatory housing targets. The targets, which are monitored through the Housing Delivery Test (HDT), not only help to ensure enough homes are built when compared to need but also encourages councils to allocate sites which can more easily be delivered.
Rico Wojtulewicz, Head of Housing and Planning Policy at the National Federation of Builders and House Builders Association (HBA), said: “We were led to believe that Mr Gove was appointed to ensure Robert Jenrick’s ambitious planning reforms were not lost, yet his first move was to water them down so much that disgruntled Conservative MPs were given a platform to further derail vital change.
“Housing targets were brought in to ensure that councils did not condemn another generation to housing misery but they also helped smaller builders too by putting an emphasis on deliverable supply and not simply high volume sites which do not always come to fruition in a timely manner - exampled by the 400,000 unbuilt permissions. Removing targets, which ambitious councils have doubled and quadrupled without Government intervention, harms aspiring homeowners, small businesses, placemaking and shows that levelling up is a phrase, not a reality.
“The Government appears to have lost its vision for homeownership and is now withdrawn to helping protect backbench MPs’ electoral chances at the next election. We’ll be increasing our work with Labour, trying to convince them that we need a small site register, a medium sized site definition of between 10 and 50 homes and housing need assessments that take advantage of modern technology to ensure data is robust, detailed and locally driven.
“The last two years have been very difficult for housebuilders. Eleven new taxes and levies, misuse of data on unbuilt permissions, watered down planning reform, a worsening planning process and incoherent proposals such as brownfield-first, protecting landscapes and removing negotiable housing taxes without bringing any more land forward. By ending mandatory housing targets, the Government has signalled an end to its housing ambitions and placed backbench MPs’ careers before the national interest. The housing crisis is going to get worse.”
Cllr David Renard, housing spokesperson at the Local Government Association, said local authorties remain committed to helping with the country needs, with land for more than 2.6 million homes allocated in Local Plans and nine in 10 planning applications being approved.
“It is good that the Government has recognised that national, top-down algorithms and formulas can never be a substitute for local knowledge and decision-making by those who know their areas best,” he continued. “We have been clear that councils and communities are best placed to decide how to build the right homes in the right places in their local areas, with the right infrastructure, and these proposed changes will help to ensure this can happen.
“Councils have long-called for more powers to tackle developers who do not build homes in a timely manner and we are pleased the Government is acting on our call for action. By penalising those who sit on planning permissions for longer than necessary, more homes can be provided in a speedy manner to those who really need them the most.
“In addition, the social housing supply is not sufficient to meeting 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, including reform of the Right to Buy scheme, which has made it difficult.”
