Budget boost leaves housing gaps

Originally published on March 11 as a blog for Inside Housing.

This is a Budget that does not live up to its own hype and has some glaring omissions but still brings some good news for housing.

There are three big positives: a £12.2bn Affordable Homes Programme (AHP) over the five years from 2021/22; an additional £1bn for a Building Safety Fund to remove dangerous cladding; and £650m to help rough sleepers into permanent accommodation.

Add the reversal of an interest rate hike for borrowing for new council homes, extra funding for housing infrastructure, £1.2bn in consequentials that other UK nations can invest in new homes and an extension of Shared Accommodation Rate exemptions to young rough sleepers and other vulnerable groups, and this looks like one of the best Budgets for housing in the last 10 years.

However, that’s not setting the bar especially high, and you don’t have to look very far below the surface before the questions start to mount up.

The AHP, for example, looks like a £3bn, or 33 per cent increase, on a 2016/21 programme worth £7.8bn.

However, where pre-Budget rhetoric had boasted of the biggest increase in investment ‘in generations’, chancellor Rishi Sunak was more modest in his speech as he hailed ‘the largest cash investment in affordable housing in a decade’.

And for good reason. That form of words concedes that housing investment will still be lower than the Conservative-led government inherited from Labour in 2010.

What was then called the National Affordable Housing Programme was worth £8.9bn but over the three years from 2008/11, which works out at £2.97bn a year.

That compares with £12.2bn over five years, or £2.44bn a year. Even before allowing for inflation, that is £500m a year less per year than a decade ago.

Then there’s the whole question of the meaning of ‘affordable’.

A pre-Budget letter signed by 28 backbench Conservative MPs argued for ‘building up our nation’s offer of social homes’ and argued that ‘if our policies simply continue to provide only unaffordable housing, then the people will never forgive us’.

We will have to wait for the spending review in the Autumn for the detail of the new programme but the Budget Red Book hints at priorities when it says the programme ‘will help more people into homeownership and help those most at risk of homelessness’.

On housing in general, a big announcement on planning is due tomorrow, with the Red Book promising ‘comprehensive reforms to bring the planning system into the 21^st century’ and ‘firm consequences’ for local planning authorities that fail to meet their local housing need.

The £1bn Building Safety Fund is explained in more detail on the Ministry for Housing Communities and Local Government website.

It extends government help to dangerous cladding that is non-ACM and mentions high-pressure laminate and wood in particular – and it applies to social and private sector buildings.

In the private sector, ‘grants will be for the benefit of leasehold owners’ with building owners expected to honour commitments they have already made and to recoup the government for any successful warranty claims.

However, the fund will only apply to buildings of 18m or over, leaving owners and leaseholders of mid-rise blocks in limbo.

Confirmation that the fund is for 2020/21 appears to allay fears that it might come out of the future Affordable Homes Programme.

But it will not be remotely enough in itself to fix a cladding and fire safety crisis with costs that housing associations alone say could ‘easily exceed’ £10 bn and that has left at least 600,000 leaseholders with unsaleable flats.

On rough sleeping, the chancellor said he was ‘confirming nearly £650m of funding’ but that appears to consist of £237m already announced by the prime minister plus a further £144m for associated support services and £262m for substance misuse treatment services.

And the Budget had nothing to say on the one of the main causes of homelessness and rough sleeping – local housing allowance rates that do not cover private rents – and what the funding gap in the system that is meant to reduce it.

The cut in the interest rates for Housing Revenue Account borrowing from the Public Works Loan Board is a welcome move that should mean more council homes – but it only reverses a hike introduced to widespread consternation last year.

The Budget seemed to have nothing to say about the decarbonisation of existing housing, despite its emphasis on climate action ahead of COP26.

While the chancellor took the opportunity provided by Brexit to eliminate VAT on tampons and electronic books, he did not choose to do the same for energy efficiency and decarbonisation works.

More answers on all of the above will come in the Spending Review and another Budget due in the Autumn.

Until then, the questions will keep mounting up but the first Budget of the 2020s is still a big improvement on the 2010s.