Labour’s plan for ‘a decade of renewal’

Posted: July 2, 2025 | Author: julesbirch | Filed under: Affordable housing, Council housing, Rents, Right to buy, Social housing |Leave a comment

Originally written as a column for Inside Housing.

The spending review may have given us the headlines but a flurry of announcements on Wednesday fills in much of the detail about what the government is calling ‘a decade of renewal for social and affordable housing’.

On new homes, a key question was how the £39 billion will be spent over the next 10 years and, in particular, what the trade-off will be between maximising total output of affordable homes and giving greater priority to social rent. 

That got an answer in an overnight press release: a renamed Social and Affordable Homes Programme (SAHP) is forecast to deliver 300,000 homes over the ten years (30,000 a year), of which at least 180,000 (18,000 a year or 60 per cent) will be for social rent. 

To put this in perspective, the current AHP was originally meant to produce 180,000 affordable homes over the five years from 2021 to 2026 (36,000 a year) but rising construction costs cut that to between 110,000 and 130,000 (22,000 to 26,000 a year. Of those, just 40,000 (8,000 a year) are forecast to be for social rent.

Importantly, strategic partnerships will be able to bid for funds over the lifetime of the programme, which should give at least some protection from the risk of cuts if a government more hostile to housing wins the next election.

Another trade-off is the split between London, where higher land prices and construction costs mean more grant per home is needed, and the rest of the country. 

Under the current AHP, the Greater London Authority (GLA) got £4.1 billion (36 per cent) and Homes England £7.4 billion (64 per cent) of the grant available. 

Under SAHP, the GLA’s share will be cut to 30 per cent or up to £11.7 billion. It’s hard to reconcile that with the fact that more than half of the 126,000 homeless households stuck in temporary accommodation waiting for a social home are from London. 

The long-term plan confirms that other mayoral authorities will not get their own ring-fenced budget but will be able to set strategic direction and get upfront indicative spend. 

There will also be flexibility in the programme to support regeneration schemes and ‘a limited number of acquisitions of existing housing stock’, while providers will be able to combine grant, guarantees and Section 106 contributions with £2.5 billion in low-cost loans announced in the spending review. 

However, the government also wants to diversify investment with what sounds like a clear invitation to for-profit providers and private equity: ‘We want to support social housing providers to access new types of investment and help newer social and affordable housing providers to enter the market.’ 

Overall, the increase in social rent is both impressive and desperately needed – plus more could be delivered via planning gain if the government strengthens Section 106 requirements. 

But this was just the first in a series of announcements and consultations that make up the long-term plan. 

Action to rebuild the sector’s capacity to borrow and invest includes a consultation on rent convergence, capped at £1 or £2 a week, to run alongside the ten-year CPI plus 1 per cent rent formula. 

One quid pro quo is that housing associations will be expected to ‘reassess their position’ on buying unsold Section 106 homes that are holding back development around the country.

Another is substantial investment in their existing stock, with more consultations on a reformed Decent Homes Standard and new Minimum Energy Efficiency Standards for social and private rented homes alongside last week’s outcome of the consultation on Awaab’s Law.  

Following the series of scandals about housing conditions for social tenants there are also big steps towards the completion of unfinished business, with  announcements on a new Competence and Conduct Standard for senior staff and executives and a requirement for landlords to give tenants access to housing management information. 

Plans to reinvigorate council housebuilding also go further than before. Following a consultation on reform of the Right to Buy, the government plans to increase the qualifying period from three to ten years and reform discounts so that they start at 5 per cent of the property value rising to 15 per cent or the discount cap (whichever is lower).

Crucially for local authority development plans, newly built social homes will be exempt from the Right to Buy for 35 years so that they do not lose them before recovering the costs of building them. 

Flexibilities on spending capital receipts will be extended indefinitely and councils will be able to combine receipts with grant funding from next year. The plan also reveals that the government is looking at how to extend discounted financing from the Public Works Loan Board and at ways to make it easier for non-stock holding authorities to open a Housing Revenue Account. 

Housing minister Matthew Pennycook acknowledges in a written statement that ‘ending England’s acute and entrenched housing crisis will be a painstaking and laborious effort that will require focus, energy and determination over many years’.

He’s right of course. Those 180,000 homes for social rent and 120,000 for affordable rent and home ownership over ten years are a good start.

The last Labour affordable housing programme produced 174,000 affordable homes including 93,000 for social rent in the three years between 2008 and 2011. . 

And independent estimates suggest a need for 90,000 homes for social rent plus another 50,000 affordable homes per year in England. 

If those comparisons deflate some of the hype about ‘the biggest boost in a generation’ they also reveal the scale of the damage done by austerity. 

Funding for affordable housing was cut by 64 per cent in 2010 and support for social rent was ended. 

With interest rates close to zero in the wake of the financial crisis the coalition could have borrowed to invest at a time when building costs were much lower rather than slashed and burned. 

That mistake on new homes was compounded by rent cuts that delivered short-term savings in housing benefit but fatally undermined the sector’s financial capacity and by deregulation that appealed to free market instincts but contributed to the building safety scandal. 

What was never discussed at the time was the cost of not investing: we can now say that it was £39 billion and that’s just for starters.  

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