The Department for Levelling Up, Housing and Communities (DLUHC) has announced that it will be returning nearly £2 billion of housing funds to the Treasury after failing to spend the allocated money during the 2022/23 financial year. The admission comes as a blow to the government’s efforts to address the housing crisis and has sparked criticism from opposition parties.
According to reports, the underspent funds include £255 million intended for affordable housing and £1.2 billion allocated for the Help to Buy scheme. While DLUHC officials have stated that a significant portion of the funding will be re-profiled for use in future years, the £1.2 billion designated for Help to Buy cannot be reallocated due to the closure of the scheme.
Freedom of information requests have revealed that the department underspent by over £600 million on the affordable housing program, resulting in £255 million being returned to the Treasury. An additional £245 million designated for building safety repairs and £1.2 billion for Help to Buy have also been handed back. The DLUHC has attributed the underspending to economic volatility, which led developers to slow or pause housing projects.
The Labour Party has seized upon the news, with shadow housing secretary Lisa Nandy accusing the government of giving up on tackling the housing crisis. The revelations have raised concerns about the government’s commitment to addressing the shortage of affordable housing and supporting the construction industry.
DLUHC officials have defended their handling of the funding, stating that the underspent funds will be used flexibly in the coming years, depending on demand and the economic climate. They maintain that the government remains committed to funding affordable housing and meeting its target of delivering 300,000 homes per year.
As part of its budget reallocation, the DLUHC plans to move £700 million of the Affordable Homes Programme funding to later years within the current spending review period, ending in 2024/25. An additional £500 million will be directed toward funding the construction of homes in the next spending review period.
Critics argue that these findings reinforce the perception that housing is not a priority for the government. The scrapped housing targets, failure to address outdated planning systems, and lack of support for the construction sector have all contributed to a slowdown in housing development.
The latest revelations serve as a reminder of the challenges facing developers and the need for central government support in allocating high-quality land for development. Housing professionals are calling for greater commitment and action from the government to overcome the obstacles in the housing sector and ensure the delivery of much-needed homes.
The DLUHC acknowledges that improvements are necessary and has announced plans to overhaul the Affordable Homes Programme rules, following Homes England’s failure to meet the delivery targets for the 2016-23 program.
Moving forward, it is crucial for the government to strike a balance between financial accountability and effectively utilizing housing funds to meet the growing demand for affordable homes. The DLUHC must work closely with industry stakeholders to address the challenges facing the housing sector and provide the necessary support for developers to deliver on housing targets.
By taking a comprehensive and strategic approach to housing, the government can make significant progress in tackling the housing crisis and ensuring that affordable homes are accessible to those in need. With careful planning and efficient use of resources, the government can restore confidence in its commitment to addressing the housing shortage and provide much-needed relief for those struggling to find affordable housing.
