Affordable housing program ‘could be more ambitious to support broader goals’
According to a public spending watchdog, government efforts to build more affordable housing could be more ambitious to help achieve broader goals, such as net zero commitments.
The Department of Planning, Housing and Communities (DLUHC) intervenes in the housing market to try to ensure an adequate supply of affordable housing.
The Affordable Housing Scheme provides grants to housing providers in England to cover the costs of delivering these properties.
A lack of affordable housing drives social inequality and can increase cost pressures elsewhere, such as on housing benefit payments and temporary accommodation, according to the National Audit Office (NAO) report.
The DLUHC plans to spend around £20.7bn on new grant-funded housing, to be completed between April 2015 and March 2032.
But the NAO said the department could be more ambitious in how the program supports broader government goals, such as how it contributes to net zero commitments.
The report focused on two versions of the affordable housing program operating simultaneously – a 2016 program and a 2021 program.
The NAO found that the 2021 program had few targets based on broader factors such as quality or size of homes or environmental standards.
He said the DLUHC had not fully defined the broader outcomes it expects from the program, such as reducing fuel poverty and creating mixed communities, or what success would look like.
There is also a projected shortfall of 32,000 homes to be delivered, compared to the published targets for the 2016 and 2021 programs, as of May 2022, the report said.
It also highlighted the risk of fewer homes being completed than currently expected due to construction cost inflation, a shortage of materials and labor and other challenges.
Commenting on the findings, Meg Hillier, Chair of the Public Accounts Committee, said: “The government’s attempt to address the housing crisis, particularly the lack of affordable housing, is not good enough.
“The Department of Upgrading, Housing and Communities expects a shortfall of 32,000 new homes under its affordable housing program.
“An economy characterized by rising inflation and labor shortages means that this number could increase.
“The DLUHC must master the situation by achieving the objectives it has set itself and by better directing its support to those who need it most.
“As things stand, millions of ordinary people’s chances of accessing affordable housing are woefully out of reach.”
The NAO has also expressed concern about the lack of strong incentives for housing providers to provide affordable housing in areas of high housing need or in the most unaffordable areas.
When designing the 2021 program, the DLUHC considered how it could generate intergovernmental benefits in terms of housing assistance expenditures, the number of people in temporary accommodation and adult social care.
But he did not include in his economic modeling the savings made on temporary housing or the costs of social care for adults through the provision of supported housing.
Potential savings in these areas are not factored into how the DLUHC allocates program funding and the type of housing delivered, the report said.
The NAO said the DLUHC should develop plans to mitigate the risk that affordable housing delivery targets will not be met and continue to improve its monitoring of the program.
The DLUHC should also review the information it needs to improve its understanding of housing needs in local areas, review how the program sets and monitors targets, and clearly indicate how the program contributes, where possible, to broader government goals, such as net-zero and savings for other departments and local government, the NAO said.
Gareth Davies, the head of the NAO, said: “Since 2015 the Department of Leveling, Housing and Communities has made improvements to the way the Affordable Housing Scheme works, but there are still areas that need to be resolved.
“He should re-evaluate the targets to ensure the program provides affordable housing in areas that need it most.
“He should also use the program to bring greater value to other parts of government and advance broader efforts around net zero.”
A spokesperson for DLUHC said: “Increasing the supply of affordable housing is central to our upgrading mission and the Affordable Housing Program has always been focused on increasing the supply of much needed housing for across the country.
“We welcome the NAO report, which recognizes that the program is expected to deliver approximately 400,000 new homes – despite global headwinds resulting from the pandemic, supply chain pressures and the current economic climate.”