Government thwarts plans for 500k homes

A plan with potential to build more than 500,000 new homes over thirty years has been undermined by successive government policies, according to a report published by the Chartered Institute of Public Finance and Accountancy (CIPFA) and the Chartered Institute of Housing (CIH).

The report, ‘Investing in council housing: The impact on HRA business plans’, examines the 2012 ‘self-financing settlement’ that put in place a long-term plan for council house building. That settlement encouraged councils to take on £13bn extra debt to finance building against the promise of future rental income.

However, successive policy changes have cut rental income so that today, just 45,000 new homes are expected, no more than were planned before the settlement was made.

Rob Whiteman, CIPFA Chief Executive, criticised the move saying it has “choked the revenue streams” available for housebuilding.

“The situation is desperate. Families across the country will not get the homes they need because the Government keeps on tinkering with housing policy without properly thinking it through.

“At best, successive governments have turned a blind eye to the consequences of inconsistent housing policy, at worst they have deliberately set out to undermine local authorities’ best laid plans.”

He added:

“By reducing rents to soften the blow of welfare cuts, the Government has choked the revenue streams that were meant to fund new house building. Robbing Peter to pay Paul.

“As the economic consequences of Brexit bite, there is now an even stronger case for the kind of house building programme we haven’t seen since the days of Harold Macmillan. We need urgent action to reset the self-financing settlement, with assurances that its foundations won’t be pulled away the moment government attention turns to something else.”

 

Terrie Alafat, chief executive of the CIH, added:

The report we’re launching today shows that the effect on the ability of local authorities to invest is dramatic, at the current rate many will struggle to maintain their current rates of house building, let alone raise it.

“If the government is to achieve its aim of building one million homes over the next five years then it must ensure that all parts of the housing industry are building new homes, and not rely solely on the private sector.”