Government considers bringing forward housing spend

Homes and Communities Agency chief executive Pat Ritchie has said the government is considering bringing some spending on affordable housing forward in order to ensure more homes are built.

Speaking to Building, Ritchie said the HCA was having “early stage” discussions with the Department for Communities and Local Government about “re-profiling” spend under the government’s four year Affordable Rent programme, which is currently loaded towards the end of the period to 2015, to spread it more evenly.

The news follows the release of statistics yesterday that showed that affordable housing starts in 2011/12 fell 68% on the previous year.

Labour politicians hit out immediately at the figures, which showed that just 15,698 affordable homes for rent or sale were started in the year to March 2012, compared to 49,363 the year before.

Ritchie said the HCA remained on target to fund the construction of 170,000 homes between 2011 and 2015, despite the fall, but that nevertheless concerns had been raised over the “backloading” of the spending programme.

She said: “No conclusions have been reached but we are looking at the overall profile of spend and whether it can be flattened. We’re also reviewing the contracts that we’ve signed and discussing with partners what flexibility there is to deliver outputs at different times.”

Under the current profile, spending on the government’s affordable rent programme ramps up from just £337m last year to £892m in 2014/5, with two-thirds of the spend in the last two years.

Ritchie admitted that the drop in starts in 2011/12 would impact on the number of completions next year, and said that the HCA was also in discussions with registered providers about tying down exactly what sites they were intending to deliver homes on.

“We’re confident we can deliver on the 170,000 target, but as part of the discussions we’re having with providers we obviously need to firm up the position on how they will deliver their development plans.”

The drop in starts follows the slashing of budgets for affordable housing by more than half in the 2010 Comprehensive Spending Review and the subsequent move to a new model of affordable housing funding, with higher rents levied on tenants to make up for lower capital grants.

Meanwhile the body said it had hit its targets for the completion of new homes, with 59,451 homes built, albeit still 8% down on 2010/11.

Steve Douglas, partner a social housing consultant Altair, said: “The sector has faced the perfect storm really – a downturn in the market, a change to a new funding system, and the transition to a new government. The figures then are no surprise. It’ll be 6-9 months before we have cause to panic if these starts aren’t improving by then.”

Labour shadow housing minister Jack Dromey said the figures revealed the “tragic failure” of the Coalition’s housing and economic policies.

He said: “The £4 billion cut to the affordable housing budget hit the construction and house building industries hard, helping tip us back into double-dip recession.”

But this morning housing minister Grant Shapps told the Radio 4 Today programme that the government was “confidently on track” to build 170,000 affordable homes by 2015.

“The big picture is this: We know from this set of stats that came out yesterday that we are now confidently on track to deliver 170,000 affordable homes by the end of this parliament – in other words in the next three years.”

 “Let’s put all these stats to one side and concentrate on what we absolutely know for sure. We absolutely know for sure that we have the contracts in place and the diggers on the ground to build 170,000 affordable homes by 2015 - in the next three years.”