England’s Affordable Homes Programme: will it be bigger in 2021/22?
Following on from recent announcements around the Affordable Homes Programme, CIH policy advisor John Perry unpicks some of the detail and what this means moving forward.
The way the government has referred to next year’s Affordable Homes Programme in the past few weeks has raised doubts about whether it’s a real increase in investment, compared with what is being spent now. It would be wrong to say for sure that there isn’t still some ambiguity. But, based on the Chancellor’s statement this month, we’ll attempt to show how spending levels have changed over the last decade and what the prospects are for 2021 onwards.
The bar chart starts in 2010/11 and shows the main programmes that have funded affordable housing in England and how they have developed. It begins with the change in government that saw Labour’s National Affordable Housing Programme (NAHP), shown in red, come to an end, although spending continued for several years afterwards. In cash terms, the NAHP represented investment of almost £3 billion annually, which would prove to be the highest level shown on the chart. It contrasted sharply with the coalition government’s first AHP, shown in blue, which saw allocations fall to only £0.42 billion annually, although spending on site was still boosted by money carried forward from Labour’s programme.
It wasn’t until the Cameron-May governments in 2015 and 2016 that spending began to increase again. For a period, the second AHP overlapped with a third, called the Shared Ownership and Affordable Homes Programme, and allocated spending rose above £1 billion for the first time after five years at much lower levels. May’s government increased spending again, twice, so that in 2020/21 it is now running at almost £2 billion annually. It became a frequent government boast that spending on affordable homes totalled “more than £9 billion”: the claim was true, but what it represented was an amalgam of four distinct programmes over the six years from 2015/16 to the current year.
Theresa May also made two distinct promises about a future AHP, summarised in the chart. She announced future funding of £2 billion over an unspecified time span beginning next year, and she promised that the next AHP would have £400 million extra to compensate for money diverted to post-Grenfell cladding work. Of course, it is difficult to tell to what extent these promises have affected decisions by the Johnson government, although officials refer to the £2 billion pledge as having been honoured.
The Chancellor’s statement on 8 July 2020 said this about the AHP from next year onwards:
The government has confirmed that the £12.2 billion Affordable Homes Programme announced at Budget will support up to 180,000 new affordable homes for ownership and rent in England. The £12.2 billion will be spent over five years, with the majority of homes built by 2025-26 and the rest by 2028-29. The Affordable Homes Programme will also include a 1,500 unit pilot of First Homes.
Since building of the homes resulting from the new AHP will extend beyond five years, we can take it that the £12.2 billion to be “spent” will in reality be allocated by 2025/26, with some of the spending stretching beyond that. The total is made up of £9.5 billion provided for in last March’s Budget, together with the £2 billion promised by Theresa May and £0.7 billion underspent from the current AHP.
So the chart does, indeed, show that average annual allocations will, at £2.44 billion, be 25% higher than current levels, a significant increase. They still fall short of the average spend under Labour’s last programme, which in current money would be worth close to £3.5 billion. And they also fall short of what CIH and others have called for. Whether there will be a big enough boost in spending to have the economic impact which the Chancellor hopes for, remains to be seen. And while the total allocated is a step change on this year’s spending, we have to await the government’s detailed announcement on the new AHP to see in detail what types of home social landlords are now expected to build.