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England’s affordable housing programme has been allocated less per year in new money for the rest of this parliament than its current annual budget despite Rachel Reeves’ boasts of a record £39bn settlement.
Reeves on Wednesday announced a decade-long investment in affordable and social housing in England as one of the centrepieces of her spending review, calling it the “biggest cash injection” in the sector in 50 years”.
But the money is heavily backloaded involving about £3bn a year until 2029 — the latest possible year of the next general election — before eventually rising to £4.5bn in 2035/6, according to analysis by the Financial Times and the Institute for Fiscal Studies.
The Affordable Homes Programme budget has as much as £3.3bn to spend in the current financial year, according to government officials.
“Upon closer inspection the promise of £39bn over 10 years is less generous than on first appearance,” said Ben Zaranko, associate director at the Institute for Fiscal Studies, a think-tank.
He added: “The small print suggests spending of about £3bn a year over the next three years, which is not a million miles away from what is currently spent on the AHP”.
“This is why enormous-sounding numbers should always merit further scrutiny,” Zaranko said.
The government on Wednesday refused to provide a breakdown of annual expenditure of the new AHP settlement. Treasury document said only that spending would “reach” £4bn-a-year in 2029-30 and then rise with inflation.
Zaranko said that assuming an inflation rate of 2.3 per cent, £30bn would be allocated during the seven years from April 2029, leaving about £9bn for the three years from 2026-27.
Professor Tony Travers, visiting professor at the London School of Economics, said the profile of spending under the next AHP “in the years up to the general election appears to be lower than after the next general election”.
Actual spending in each year may be higher than the allocated amount if money from previous years rolls over. Some payments from the current five-year settlement will be paid out in later years as housing projects are built. As such the sector could still benefit from increases in spending, albeit modest, later in this parliament.
The current five-year settlement, running from 2021 to 2026, was for £12.3bn, or £2.5bn a year on average. The current year had a top-up by the new Labour government to £3.1bn, according to ministers, although officials said the true figure was higher at £3.3bn.
Reeves’ £39bn investment in affordable housing is at the heart of the government’s pledge to build 1.5mn homes in England during this parliament, a target that ministers have admitted is ambitious.
Deputy prime minister and housing secretary Angela Rayner is keen for the 1.5mn target to include a substantial increase in social housing, against a backdrop of record homelessness and rising private rents.
A housing industry figure said it would be “fair enough” for Labour to argue that it was investing more than the Conservatives.
“But this seems well short of the transformational investment the government promised,” he added.
The Treasury and the Ministry of Housing, Communities and Local Government declined to comment.
One government official said: “The key thing the sector needs is confirmation of their funding over a multiyear period, which this settlement gives, and I’d point you to the overwhelmingly positive response from stakeholders to the 10-year programme.”
