The government has promised a surge in the amount of affordable housing in this parliament, but, asks Simon Graham, what can be achieved when money and time are tight?
February’s news that social housing waiting lists had climbed to 1.33 million households, the highest in a decade, was compounded for the government by new research from real estate company JLL, suggesting two million households could be waiting for social housing by 2034 without a big surge in affordable housebuilding.
Of course, a big surge is exactly what the Labour government has promised, and deputy prime minister, Angela Rayner, reiterated her determination to meet the 1.5 million homes target by 2029 in a February interview with the BBC. She said she had been asked by senior civil servants within a month of entering office if she might like to ‘review the target’. She said no.
The JLL figures reinforce the scale of the challenge once more. While 62,000 affordable homes were built in 2023/24, JLL said the level of demand plus demolitions and Right to Buy sales meant that 105,000 new affordable homes were needed a year just to stand still; 70% more than are currently being produced.
In the last three years, London has delivered 40,268 affordable homes, yet housing waiting lists are up by 40,000 households. The capital needs to double output if it is to meet housing need. Waiting lists are increasing everywhere except the east of England.
Even if 1.5 million homes were built during this parliament, JLL estimates there would still be a shortfall of 570,000 homes by 2028.
Coming at the affordable housing shortage from a very different angle, the Institute of Public Policy Research (IPPR) also believes 100,000 new affordable homes a year are needed, in its view for each of the next 20 years. Its latest research was about child poverty and the inadequacies of Local Housing Allowance (LHA). The increased channelling of low-income families into the private rented sector is another consequence of the consistent failure to provide enough social rented homes.
The IPPR estimated that there are now 440,000 families with children whose LHA no longer covers the rent. If Labour freezes LHA rates for 2025/26 – and, as yet, there is no indication of a rise – another 90,000 families will face a financial shortfall and, overall, 925,000 children will be living in homes where the parents are scratching around to pay the rent each month. Echoing much-derided Conservative tactics to keep benefit costs down at the cost of social justice is not what people voted Labour into power to do.
More than 20% of children now live in the private rented sector, the IPPR says, compared to around 8% two years ago. Families are being trapped in a cycle of poverty and instability by unaffordable rents and insecure tenancies.
Its modelling suggests moving all families with children on means-tested benefits into social rented housing would reduce the housing benefit bill by £3billion a year and lead to a fall in poverty of around 200,000 households. It would also help bring rampant temporary accommodation costs under control.
For good measure, the House of Commons Public Accounts Select Committee (PAC) said in January that governments had failed to consider the impact on homelessness of ‘illogical’ LHA rates. The number of households in temporary accommodation is at record levels and more than 6,000 families are living in ‘unacceptable’ bed and breakfast hotels.
The UK has the highest rate of homelessness in the developed world.
The fact is that none of this is an accident. It is the product of deliberate policy over many years. Since the financial crash of 2008, governments have failed to acknowledge or accept the severe social consequences of running down our public services and the welfare state.
Hardly surprising, then, that Angela Rayner describes her task in meeting the housing target as ‘really difficult’. She said the various major reforms the government is putting in place will take time to have an impact. But, strange as it sounds less than nine months into a five-year parliament, time is not on her side, given how long it takes to get from site acquisition to completed developments.
Labour remains hamstrung by its dire financial inheritance. There is no money sitting idle for an Attlee/Bevan-style mass social housebuilding programme and Liz Truss scared and scarred the financial markets so profoundly that chancellor Rachel Reeves cannot simply turn on the borrowing tap. While there will be some extra money for housing in the summer’s Comprehensive Spending Review, the next Affordable Housing Programme is not going to answer the social housing sector’s prayers. Instead, the government will rely on a cuter set of lower-cost options, most of which will require the private sector and investors to foot the bulk of the huge bills involved.
The state of the public finances also explains why Labour is shouting ‘build, baby, build’ and introducing a range of positive, pro-development reforms on one hand, while extracting heavier national insurance contributions, new green requirements and more from housebuilders, tightening private rented sector regulation of landlords and increasing stamp duty for buyers.
Much as the government wants to be heading directly to the desired destination, it feels compelled to take a more circuitous route. This will only increase the time taken for pro-growth measures to have any significant impact on the housing crisis.
Labour will need a renewed mandate in 2029 to come anywhere close to getting the job done in housing. But without solid progress in the interim, the less likely that further mandate is to materialise.
