Time to fund the foundations: why housing must be at the heart of the Spending Review

Analysis for the UK Housing Review (UKHR) shows that only half of England’s housing budget goes towards affordable homes, far behind the 80%-90% in devolved nations. Instead, billions are spent on demand-side subsidies – benefits over bricks.

That imbalance has consequences. One in five children in England lives in overcrowded, unaffordable or poor-quality housing. Homelessness is at record levels, with a 30% rise in families living in temporary accommodation in the past year. Meanwhile, the supply of genuinely affordable homes, especially those for social rent, continues to fall short.

This is not just a housing crisis; it’s a failure of economic and social policy.

Social housing is the cornerstone of recovery. The CIH has long advocated for a major programme of social housebuilding. Writing for the UKHR, Glen Bramley, professor of urban studies at Heriot-Watt University, shows that we need 145,000 affordable homes a year, including at least 90,000 for social rent. Yet even with a massive boost from developer contributions, the current Affordable Homes Programme is delivering just over 60,000 annually, with only a small proportion at social rent.

“Redirecting subsidies from the private market to social housing would reduce housing benefit costs, improve economic efficiency and ease pressure on the NHS and social care”

The Capital Gains report from the Resolution Foundation thinktank highlights the structural weakness in our approach. The UK lags behind comparable nations in capital investment. Too often, what investment there is fails to support inclusive growth.

Housing is a clear example. Redirecting subsidies from the private market to social housing would reduce housing benefit costs, improve economic efficiency and ease pressure on the NHS and social care – exactly the kind of smart investment the government says it wants. It could free up over £2bn more in grant investment annually, without adding to capital budgets.

So, what would a housing-centred Spending Review look like?

First, it would unlock a new Affordable Homes Programme from 2026, with an ambition to reach 140,000 affordable homes a year, including 90,000 for social rent. The CIH estimates this would require £39bn over five years, based on required grant levels. This is a significant increase, but one that could be partly funded through redirected subsidies and savings elsewhere.

Second, it would invest in improving the quality of existing homes. Damp, mould and cold are contributing to £1.4bn in annual NHS costs. Home, Sick Home: Frontline views on the public health crisis of unhealthy homes, a recent report by charity Medact, found that more than two-thirds of UK health professionals believe it’s better to prevent illness from cold homes than spend NHS money treating the effects. Yet housing providers face growing demands to meet new safety and energy standards, often with no additional funding.

A renewed, flexible Decent Homes Programme would help providers meet those standards and free up resources for new homes.

“Councils spent nearly £2.3bn on temporary accommodation last year – a 29% rise. That money would be better spent building truly affordable homes and funding early-intervention services”

Third, the Spending Review must stabilise supported housing. More than 600,000 people rely on specialist homes, from older people and disabled residents, to those recovering from homelessness or domestic abuse. Yet viability is collapsing: a survey by the National Housing Federation found that 60% of providers closed schemes in 2024. Without urgent support, we risk losing a safety net that keeps people well and out of hospital.

Finally, the government must prioritise homelessness prevention. Councils spent nearly £2.3bn on temporary accommodation last year – a 29% rise. That money would be better spent building truly affordable homes and funding early-intervention services.

We welcome the government’s pledge to develop an inter-ministerial homelessness strategy and a long-term housing plan. Now the Spending Review must deliver the funding to support them.

The government’s Plan for Change aims to reduce NHS waiting lists, raise living standards, and break down barriers to opportunity. None of these goals is possible without decent, secure, affordable homes. We cannot level up the economy while leaving housing behind.

On 11 June, the government has the opportunity to turn words into action. Let this be the moment housing is finally treated not as a cost to be contained, but as a platform to build a better future.

Rachael Williamson, director of policy, communications and external affairs, Chartered Institute of Housing