Last week Inside Housing launched Grant Britain Homes - a campaign to persuade George Osborne to provide grant funding for affordable homes in 26 June’s spending review (see campaign objectives below). Now, Nick Duxbury sends the chancellor a postcard from Scotland and Wales to show how England’s neighbours have prioritised funding affordable housing since the 2010 spending review cuts
‘We should have had cuts of £100 million in the last three years - in fact we had £100 million extra.’ So says Nick Bennett, chief executive of umbrella body Community Housing Cymru.
Since its capital budget was slashed by 40 per cent in the 2010 comprehensive spending review, the Welsh Government has invested £140 million of capital funding - through top-ups from Westminster known as Barnet consequentials - into housing between 2010/11 and 2012/13.
In short, according to calculations by Community Housing Cymru, it has prioritised housing to such an extent that it has eroded 93 per cent of the expected cuts in 2011/12 by diverting money at every opportunity to building more social rented (not affordable rented) homes.
In the most recent announcement of additional cash (passed back from Westminster) last month, the Welsh Government allocated £30 million out of a total pot of £75 million to housing. On top of this, housing is now to receive an additional £120 million of revenue spending over the next 30 years.
Welsh housing minister Carl Sargeant says the cabinet has taken ‘collective responsibility’ in making housing an investment priority and siphoning as much of the additional funding from Westminster as possible into housing.
‘We recognise that housing plays a critical role in changing the way the economy works - we understand both the economic and social benefits of having the right housing in the right communities and that’s why we have been able to ensure that [the extra cash], has been directed into supporting affordable housing to stimulate the economy. So, quite different to what you are seeing in England and the rest of the UK,’ he adds.
Mr Bennett says this is because housing associations have a track record of delivering quick boosts to the Welsh economy. A Welsh Economic Research Unit study, Measuring the economic impact of the Welsh housing association sector, published last November showed that in 2011/12, Welsh housing associations had a £1.8 billion impact on the country’s economy (up from £1.57 billion the year before), with gross value added of £570 million. The report also found the sector had supported 20,200 jobs, employing 7,500 directly and a further 12,700 employees supported by the sector.
Affordable house building target by 2016: 7,500 social rented homes
Average grant rate: £50,000 per social rent home
Cut in the 2010 spending review: more than 40 per cent in real terms
Amount of funding subsequently made available for housing: £140 million in capital grant
The Scottish Government is considering increasing grant rates. That’s right, increasing. As England cuts grant in its latest affordable house building programme, the £450 million affordable housing guarantee fund, to just £15,000 a home, the Scottish Government is considering doing the exact opposite.
The reason? Scottish landlords have said they cannot continue to build social rented homes with £42,000 grant per home (down from £66,500 in 2010). This might sound incredibly generous to English associations working with average grant outside London of £19,000 per home under the affordable homes programme but - without the ability to charge ‘affordable’ rents at 80 per cent of market rates - Scottish landlords say the model is unsustainable and they often lose money on government projects.
As a result, Holyrood - which has promised to build 6,000 affordable homes each year until 2016 - is under pressure to listen to warnings that without an increase in grant this target will be missed.
‘I would commend the government for even considering increasing grant levels,’ says one developer with cross border experience. ‘You can’t imagine that happening in England.’
Holyrood, unlike Westminster, has also continued to fund the tenure of social rented homes - 20,000 of them by 2015, along with 10,000 ‘mid-market’ rented homes. Furthermore, the Scottish Government has increased the money available to housing by £230 million to £859 million between 2010 and 2013 - £180 million of which came from five successive Barnet consequentials. In addition there was a £291 million injection of loans and equity for low-cost homeownership schemes rather than social homes.
David Bookbinder, head of policy and public affairs at the Chartered Institute of Housing Scotland, says the Scottish Government deserves credit for this and for protecting social rents. ‘There is a genuine commitment from ministers to maintain social housing as something quite distinct from other rental provision… Here there has always been a genuine sector-wide and government-wide commitment to trying to make sure rents remain affordable to people in low-paid work: England is seen as having ditched any such principle years ago.’
‘The Scottish Government has been fighting valiantly to sustain affordable house building,’ agrees Craig Sanderson, chief executive of Link Housing.
Affordable house building target: 30,000 affordable homes by March 2015
Average grant rate: £42,000 per home, £30,000 per home for mid-market rent
Cut in the 2010 spending review: 30 per cent lower in real terms
Amount of funding subsequently made available for housing: £230 million over three years (Scottish spending review was last year)
Inside Housing’s Grant Britain Homes campaign calls for:
Sign the Grant Britain Homes petition at www.insidehousing.co.uk/granthomes