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Government to cut off £45m in affordable housing funding to combined authority
The government will cut £45m of planned affordable housing funding for a combined authority over concerns about delivery progress and value for money.
Cambridgeshire and Peterborough Combined Authority (CPCA), which is led by Conservative mayor James Palmer, agreed a five-year £100m affordable housing fund with ministers as part of its devolution deal signed off in 2016.
The combined authority has set a target to deliver at least 2,000 affordable homes through the programme.
So far CPCA has received £55m, with £15m intended to be paid in 2019/20 withheld pending a government review and another £30m still outstanding.
In a letter to CPCA seen by Inside Housing, local government minister Luke Hall revealed that the funding will be halted following the review.
He wrote: “I have concluded that the programme has made insufficient delivery progress and that the value for money being achieved is below our expectations.
“I will not be extending the timeframe or continuing to fund the programme on its current basis.”
According to a report set to go before the combined authority’s Housing and Communities Committee on Monday, the government officials had raised three concerns in meetings.
One involves a dispute over whether the 2,000-home target requires starts to be made by the end of March 2021 or March 2022, with the Department for Business, Energy and Industrial Strategy (BEIS) arguing the former and CPCA contending the latter.
Only 849 starts have so far been made, with the combined authority expecting that to rise beyond 1,000 by the end of this month.
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BEIS has also argued that 243 affordable homes built at a scheme in Northstowe, for which the combined authority provided flooding remediation funding, should not count towards the target.
The third concern revolved around whether the general degree of progress being made through the programme merited the remaining funding being provided.
CPCA has allocated funding for 47 schemes through the programme worth £97.6m, with £40m of this taking the form of revolving loans from the combined authority and the remaining £57.6m intended to be paid through the grant from government.
Cambridge City Council’s separate £70m funding agreement with the government, which also formed part of the devolution deal, is unaffected.
Mr Hall’s letter added: “However, rather than closing the programme at this point, I remain committed to enabling investment in schemes that will deliver further affordable housing, at pace, in Cambridgeshire and Peterborough.
“I have confirmed to mayor Palmer that the department will, subject to further work on the details, consider making further funding available to CPCA for the delivery of affordable housing by 31 March 2022.”
Aidan Van de Weyer, Liberal Democrat candidate for mayor of Cambridgeshire and Peterborough, said the minister’s letter was “disastrous news for the people of Cambridgeshire and Peterborough” and called for the mayor to be replaced.
He added: “As a result of Palmer’s incompetence and arrogance, hundreds of desperately needed affordable houses will now not get built.
“The housing programme is now at an end and several schemes that had been approved – and that residents were looking forward to – will have the rug pulled from under them.”
In a statement, Mr Palmer said “the government have not made it easy for us to deliver on their programme”.
He added: “It has become clear to me that in light of the toughening financial situation, MHCLG do not see their current programme as a chance to try alternative solutions, and are continuing with a short-term focus on arbitrary targets and deadlines.
“I know the combined authority board, and the people of Cambridgeshire and Peterborough, want us to do something different, something better than current policy; just giving money away to housing associations will never be good value for money.
“It was also always the case that the innovations we’ve introduced in the last four years could only ever be proofs of concept in light of the scale of the problem we are trying to address.
“To that end, I will ask the combined authority board to agree to the steps necessary to complete this MHCLG Affordable Housing Programme, and to mandate me to continue the development of a housing delivery plan that works for Cambridgeshire and Peterborough.
“One based on innovative solutions, encouraging affordable ownership rather than expensive rents, and to a scale that will have a chance of building the homes we need in a sustainable way.”
A spokesperson for the Ministry of Housing, Communities and Local Government said: “The programme was behind schedule and not on track to deliver value for money.
“We remain committed to the devolution deal, and will continue to work with the combined authority to consider if further funding can be made available to support the delivery of more affordable housing in the local area.”
Update: at 15.26pm 17/03/21
A comment from MHCLG was added to the story
