In a series of personal reflections on Budget 2024, Alan Fraser (Member of CNM’s Housing and Communities Leadership Board and Proprietor, Alan Fraser Consultancy & Support) gives an insight into the announcements made and the impact that they may, or may not have, on addressing the country’s housing crisis.
(November 2024)
For housing professionals of a certain vintage it was a rare pleasure to see in a budget in which housing and in particular social housing featured so prominently. Whilst this must go down as one of the most leaked budgets in history it was a still a pleasure to hear the Chancellor announce a raft of measures which even the most curmudgeonly would have to admit will make a positive difference to many social housing providers and our customers.
The £500m top-up of the Affordable Homes Programme (AHP) will enable at least some schemes that would otherwise be stalled because the existing pot has already been allocated to move forward during the lifetime of the current programme (i.e. up to March 2026). The amount pledged is significant but only half the £1bn that Inside Housing had predicted the week before would be made available. However, it is clear that there were voices within the Treasury who were reluctant to make any further allocation at all to the current AHP budget and so it is to be welcomed that the Housing Secretary was at least partly successful in her negotiations. To put the sum in context, it is expected to deliver an additional 5,000 homes at Social Rent. This will make a small but welcome dent in the government’s target to deliver 1.5 million homes over the next five years. From a West Midlands perspective it is worth noting that £100m of the top-up money is likely to be allocated specifically to London.
Of course, in order to get any of these homes built we will need to secure planning approval for them. To that end the Chancellor announced that she would be releasing funding to deliver 300 extra planning officers across the country. This was a manifesto pledge and one that Labour was very excited to announce during the election campaign. The response from local government and developers has been more muted. In reality, this equates to less than one additional planning officer per planning authority so those of us working in housing development are not anticipating a sudden breaking down of the planning logjam that has afflicted so many of our schemes over recent years. But after years of losing planning officers, it is certainly to be welcomed that the direction of travel appears to have been reversed.
Even if we do manage to deliver all of the new social housing that’s been promised though, it won’t make much difference if we are losing social housing stock at a faster rate. Despite all the building activity by registered providers, the net gain in social homes was just 700 last year because of ongoing sales under the Right to Buy (RTB). The Chancellor therefore also announced that in future local councils would be able to retain 100% of receipts from RTB sales to assist with the provision of replacement social housing. This change has been welcomed by the LGA, and it is suggested it will deliver £1.2bn for new homes by 2030. Of potentially greater long-term significance is the government’s intention to review the discount levels available to tenants looking to buy their own social homes. The intention is clearly to make these less generous – or in the Chancellor’s phrasing ‘fairer’. Whilst such a move would bolt the stable door some forty years after the horse first bolted, it might actually ease the slow loss of social homes from the sector and give housing providers a more realistic chance of delivering genuinely additional social housing. That would indeed be fairer to everyone involved in social housing – including those trying to access it now and in the future.
There was an interesting, less noticed, announcement around additional funding for the Warm Homes programme. No guidance was given at the time as to how much of that top-up might go to social housing, but it is to be hoped that the government’s clearly stated deadline to decarbonise social homes by 2030 will mean that at least some of that additional funding will find its way into the sector.
Another couple of announcements that seemed to slip past commentators with barely a mention was the announcement of a further £233m to tackle homelessness and rough sleeping – which the LGA has been quick to praise. There is also a further £1bn for cladding remediation. This is certainly welcome and will enable further progress to be made on this critical issue in the private sector, but it remains the case (although this wasn’t made clear in the Chancellor’s statement) that social housing providers will find it virtually impossible to access any of that money as the eligibility criteria will remain the same as at present.
Of course, the ‘big ticket’ item as far as social housing providers was concerned was the announcement that social housing rents are going to be subject to a five-year rent settlement, mooted to be CPI+1%. This is designed to provide much needed certainty for providers and tenants – but also, crucially, lenders. The hope must be that this feeds its way into lower lending rates for social housing development. If it does it might provide a further boost to the development programme.
Increases in the National Living Wage and National Minimum Wage, allied with some smoothing out of anomalies in the Universal Credit system might also help to put more money in working tenants’ pockets. This should be welcomed by landlords as well as the tenants themselves.
However, these positive announcements contained a sting in the tail.
On Thursday – outside of the main Budget statement itself – the government announced that it was freezing Local Housing Allowance (LHA) levels for at least the forthcoming financial year. This will certainly impact tenants in the private rented sector (PRS) whose benefit claim is limited to the LHA, but it will also hit some tenants in certain types of registered provider and unregistered housing charity accommodation. The LHA has been frozen for seven of the last twelve years and when the Coalition and Conservative governments did it Labour always cried foul, recognising – rightly – that cutting the link between the benefit available and the actual rent that is charged risks excluding people on low and/or insecure incomes from access to the PRS and increasing the risk of eviction for those who do manage to secure accommodation. But it also undoes all the government’s efforts to increase ‘rent stability’ for providers by introducing a key plank of uncertainty into the heart of the system. This move will undoubtedly make securing finance to deliver certain types of accommodation a lot more difficult and it will put off both private sector and social sector landlords from delivering housing that relies on LHA rates. And yet the government has sought to defend the move by referring to the increases in housing spending elsewhere and the need to achieve to achieve an ‘affordable’ and ‘fair’ benefits system – another example of a worrying trend that has already emerged from the new administration of insisting that practices which were decried under the Conservatives are suddenly alright when undertaken by Labour.
Make no mistake, allied with other tax changes designed to reduce the financial incentives for property speculation (e.g. the increase in the so-called ‘second home’ stamp duty from 3% to 5%), this change is going to test to destruction the theory that the government can afford to alienate private landlords without it affecting the availability of property to would be renters.
Of course, all of this is just a series of holding measures pending the outcome of the spending review in the late spring. It is there that the future direction of housing policy will be set. What will the next AHP look like, what might the rent review recommend how might we pay for the decarbonisation of social homes. So there is still all top play for. Despite all of the warm words about the need for more housing, it is not yet clear whether we will actually see any decrease in homelessness as a result of these announcements.
This is a personal blog post. Any opinions, findings, and conclusion or recommendations expressed in this article are those of the authors and do not necessarily reflect the view of the Centre for the New Midlands or any of our associated organisations/individuals.
ABOUT OUR AUTHOR:
Alan Fraser is a social housing consultant with over thirty years’ experience working in the sector for housing associations, charities and local government.
He sits on CNM’s Housing Communities Board, but writes in a personal capacity.