Funding gap threatens ambitious council housebuilding plan

Currently, over £40 billion is allocated to the 10-year Social and Affordable Homes Programme (SAHP), including an additional £1.5 billion announced in this week’s Budget. However, the New Economics Foundation (NEF) warns that this is insufficient to achieve the stated goals.

Homelessness charity Shelter believes the recent funding boost “falls short” of addressing the national housing crisis, while Crisis emphasizes the need for a significant acceleration of efforts. The NEF report indicates that current plans are projected to yield an average of 18,000 social homes annually over the next decade.

Experts from Crisis, Shelter, and NEF assert that England requires 90,000 new social homes each year to meet existing demand. In contrast, the 1970s saw an average of 103,000 homes built annually, whereas only 2,000 were constructed in the five years leading up to 2025.

The NEF report concludes that current delivery plans represent only a fraction of the post-war peak and that the SAHP must be expanded if the government intends to achieve record levels of social housing. “Investing in new social homes is our only way of solving the housing crisis for good,” stated Molly Harris, senior researcher at NEF.

With an additional £7 billion invested by the end of the next spending review, the SAHP could fund over 100,000 new council and social homes by 2030, potentially putting England on track to build 90,000 homes annually by 2032-33.

Mairi MacRae, acting chief executive of Shelter, stressed the importance of building social homes at scale and urged the government to provide further funding, noting that decades of policy decisions have depleted the supply. She added, “By re-visiting its fiscal framework the government has the power to unlock the kind of investment needed to truly deliver council homes at scale.”

The Conservative party criticized the plan, suggesting it lacks a realistic delivery strategy. Shadow housing secretary Katie Lam proposed slashing “net zero red tape” to reduce building costs, restricting social housing tenancies to British nationals, and abolishing stamp duty to stimulate the housing market.

The Office for Budget Responsibility (OBR) also indicated that increased construction would be necessary to fulfill the government’s social housing commitment, estimating that an additional 22,000 homes per year, costing £3-4 billion annually, would be required to match 1980s levels.

Chancellor John Healey announced over £1 billion for social and affordable housing and increased powers and funding for regional leaders. This includes preferential interest rates for councils borrowing to invest in housebuilding, aimed at boosting economic growth. Jasmine Basran, head of policy and campaigns at Crisis, described the investment as a “significant step forward” but reiterated the need to “shift gears” to build more.

Senior analyst Maurice Lange stated that increased spending and regulatory reforms are essential for fulfilling the pledge, acknowledging the challenging fiscal position the government faces. He emphasized the urgent need to address the widespread housing conditions affecting many residents.