Social housing spending at record low

At the National Housing Federation Annual Conference, Chief Executive David Orr will today warn that social housing funding is in crisis, unless the Government is prepared to make a break with the past and start funding new genuinely affordable homes.

19 September 2017

The warnings come as the Federation – which represents housing associations, social landlords to over 2.7 million homes – publishes a report outlining dramatic shifts in public spending in housing. The report shows that the nation's commitment to building homes has fallen from £11.4bn in 2009 to £5.3bn in 2015 – from 0.7% to 0.2% of the total GDP. Despite this, more than a million families remain on the housing waiting list.

While the amount of money going into building new social homes has fallen precipitously, the nation is spending more than ever supporting people to live in costly rental properties through housing benefit. Over the last 20 years, spending on housing benefit has risen from £16.6bn to £25.1bn. 

Housing someone in the private rented sector instead of a social home costs an additional £21 every week. In fact, the report found that the amount of housing benefit going to private landlords has almost doubled over the last decade to £9.1bn in 2015/16.

And yet there is currently not a single penny available to build social rent, affordable housing for those on the lowest incomes. Following the 2010 Government decision to halt funds to social rent, construction dropped off sharply. In 2010/11, work was started on almost 36,000 social rented homes, the next year on just over 3,000. Today, housing associations are still delivering some social rented homes through their own cross-subsidy, but nothing like at previous or needed levels.

Demand for new homes is not slowing down; the population of England is projected to increase by 17% until 2039 – an additional 9m people. 

Making more capital available to social homebuilders, like housing associations, and then giving them the flexibility to charge rents appropriate to residents' incomes is the way forward. The £1.1bn that remains unspent on Starter Homes should be redirected to building homes for social rent. With this money, housing associations could build 20,000 of the most affordable homes.

David Orr, Chief Executive at the National Housing Federation said:

"It is absurd that we're spending less on building social housing than we did in the nineties – there are even more people today on housing waiting lists than then despite increasingly stringent criteria. 

"We know we need more, better quality social housing. And yet, rather than putting public money into building the homes we need, we are propping up rents in a failing market. Ultimately, this is poor value for the taxpayer and has a knock-on effect on everyone struggling to rent or buy.

"The Prime Minister is right that we've not paid social housing enough attention. After the tragic fire at Grenfell, this crisis can no longer be ignored. The Government must be bold and make a break with the past by making money available to build genuinely affordable homes.

"There's more than a billion pounds that remains unspent on Starter Homes. Let’s put this money to use and let housing associations build 20,000 of the genuinely affordable homes the nation needs."

Read the full report: How public money is spent on housing

Data sources:

  • Housing development figures: Eurostat, General government expenditure by function (COFOG)
  • Housing benefit figures: DWP Benefit expenditure caseload tables 2017, Table 1b and DWP Expenditure and Caseload forecasts 2017
  • Housing starts figures: Affordable Housing Starts and Completions in England funded by the Homes and Communities Agency and the Greater London Authority, DCLG Live Table 1012
  • Population projection: ONS population projections for England