It is reported that £817 million for 2017-2018 allocated to local councils for affordable housing and infrastructure has been returned to the Treasury. Not surprisingly MPs are demanding an explanation. It is expected this week that housing minister Dominic Raab and minister of homelessness Heather Wheeler will be questioned on the issue. This is seen as a critical time for the national housing situation in Britain as many local councils are in urgent need of government assistance for housing needs.
The Independent reports that a memo circulated by the Department for Housing, Communities and Local Government says that the money for homes will be “utilised to offset the budget requirement for the Help to Buy programme.”
The memo also stated the £329 million allocation for starter homes for first time buyers has been sent back to the Treasury.
“Starter Homes budget was surrendered as agreed with [the Treasury] to contribute to the higher Affordable Housing investment in future years.”
“The Independent revealed late last year that, despite being a flagship Conservative policy for boosting home ownership, not a single Starter Home has yet been built.”
John Healey, Labour’s Shadow Housing Secretary, said: “Feeble ministers are selling families short by surrendering much-needed cash for new homes."
Tory MP Bob Blackman of the Housing, Communities and Local Government Committee has responded in the Guardian:
“We will be wanting to know why this very large sum has not been spent at a time of great strain on local authority budgets, and why it was not channelled to other spending projects. It does not help those of us who argue that more should be given to local authorities if the chancellor knows money he gave last time has not even been spent.”
As for progress on the funding of new housing:
“We’re making good progress on building the homes this country needs with, last year, a 20-year record high for housebuilding. This is how we build an economy that works for everyone.”
One member of Parliament Helen Hayes MP (Labour) was reported to be ‘astonished’ that the money had gone unspent since grants have been decreasing since 2010 due to budget cuts and the ‘right to buy’ schemes that allows council homes to be bought at a reduced price of 40%.
Helen Hayes MP said:
“This is the biggest issue for families up and down the country, including in my Dulwich and West Norwood constituency.”
“It is simply astonishing and unacceptable that there is so little urgency being shown.”
The Guardian reports:
“Hundreds of councils have set up their own property development companies to build homes and get around the rules. But progress has been slow, in part because of the threat from
ministers that they might extend the right to buy to the new council-owned companies.”
Shadow housing minister John Healey says Sajid Javid the housing and local government secretary left unused £220m for affordable housing in 2017.
Mr. Healey: “Sajid Javid needs to explain why he is selling families short by surrendering much needed cash for new homes.”
“If the secretary of state can’t defend his department’s budget from the Treasury he should give the job to someone who can.”
A housing spokesman told the Guardian:
“We are investing £9bn in affordable homes, including £2bn to help councils and housing associations build social rent homes where they are most needed.”
“All of the affordable housing underspend from 2016-17, including £65m returned by the
Greater London Authority, has been made available to spend on similar schemes.”
The National Audit Office reports that at least “...10% of unitary authorities and county councils have less than three years’ reserves left if they continue to deploy them at current rates, leaving them vulnerable to potential insolvency.”
Prime Minister Theresa May has announced a renewed commitment to help with the housing crisis in Britain. In her speech last week Prime Minister Theresa May is planning to make it more difficult for developers to "sit on land and watch its value rise.” She has called on developers to ‘Do your duty for Britain” by building more affordable homes and to bring the properties to market at a quicker pace. She is proposing changes to Green Belt rules for increased housing density.
The Prime Minister also stated:
“...cannot bring about the kind of society I want to see, unless we tackle one of the biggest barriers to social mobility we face today" - the lack of affordable housing.”
“That is what this country should be about – not just having a roof over your head but
having a stake in your community and its future. All that is put at risk by the mismatch
between housing supply and housing demand and the soaring prices that have resulted.”
“We’re investing in innovative modern construction methods that get more homes built
more quickly. The £5 billion Housing Infrastructure Fund has already made its first awards, investing almost £900 million in the roads, cycle paths, flood defences and other essential works that will allow for the construction of up to 200,000 homes that would otherwise not get built.”
"We’re making it easier for neglected and abandoned commercial sites to be turned into homes."
"And we’re making sure councils do all they can to find sites, grant planning permissions
and build homes. That includes creating a nationwide standard that shows how many
homes authorities need to plan for in their area – making the system fairer and more transparent."
“And we’ve put an additional £1.5 billion into the Home Building Fund, helping smaller
developers deliver homes that don’t attract finance from the private sector. As one
builder put it after finishing a development in Derbyshire: “The banks were very sceptical
and very unhelpful. The Home Building Fund finance made all the difference.”
It was reported by BBC in 2014 that £1.5 billion in community money had gone unspent by Councils in England. The report found that over a five year period £9.8 million had been returned to developers “often because it has not been spent within a set time period.”
Freedom of Information requests were sent to 353 local council authorities with 316 reporting at that time:
“Hertfordshire County Council holds the most "unspent" money with £56m”
“Swindon Borough Council has the most "unallocated" money with £18m”
“Essex County Council returned the most cash to developers, with £1.2m in the past five years.”
At the time of these revelations Mark Dempsey, the shadow deputy leader of the Conservative-controlled Swindon Borough Council, which also had £18 million uncommitted to local projects said:
"It's a story of not managing section 106 money. What we need is a full review of how this money is managed, so we can give real value for money."
Money for a development in the north of the town led to Section 106 money being returned to developers.
"It was meant to be spent on a new link road to the town centre, a new sports hall and football pitches, but none of this has taken place," he said.