Wednesday, July 25, 2012

House of Lords Written Answers - Building of Affordable Homes

Lord Beecham:

To ask Her Majesty's Government what steps they will take to mitigate the risk of failing to secure the building of 80,000 affordable homes by 2015, and the extra cost to the public purse of £1.4 billion, as a result of rising housing benefit costs, identified by the recent National Audit Office Report -  Financial viability of the social housing sector: introducing the affordable homes programme.

 The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham):

The National Audit Office report confirmed that:

 "The Department of Communities and Local Government selected the best delivery model open for the funds it had available. The Department has so far achieved its policy objective to maximise the number of homes delivered within the available grant funding. On average, the grant awarded per home is a third of previous programmes.

"Affordable housing is supported by both public capital investment, and housing benefit. Whilst the Government have acknowledged that the affordable homes programme will place some additional pressure on housing benefit, the new affordable rent model has permitted a reduction in capital grant rates from around £60,000 per property to only £20,000.

"This has allowed the Government to fund far more, much needed, affordable homes than would have been possible under the old model of delivery. As the National Audit Office noted, the Government now expect to deliver 80,000 new affordable homes through the affordable homes programme. It would only have been possible to fund 27,000 using the old model.

"This means that many more households will have the opportunity to live in a new sub-market rented property, rather than the Government supporting them through the payment of local housing allowance in the private rented sector. The most effective way of mitigating the housing benefit pressure is therefore to ensure that the new affordable rent homes are delivered.

"The Homes and Communities Agency monitors delivery through regular meetings with providers. Where risks arise to delivery, it will be taking action to mitigate these. The Agency provides this Department with regular progress reports and risk assessments. It has taken steps to bring forward delivery of affordable homes. Figures are set out in its corporate plan, published on 6 July.

"I would note that the £1.4 billion figure that the noble Peer cites is a net present value extrapolated over 30 years, rather than a cost over the Spending Review period. In the context of the need to tackle the deficit left by the last Administration, the affordable rent programme delivers greater economic and social benefits for the taxpayer and will result in far more homes being built than would have been possible under old funding models."

Indeed, the Government's broader affordable housing programme is delivering £19.5 billion of public and private investment over this Spending Review period.