Mayor Sadiq Khan locked in talks with government to tie down details of £4bn programme

Lobby groups have raised concerns over the scale of investment in affordable homes announced by the government yesterday, amid continued wrangling over the scope of the funding package in London.

London new build housing

The government yesterday confirmed that it will spend £12.2bn on affordable housing in the five years between 2021 and 2026, with £11.5bn of that being newly allocated money, which it is claiming represents the biggest commitment to affordable housing in a decade.

This includes a £7.5bn programme for England outside of London, representing a £2bn uplift on the last settlement.

However, amid ongoing political tensions with the Labour mayor of London Sadiq Khan, the government has plans to put just £4bn of that into the capital, the same figure as in the last round. This is despite Greater London Authority-backed research suggesting London needs nearly £5bn invested every year  in order to meet demand.

This comes as it emerged the government and Sadiq Khan have so far failed to reach agreement over what the £4bn funding will be used for. The government press release announcing the programme said negotiations over what the £4bn will be expected to deliver were still “in progress”, with a spokesperson for the mayor saying that the “finer points” were still being hammered out.

Jonathan Seager, executive director of place at business lobby group London First, said the level of investment being offered only scratched the surface of England’s housing crisis, and didn’t meet the need in London.

He said: “The potential £4bn on offer to the Greater London Authority over five years is just below what London requires every year to help meet affordable housing need in the capital. In finalising the settlement with the mayor, the government must recognise the overwhelming need for affordable rented accommodation in London.”

London mayor Sadiq Khan

Sadiq Khan (pictured, right) has previously called for the government to deliver “significantly more investment” in affordable housing for the capital, in order to focus on the construction of homes at social rent levels. However, the GLA spokesman said Khan was reserving judgment on the allocation from government until negotiations had been finalised.

The spokesman said: “City Hall research found London needs £4.9bn every year to deliver the homes the capital requires, but instead we have been allocated just over £4bn for five years.

“The Mayor’s team are continuing negotiations with the government to seek to ensure that our city has the tools and resources it needs to build the affordable homes Londoners deserve as we recover from the pandemic.”

Meanwhile, while many have welcomed the investment, other groups raised concern over the scale of the package overall, despite it representing growth compared to the previous £9bn programme.

RIBA President, Alan Jones, said the package did not do enough to help the 1.15 million households on social housing waiting lists. “If the government is serious about fulfilling its ‘levelling up’ agenda, it must tackle the severe shortage of council houses, by giving local authorities the power and resources they need to take the lead.”

The £12.2bn programme is designed to see 180,000 homes built, of which around half will be for affordable home ownership, and around half for rent, either at affordable rent or the much cheaper social rent level.

Polly Neate, chief executive of Shelter, said the deepening covid-induced recession meant the government had to invest more in social housing than its current plans allow for. She said: “Social homes are designed to be genuinely affordable, which is exactly what we need right now. Discounted homeownership schemes are not.

“Achieving the step change we need to deal with the scale of crisis that we face will require the government to go further, faster.”

The full prospectus from Homes England inviting registered providers to bid for funding from the programme is due to be published later this week.

Housing secretary Robert Jenrick MP yesterday said the programme represented the highest single funding commitment to affordable housing in a decade. “This government is helping hard-working families and prospective first-time buyers get their feet on the housing ladder in an affordable way,” he said.