Government ‘unable to spend’ £1.9bn allocated to tackle housing crisis

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Billions of pounds allocated to tackle Britain’s housing crisis has been returned to the Treasury because the housing department was unable to find projects to fund.

Figures released under the Freedom of Information Act show the Department for Levelling Up, Housing and Communities (DLUHC) was unable to find projects for the £1.9bn of funding budgeted for 2022-23.

This amounts to a third of DLUHC’s housing budget, and includes £255m meant to fund new affordable homes and £245m intended to support improvements to building safety following the Grenfell Tower fire, according to the figures first published by the Guardian.

The failure to spend money is likely due in part to rising interest rates and uncertainty in the housing market making it difficult to find projects to fund.

File photo dated 16/02/21 of The Grenfell Tower. Just 2% of money allocated to remove dangerous Grenfell-style cladding from Scottish homes has been spent, the Scottish Conservatives have claimed. Issue date: Tuesday July 11, 2023.
Image:
Grenfell Tower

Around £1.2bn earmarked for Help to Buy was also handed back in the last year of the scheme’s operation due to lower-than-expected demand.

When departments fail to spend money budgeted for a given year, they can “reprofile” the spending into future years.

DLUHC has done this with another £363m that was meant to be spent on affordable homes in 2022-23 but will now be spent in 2023-24.

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The money must be surrendered to the Treasury if the spending is delayed beyond the next spending review, which could come in 2024.

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Lisa Nandy, Labour’s shadow housing secretary, said: “This absolutely beggars belief. We are in the middle of an acute housing crisis, even the Housing Secretary says the system is ‘broken’, and yet the Government was unable to spend a third of its housing budget.

“The Tories have simply given up.”

A DLUHC spokesperson said: “These are multi-year funding programmes that are being spent flexibly – meaning some money can be moved into future years depending on demand and the wider economic climate.”

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The Government missed its target of building 300,000 new homes annually in 2022 by around 100,000.

But campaigners fear a recent decision to scrap housing targets means the Government will struggle to keep its promise.