Budget row highlights holes in Labour's housing plans

The Guardian reports that Angela Rayner and Rachel Reeves are at loggerheads over a major programme of social housebuilding, in the latest sign of cabinet tensions over this month’s budget.

The paper says that as housing secretary, Raynor has been pushing Reeves for billions of pounds more for affordable housing, which she argues will be needed to hit Labour’s target of building 1.5m new homes across five years. However, the Chancellor has made it clear that there will not be enough money available in this spending review for an immediate cash injection:

The standoff is the latest sign of the tensions across cabinet over both the budget and spending review, with several cabinet ministers yet to sign off on their individual departmental settlements.

Rayner is understood to have stressed to the chancellor that social housing should not just be seen as do-gooding but as a key part of the government’s growth agenda.

She told a panel during the Labour conference last month: “I actually think it’s a moral mission with the Labour government to recognise the problem and to build the social housing we need … But hopefully at the spending review, you’ll see that this government is really serious that we’re going to build those houses we desperately need.”

Treasury sources say, however, that they are not able to accommodate every department’s demands given the tight spending constraints.

...

Sources have told the Guardian that Rayner had asked for an immediate top-up to the affordable homes programme, a government scheme which allocates £11.5bn to local authorities and housing associations over five years.

The programme is due to expire in 2026, but sources in the housing industry said it was already running out and needed an immediate boost of up to £2bn. They pointed out that Michael Gove handed back nearly that amount to the Treasury last year after struggling to find projects to spend it on.

Kate Henderson, the chief executive of the National Housing Federation, said: “To deliver affordable and social housing at the levels needed, at the autumn budget we need … an urgent top-up in affordable housing funding, and commitment to a new multi-year affordable housing programme which prioritises funding for social rented homes.”

Polly Neate, the chief executive of Shelter, said: “This government was elected on a promise to deliver the biggest increase in social housing in a generation. The only way to do this is through serious investment and by recognising housing as fundamental to communities and growth and counting it as critical infrastructure.”

Government insiders said that while the chancellor had ruled out an immediate top-up to the programme, she had not made a decision on how large it should be after 2026.

Housing industry groups say that hitting the government’s annual housing targets would mean building 90,000 social-rent homes a year for the poorest households, at a cost to the government of about £11bn. However, lobbying groups admit they would be happy to settle for closer to £4bn a year – double the current allocation.

When I wrote about Labour's housing targets back in August I said that the real issue is affordability, something that ministers cannot rely on the private sector to enable. I added that if Labour are serious about providing homes where they are most needed then they will need to provide significant amounts of public subsidy and ensure that local councils and housing associations are sufficiently resourced to build the social housing that is required. They will also need to invest in infrastructure. This target cannot be met on the cheap.

IF they don't bite that bullet straight away then they may as well say goodbye to meeting their targets.