On Wednesday 11 June, Chancellor Rachel Reeves will publish the Government’s much-awaited Spending Review. This will set out the Government’s spending plans for the next few years, covering both spending and investment.
Reeves has already announced a £190 billion increase in funding over the spending review period and a £113 billion investment package, which she said will “power growth and renew our public services”.
“Public investment will be at its highest sustained level since the 1970s,” said Reeves in a speech last week. “Combined, these changes deliver over £300 billion of extra spending across five years, on our public services and on our economic future.
“Britain faces a binary choice — investment, or decline. And I choose investment, because I believe in an entrepreneurial, and an active state.”
Even so, Reeves said that “not every department will get everything that they want”. With cabinets all vying for funding, where the Government chooses to allocate its spending will be an important reflection of its priorities.
So what does this mean for housing?
“Most people, including politicians, accept that we are in the midst of a housing crisis, so we hope that the Chancellor addresses this, particularly the continuing shortage of social and affordable housing for sale and rent in areas of high demand,” says Jeremy Leaf, estate agent and a former RICS residential chairman.
“We have heard many encouraging words since the change of government but change on the ground is not happening fast enough. Uncertainty is the enemy of investment and the cost of doing nothing is far higher.”
Amid the uncertainty, here’s what we might be able to expect from tomorrow’s Spending Review.
The Government is under pressure to meet its election target of building 1.5 million new homes
PA Wire
The Labour Government pledged to build 1.5 million new homes in its election manifesto, and Reeves is under pressure to allocate the funding to reach these targets. It is expected that new housing investment will be announced on Wednesday.
Florence Eshalomi, Chair of the cross-party Housing Committee, said that the review is “make or break for the 1.5 million target” in an open letter to Reeves last week.
According to the Committee, the Government will fail to meet this goal if it relies on private sector investment alone, arguing instead that a “generational increase in social and affordable housing investment is required”.
Shelter have consistently called for the Government to invest in 90,000 social homes a year in the spending review to help end homelessness.
“As homelessness soars and over 1.3 million households are stuck waiting for a social home, it is absurd that we continue to lose more social homes than we build,” said Polly Neate, Shelter’s chief executive. “To truly clear waiting lists and end homelessness, the Government must now commit enough investment at the next spending review to build 90,000 social rent homes per year for ten years.”
The National Housing Federation argues that housebuilding must sit alongside a new Affordable Homes Programme. Its models show that an investment of £7.8 billion per year across all social landlords could deliver 500,000 homes.
It has also called for a 10-year rent settlement to support housebuilding, as well as targeted funding to repair and remediate existing housing stock.
“Action to address the issues is not just about building but making better use of existing stock,” Leaf agrees. “We want to see transaction numbers increase, greater balance between supply and demand and more assistance for first-time buyers who won’t be helped by another boom and bust in prices.”
But while an increase in spending on affordable housing is expected in the spending review, it remains to be seen how much will be allocated.
Reversal of winter fuel cuts
After being elected last year, Reeves announced that the winter fuel payment, worth up to £300, would be scrapped for around 10 million pensioners, with only those on pension credit to remain eligible.
Now, pensioners with an income of £35,000 or below will be entitled to receive the payment. For couples, if each partner as an income on or below £35,000, they will keep the full winter fuel payment. If they are both above this level, they will lose it.
If one of them has an income of £35,000 or below, and the other has a higher income, they will receive half the winter fuel payment.
The Government aims to retrofit the 715,000 housing association homes that have an EPC rating below C
PA Wire
In its manifesto, Labour pledged a £6.6 billion “Warm Homes Plan” to support energy efficient upgrades to properties like solar panels, batteries and low carbon heating.
With budgets tightening, though, there are concerns that some of these investments will be scaled back.
The National Housing Federation has called for Labour to continue to fund the programme in line with its manifesto commitments. It cautions that the Government needs to nearly double its current rate of progress in order to meet its target of retrofitting the 715,000 housing association homes that have an EPC rating below C.
Housing to be reclassified as infrastructure
A group of six housing associations have called for housing to be reclassified as critical infrastructure ahead of the spending review. Between them, the associations own or manage more than 1.7 million homes across the UK.
The reclassification, they argued in their Spending Review submission, would allow Reeves to commit extra funds to housing without breaking her fiscal rules.
They wrote: “Reclassifying housing investment as infrastructure spend would unlock long term funding, enabling consistent delivery, larger strategic developments, and better deployment of resources. Reclassification is the only way we can we deliver the pipeline of new homes needed, alongside the decarbonisation of existing homes and the renewal of our towns and cities.
“Housing is fundamentally essential and significant infrastructure, and therefore funding should be classified in the same way as other significant national projects such as road, rail, schools and hospitals. With the support of recent planning reforms, new homes could be delivered at the pace and scale needed to tackle the housing crisis.”