Watchdog predicts Welsh Government will miss social housing target without significant additional spending
The Welsh Government will fail to hit targets it set in the ‘Programme for Government for 2021 to 2026’ for new low carbon social homes for rent without additional funding of hundreds of millions of pounds, Audit Wales has warned.
The target was set at 20,000 new homes, but Audit Wales believes this will be underperformed by 3,330 – 4,140 homes by the March 2026 deadline, unless room is found for additional investment of between £580m to £740m.
In a report addressing the delays and funding issues faced by the Welsh Government, the watchdog said the Welsh Government would also need to deliver all the schemes in its pipeline, some of which are considered risky, and must additionally complete a small number more.
There are options to make existing funding go further, including shifting the balance towards more acquisitions of existing homes, Audit Wales said, but these may not offer value for money over the longer-term.
The Audit Wales report found that three years into a five-year programme, the Welsh Government estimates that it had secured fewer than half (between 8,859 and 9,197) of the 20,000 social homes.
The expenditure on affordable housing has been higher than initially expected due to unforeseen rises in cost. In 2021, the Welsh Government estimated it would spend around £1.6 billion on core capital schemes to deliver the target.
Despite being only three years in, the government has spent £1.27 billion in total as of the end of March 2024. This includes £1.10 billion directly funding the construction of homes that contribute to the target. It also spent £166.5 million on schemes that indirectly support the delivery of the target.
Audit Wales’ report issues a number of recommendations, including that the Welsh Government should conduct detailed scenario planning to provide a clear and early indication of funding for the key affordable housing schemes in 2025-26.
Scenario planning should include:
- the likely outcomes, in terms of homes delivered;
- costs and benefits of changing the balance between new build and acquisitions, particularly through the Social Housing Grant; and
- an assessment of funding required in 2025-26 to progress schemes that will deliver outside the target period, if a cliff edge is to be avoided.
Adrian Crompton, Auditor General, said: "Price inflation has hit the affordable housing programme hard. The Welsh Government now faces difficult choices about its funding priorities and approach if it remains committed to meeting or getting close to its 20,000 social homes target by March 2026.
“How the Welsh Government responds will further test its application of the ways of working expected under the Well-being of Future Generations (Wales) Act 2015. This includes how it balances short-term and long-term needs, builds on its collaborative approach, and looks to maximise positive outcomes from the significant public expenditure in this area."
The full report, ‘Affordable housing’ is available here.
A Welsh Government spokesperson said: “We thank Audit Wales for their report into affordable housing in Wales and we will be considering its findings and recommendations and will respond in due course.
“There are a range of factors impacting housing supply, not least the recent sustained period of record inflationary pressures, which has made achieving the target even more challenging. We continue to work with the housing sector to deliver more homes.
“Tackling homelessness and delivering more homes is a key priority for this government and we have set a challenging target and allocated record levels of funding to housing supply in this Senedd term, with more than £1.4bn invested so far.”
Harry Rodd
