The Inside Edge
The Governments Affordable Homes campaign, launched in 2011, was designed to get Britain’s home builders moving to provide the supply to meet a considerable demand. However, reports released by the National Audit Office (NAO), suggest that the scheme may fall some 50% below its intended target.
The plan had looked to deliver 80,000 new properties by the end of 2015 but the NAO are not only suggesting that the numbers may be nearer 40,000, they also suggest that due to financial issues, providers may not be able to keep to their agreement and charge 80% of market rent.
The plans, announced in 2010, left little room for negotiation and manoeuvre at the time,
“There are key risks including the fact that more than half of the homes are planned for the final year, with no room for slippage,” said Amyas Morse, Comptroller and Auditor General.
“The final judgment on the success of the programme will depend on how well these risks can be managed between now and 2015.”
Under the programme, different organisations had set themselves up as housing providers and these included local housing associations, local authorities and private companies. The main problem, as identified by the NAO seems to lie with those providers struggling to raise adequate finance to fund the project.
“Some have had to offer additional collateral, generally in the form of assets rather than cash, to lenders because of using financial derivatives to reduce their interest rate risk,” the report claims.
“A survey by Baker Tilly in 2012 found that 63% of registered providers who responded are now considering alternative funding other than traditional banking sources, the most popular being corporate bonds.”
Margaret Hodge will chair the public accounts committee that will examine the report and she indicates that the government will not explain at this stage as to just how many tenants are likely to be affected.
“The department has scrapped the target rent guidelines for this programme, leaving vulnerable tenants increasingly dependent on housing benefits and increasing the welfare bill by £1.4bn,” she said.
“The department has refused to be transparent about just how many tenants will be affected and by how much.”
Margaret Hodge went on to suggest that the scheme would have to be more transparent if there was any hope of it being completed on time.
“My committee will want officials to regularly and transparently update their assessment of the costs and benefits of the programme so that we can hold them to account for the social and financial consequences of their decisions, particularly in light of changes to the welfare system,” she concluded.