Government 1m home target not enough, says PAC

28 Apr 17

The government’s ambition to build one million homes does not go far enough to meet the country’s true housing need, a Public Accounts Committee report has stated.

Today’s PAC report Housing: State of the nation called on Whitehall to fully examine the impact to the supply of housing of the £21bn it spends annually on housing benefit.

This comes a day after Labour pledged to build a million homes – 200,000 a year – over the next Parliament, of which half would be council homes.

The PAC study highlighted the housing crisis was not just having a human cost, with rising homelessness, but it was hitting the public purse as councils spent £840m in 2015-16 on temporary accommodation.

This represents a real-terms rise of 46% in just five years.

MPs noted, of the £20.9bn spent on housing benefit in 2015-16, £8.4bn went to housing associations, which use rental income such as this to borrow to invest.

A further £8bn of housing benefit went to private tenants. This subsidised landlords in the private renting sector but did not contribute to the financing of new social housing.

However, neither the Department for Communities and Local Government nor the Department for Work & Pensions is able to quantify the impact of this funding on the construction of new homes.

The report states the government should identify a way to study the full impact of housing benefit on construction of homes; and examine the scope for this financing to be used more innovatively to increase housing supply and home ownership.

According to the committee there has been a long-running shortfall in the number of homes being built and the growing demand for homes.

Between 2001 and 2010 an average of only 144,000 homes were built a year, 100,000 fewer than were constructed in the 1970s – far below the 225,000 to 275,000 required to meet demand according to the PAC, or the 300,000 as set out by a 2016 Lord’s report.

MPs said: “Despite acknowledging that the housing market in England is “broken”, it (the government) remains dependent on the existing market, which is dominated by a handful of private developers, to realise its ambition”.

Currently the house building market is dominated by ten large firms, accounting for 60% of private homes built.

The report states these developers limit the rate of construction to what they believe the market can absorb and they have “little incentive” to accelerate this process.

The committee also recommends an international review should be undertaken exploring how other countries, with higher building rates, promote faster building and more affordability.

In February the government unveiled its white paper on housing, which set out measures to fix the “broken” system.

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