Commenting on yesterday’s announcement by the Mayor and the Homes and Communities Agency on the allocation of funding for affordable house building to London, Nicky Gavron AM, Labour Group Spokesperson for Planning and Housing on the London Assembly, said:
“Despite the Mayor putting a brave face on it, London is getting less for less.
The new information is that the Mayor has been given only £627 million to spend on additional affordable housing between 2011 and 2015 over and above what is already in the pipeline. This is a cut to London of 87%1 2 compared with the previous funding round.
From 2008 the last Government gave London £5bn to spend on affordable housing, of which £3.7bn was used to deliver 50,000 affordable homes by 2011. This deadline was missed and £1.1bn of this new package is to finish the job and is committed to homes already in the pipeline.
To make up for the Government’s cuts, the private sector contributions of £2.5bn announced in his press release will come from borrowing by housing associations. This is more in four years than they have collectively borrowed since the late 80s3. This model of funding is not sustainable.
The settlement also confirms that 1,500 homes in the pipeline and funded under the previous Government’s programme as social housing – the lowest-cost housing for rent, which is so desperately needed – have been lost in London because they will now be converted to the so called ‘Affordable Rent’ model4. In many cases this will double rents for low-income households in London and price many families out of the housing market.
In the context of housing benefit caps, welfare reforms and rising homelessness, the growing need in London is for low rent family housing. But this deal is particularly damaging for families. We understand that only around 30% of the homes will be family sized. This seriously undermines Boris Johnson’s pledge that 42% of new homes should be for families, a fact omitted from his press release.”
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Notes to Editor:
1. The Homes and Communities Agency outturn statement (pdf) confirms that expenditure between 2008 and 2011 in London was £3,753m, £1,251m a year over three years.
2. The new programme of £157m a year for four years represents a cut of 87%.
3. On 5 April 2011 Stephen Howlett, then Chair of the G15 Group of Housing Associations, told the London Assembly Planning and Housing Committee:
“I think one calculation is that, to deliver the Mayor’s programme, will take as much private money over the next four years as associations have borrowed since 1988 to deliver the homes in London. Those exact figures are open to comment but I have to emphasise that housing associations in London will be taking on enormously increased debt and risk as a result of this.”
4. The London Assembly Planning and Housing Committee recently published a report on the impact of the Affordable Rent model on London, the findings of which are summarised in a press release available here.