New housing, roads, public transport, green spaces, schools and jobs have been plunged into doubt after the Government’s housing agency pulled funding for two schemes.
An inquiry by the committee heard evidence from planning consultants that annual housebuilding will go down to around 150,000 a year under the Government’s proposed policy reforms, which include changing mandatory local housing targets to an ‘advisory starting point’ and removing the requirement for a five-year supply.
A spokesperson for Homes England this week confirmed it and the Department for Levelling Up, Housing and Communities (DLUHC) had withdrawn support for the £170m Housing Infrastructure Fund (HIF) programme on the Hoo Peninsula in Medway and the £140m South Lancaster Growth Catalyst, with a further unnamed scheme believed to be at risk of having its funding pulled.
More than 13,000 homes across Medway and Lancashire were dependent on Homes England’s funding pledge.
Construction costs have soared by 40%, hitting the agency’s confidence the two schemes will be deliverable with the same amount of funding.
Medway Council has called on Homes England and DLUHC to continue to back its £170m programme and has written to housing secretary Michael Gove to request an urgent meeting, which has yet to be arranged.
Council leader Vince Maple said the HIF was the ‘backbone’ to Medway’s economic and social prosperity while deputy leader Teresa Murray said she was ‘heartbroken’ by Homes England’s decision.
Medway had previously proposed a reworked scheme that would have kept to the original funding envelope.
Only 20,000 out of 270,000 (7%) homes being built through the £4.2bn Housing Infrastructure Fund have been started, with just 35% of 124 contracted projects having fully drawn their grant so far.
North Somerset Council last week agreed an extra £12m to help pay for a new £90m ‘landmark’ bypass project, but the cash injection still only fills half of a £24m funding gap caused by ‘unprecedented’ price increases linked to the pandemic, war in Ukraine and Brexit.
A report to councillors said the council had asked Homes England for additional HIF funding to cover the £12m shortfall.
It recently emerged that DLUHC has handed back £1.9bn originally meant to tackle England’s housing crisis – a third of its housing budget - to the Treasury.
Shadow housing secretary Lisa Nandy said: ‘This absolutely beggars belief.
'We are in the middle of an acute housing crisis.’
Jack Shaw, a local government expert who uncovered the £1.9bn figure through a Freedom of Information Act request, said: ‘The Government is experiencing significant challenges investing in housing because of a perfect storm in market conditions, but the decision to delay housing investment or withdraw it altogether as a result of lower than anticipated spending will mean fewer homes are built.’
LUHC chair Clive Betts said: ‘We have a national shortage of housing in England and there’s evidence the Government’s latest shake-up of planning rules is already having a damaging impact on efforts to increase the building of new homes.
‘Without urgent action, the Government will fail to achieve its national housing target of building 300,000 net new homes per year by the mid-2020s.’
A DLUHC spokesperson said: ‘The taxpayer rightly expects us to only continue funding projects if we are still confident they can be delivered and unlock the homes we need.’
