Labour comments on "buried details of government’s bad housing loans"
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Homes England, the government’s own housing agency, has disclosed
losses of £148.3 million arising from bad loans in 2022/23, more
than double the amount of losses disclosed by the agency in the
previous three years combined. The losses have arisen from seven
loan investments which had their value written down last year or
were written off entirely. In two of the cases, accounting for 97
per cent of the total, the agency says it cannot disclose details
of its loans or the...Request free
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Homes England, the government’s own housing agency, has disclosed losses of £148.3 million arising from bad loans in 2022/23, more than double the amount of losses disclosed by the agency in the previous three years combined. The losses have arisen from seven loan investments which had their value written down last year or were written off entirely. In two of the cases, accounting for 97 per cent of the total, the agency says it cannot disclose details of its loans or the reason they have been impaired, due to regulations against market abuse. Homes England has also admitted that, as of 31 March 2023, there were £230 million of bad loans on its books that it was still trying to recover through enforcement activity, up from £110 million at the end of March 2021 and £51 million at the end of March 2019. The revelations were buried in the agency’s annual report for the financial year 2022/23, one of 108 official ‘transparency’ publications released by the government on Thursday to coincide with the end of the Parliamentary session and the three by-elections that took place in England on that day. The disclosure of the losses comes as the government announced details of a new housing strategy in a speech from Secretary of State for Levelling-Up, Housing and Communities, Michael Gove, the minister responsible for Homes England. The only funding announcement included in his speech for the implementation of this strategy was the launch of a ‘Planning Skills Delivery Fund’ at a published cost of £24 million, a figure that represents less than one-sixth of the amount Homes England declared in losses arising from bad loans last year. Earlier this year, the losses being suffered by Homes England were one of 100 areas of waste highlighted by Labour’s Shadow Chancellor Rachel Reeves in a report on Rishi Sunak’s record in managing public money. At the time, she said: “While such loans inevitably have risks attached to them, it is not clear that HM Treasury or DLUHC are making any improvement in managing those risks.” A Labour spokesperson said: “Labour has been warning for months about the losses being suffered under the Homes England loans programme, and while the government has turned a deaf ear to those warnings, the scale of the losses has risen dramatically. “How can Michael Gove stand up and trumpet the benefits of a new £24 million fund for planning skills delivery when his own housing agency has just written off six times that amount in bad loans over the last year alone? “It says everything about the approach of this government that they are out there talking up another new strategy for housing, yet have absolutely nothing to say about the catastrophic losses facing their existing loans programme. “No wonder housebuilding is on course to hit its lowest rate since the Second World War. Only Labour will deliver the reforms required to build the homes we need.” Ends Notes The latest losses disclosed by Homes England as a result of loan investments that have been written off or impaired (and details of bad loans where enforcement activity is continuing) can be found on Pages 132-33 of its annual report below: Details of the equivalent figures in previous annual reports can be found here: https://www.gov.uk/government/collections/homes-englands-annual-reports-financial-statements From the reports above, below are the figures for the total losses for written-off and impaired loans declared by Homes England over the past five years:
From the same reports, below are the figures described by Homes England as “the contractual amount due on loan investments for which amounts have been written off or impaired, and which are still subject to enforcement activity” at the end of each financial year dating back to March 2019:
In its latest annual report, Homes England provides a breakdown of the seven cases which made up the total of £148.33 in losses arising from written off and impaired loans in 2022/23. The two cases which make up 97 per cent of those losses are described as follows, in both instances representing the previously recorded value of the loans that the agency no longer expects to recover. “£87,362m: Market Abuse Regulations preclude further commentary. An accounting impairment of £73.5m, together with reversal of previous fair value uplifts of £13.9m, have been recognised in 2022/23 to reflect the potential loss on the full outstanding amount. The equivalent total impairments expected against contractual amount due (principal and interest) were £96m at 31 March 2023. As at 31 March 2023, total cumulative accounting impairments recognised were £73.5m.” “£56,744m: Market Abuse Regulations preclude further commentary. An accounting impairment of £53.1m, together with reversal of previous fair value uplifts of £3.6m, have been recognised in 2022/23 to reflect the potential loss on the full outstanding amount. The equivalent total impairments against contractual amount due (principal and interest) were £67m at 31 March 2023. As at 31 March 2023, total cumulative accounting impairments recognised were £53.1m.” Market Abuse Regulations prohibit the unregulated disclosure of information that could have an impact on the market value of companies or their shares. In addition, Homes England’s losses for 2022/23 include a further £1.79m written off in relation to a long-term infrastructure loan provided by the Home Building Fund to support the development of 3,000 homes, a scheme that is no longer viable with a borrowing entity which has gone into liquidation. A loss of £15.5m was recognised in 2019/20, a further £0.7m in 2020/21 and £1.3m in 2021/22, with the latest £1.79m write off for 2022/23 representing a further downgrade of the original loan forecast as recoverable. As at 31 March 2023, cumulative losses written off from the investment total £19.3m. Labour’s February 2023 dossier on 100 examples of waste incurred on Rishi Sunak’s watch as Chief Secretary and Chancellor can be found at the link below, with the losses incurred by Home England as a result of bad loans highlighted at No.30 in the list: https://labour.org.uk/wp-content/uploads/2023/02/100WastesDossier.pdf |