Written statement on The Social and Affordable Homes Programme and the reinvigoration of council housebuilding - Sep 1

Minister for Housing and Planning (Matthew Pennycook): Everyone deserves to live in a decent, safe, secure and affordable home. Yet far too many families in need of one are languishing on local authority waiting lists and almost 180,000 children are growing up in temporary accommodation, including over 100,000 in London. That is why this government committed in its manifesto to delivering the biggest increase in social and affordable housebuilding in a generation and supporting councils and housing associations to make a greater contribution to affordable housing.

After years of marginalisation, we are once again asserting the necessity and the value of social rented homes. They are a crucial national asset to be proud of, to invest in, to protect and to maintain. Under the leadership of the new Prime Minister, the government is also determined not only to build upon the steps we have already taken to reinvigorate council housebuilding but to decisively raise our ambition to ensure we build council houses on a scale not seen in decades.

To kickstart social and affordable housebuilding across the country, we have delivered the biggest boost to grant funding in recent memory through our new 10-year £39 billion Social and Affordable Homes Programme. The core strategic objective of the Programme is to maximise supply particularly of Social Rent homes, with a target to deliver at least 60% of the homes under the Programme as Social Rent in line with our manifesto commitment to prioritise this tenure.

Taken together with the steps we have taken to rebuild the sector's capacity to borrow and invest in new and existing homes and to establish an effective and stable regulatory regime, this unprecedented funding will enable councils, housing associations and other social and affordable housing providers to step up and deliver at scale and pace.

On 25 August, we announced initial allocations of funding from the Social and Affordable Homes Programme so that we can start to deliver the significant increase in supply it will facilitate. We also took the opportunity to set out how the Programme will evolve over its ten-year lifetime, reflecting the emphasis the new Prime Minister has placed on increasing council housing delivery and deepening devolution through a major transfer of powers, resources and functions from central government to elected mayors and local authorities in regions across England.

As a government, we remain committed to a renewed partnership with the sector. We call on providers of all kinds, developers and local leaders to help us successfully deliver the Programme.

Reinvigorating council housebuilding

Direct council delivery of Social Rent homes has a range of benefits, including democratic accountability, the ability to tailor provision to meet local housing need, and the creation of public assets that generate rental income which is reinvested in local housing to sustain and support communities.

It is also the case that the last time we built social housing on the scale that is now required, councils were the driving force, delivering tens of thousands of social homes each year until building rates fell off dramatically from the early 1980s onwards as a result of the constraints and restrictions created by the introduction of the Right to Buy scheme.

Housing associations and other providers will continue to play a key role in the delivery of social and affordable homes, and we want to encourage greater partnership working between councils and housing associations, but we are also determined to enable councils themselves to once again build at scale. We know that hundreds of councils share our ambition to secure the future of council housing.

The government has taken a number of steps over the past two years to reinvigorate council housebuilding. These include fundamental reform of the Right to Buy scheme; enabling councils to retain 100% of receipts from Right to Buy sales; a 10-year social housing rent settlement at CPI+1%; Social Rent convergence; the extension of the preferential' Public Works Loan Board borrowing rates until the end of March 2027; an increase to the threshold for when a council must open an HRA from 200 to 1,000 homes; and funding to increase skills and capacity within councils to build. These changes are already bearing fruit with councils in 2024/2025 delivering the highest number of social homes since the current reporting period began in 1991/1992.

However, we need to go much further. As a first step, we will make sure that councils are able to access more of the funding available through the Social and Affordable Homes Programme. As we do so, we are urging councils to make timely and effective use of Right to Buy receipts, which can now be combined with grant secured through the Programme, and unspent Section 106 (S106) affordable housing contributions. Every pound that can be used for council housebuilding is a step closer to more safe, secure and affordable homes for families across the country.

As a government, we will continue to explore further ways we might support councils to expand their stock of social homes, including low-cost borrowing options, and to make use of existing powers such as those which enable the removal of hope value from the assessment of compensation in compulsory purchase cases where the public interest justifies this. We will be engaging intensively with councils over the coming months to explore these and any other constraints to building at scale.

Investment to strategic partners

As part of the initial Social and Affordable Homes Programme funding allocations announced on 25 August, we confirmed the first Strategic Partnerships designed to support providers who have asked for greater certainty of funding for the duration of the Programme and are in a position to quickly begin delivering large numbers of new social and affordable homes.

In response to the opening of bidding, we saw an extremely large number of applications and unprecedented appetite for support on the part of providers. We thank everyone who applied for responding to our call to arms and submitting ambitious bids.

From an extremely competitive field, funding has been awarded to the highest quality bids as assessed by Homes England. This means that across England (excluding London), 33 providers will receive funding totalling £9.58 billion to invest in new social and affordable housing. Nearly two-thirds of the homes built by Strategic Partners through the Programme will be for Social Rent.

For the first time ever, three councils will also be awarded Strategic Partnership status with Homes England: Cambridge City Council, Eastleigh Borough Council and Newcastle City Council demonstrating how councils are stepping up to meet our bold ambitions.

The total funding of £9.58 billion includes an estimated £2.45 billion for delivery in six Established Mayoral Strategic Authority (EMSA) areas outside London, supporting the individual priorities of mayors who set the strategic direction of the Programme in their areas.

Investment through continuous market engagement

The £9.58 billion of funding allocated through Strategic Partnerships will deliver tens of thousands of social and affordable homes across the country in the coming years, but with £39 billion of funding available over the lifetime of the Programme there is over £16 billion of funding outside London and around £5 billion in London still yet to allocate. This includes funding in each year of this Spending Review period (2026-2030) and significant sums in the second half of the Programme.

In allocating this funding, the government intends to prioritise Social Rent homes and in particular council homes so that we can achieve the Prime Minister's ambition to deliver the biggest council housebuilding programme since the post-war boom ended in the early 1980s. That said, funding will also be available for other providers,and we call on partners to come forward with strong bids in respect of specific sites.

In calling on councils to come forward with bids for new council homes, we will look to raise the cap on funding for acquisitions so that councils can buy more homes while they increase their capacity and capability to deliver homes directly. We are also reinvigorating our existing skills and capacity programme, re-branding it Capacity to Build'(opens in a new tab) and providing it with an extra £46 million to be invested over the next three years to give councils access to the skills and support they need to deliver ambitious housebuilding plans. In the later years of the Social and Affordable Homes Programme, marked by a deepening of devolution and significantly more unallocated funding, we will look to ramp up rates of council housebuilding even further.

London

In the early years of the Programme, London will receive 30% of the funding, and up to £11.7 billion overall across the lifetime of the programme. As such, we have confirmed that the Greater London Authority intends to offer allocations of at least £6 billion to providers of social and affordable housing operating in the capital to support housebuilding efforts there and address the city's acute need for new social rented homes.

London is already showing what can be achieved through fuller devolution when it comes to council housebuilding. With half of all council homes built in 2024/2025 coming forward in London, we expect over half of all the delivery in London through this funding to come from councils.

Devolution

We have seen in London what can be achieved when local leaders have the powers, capability and long-term certainty to shape housing investment. We want more mayors to have the opportunity to reach that position.

We therefore intend to ensure that as the Programme progresses more funding will flow directly to EMSAs outside London, building on the strategic direction they have set to ensure decisions about social and affordable housing investment are made locally. As mayors are given more power over grant-funded delivery, the government will work closely with them to maximise council housing delivery.

To pave the way for this future transfer, we want to support and empower mayors to quickly increase the capacity and capability of their authorities to deliver housing and regeneration schemes. As such, dedicated delivery expertise will be made available to individual EMSAs as part of the government's commitment to establish Joint Delivery Units between mayors and Homes England.

The approach we take to the Programme will be consistent with the commitments made in the Cabinet Statement on Rewiring the State, including in respect of funding mayors through retained taxation rather than grant.

Supporting job creation through investment in social housing delivery

Alongside its social and wider benefits, the Programme supports economic growth via job creation. Every home built through grant funding provided through the Programme will support jobs directly and indirectly through construction and supply chains.

We want to maximise the impact of the Programme on the employment market and wider economy. For partners delivering through the Programme, we ask all providers to consider what more you can do to support young people into employment, creating clear opportunities through the investment being provided.

The government has been driving innovative training programmes, including directly in the housebuilding sector, through skills development in Modern Methods of Construction. We will continue to explore how we can build on the progress made to date to support young people into employment, focussed on addressing skills shortages and training.

Facilitating the delivery of S106 homes

Section 106 agreements are, and will remain, an essential mechanism for delivering social and affordable housing. They account not only for a significant proportion of affordable home completions, but also a significant share of total new home delivery. Without them, the development pipeline as a whole is at risk of contracting sharply.

In addition to delivering grant funded homes, we need all partners to maximise homes built through S106. To speed up the process of drafting and concluding new S106 agreements, we have launched a consultation on a standard S106 template for medium sites(opens in a new tab) which would be expected to become the default for applications in the future.

We also published the National S106 Affordable Housing Engagement Guidance(opens in a new tab). This guidance has been developed jointly by the National Housing Federation, Home Builders Federation, Chartered Institute of Housing and Local Government Association, with their members and we thank all those who have contributed to its development. The guidance establishes a shared framework for S106 delivery and sets out the principles of effective engagement between developers, registered providers and local planning authorities. The government strongly encourages partners across the sector to make full use of it.