What the Spending Review tells us about the future of housing in Central London
This month’s Spending Review was billed as a once-in-a-generation opportunity for the UK to build itself out of its years-long housing crisis and reboot growth across the country.
The Secretary of State for Housing, Communities and Local Government and Deputy Prime Minister, Angela Rayner, described the Government’s announcement of £39 billion investment as the biggest boost to affordable and social housing in a generation. But in Central London, where demand is high, homelessness is rising, and councils are spending millions on temporary accommodation, where will this money be spent and is it enough?
The housing crisis in Central London
Tackling the housing crisis in London is urgent. One in four Londoners are in poverty after housing costs1 and one in fifty are homeless2. Central London’s private rented sector housing is the least affordable in the country. These statistics represent an enormous social cost – in hardship, and in potential wasted. There are also direct and indirect costs to the public sector. The 12 Central London boroughs faced projected overspend on temporary accommodation of £105 million last year3, exacerbating existing issues with stretched local government budgets.
What has the Spending Review announced?
The Chancellor announced a £39 billion investment for the new Affordable Homes Programme over the next ten years. In London, it is expected this will include social housing, Shared Ownership homes and housing for London Living Rent. Other announcements include: a 10-year social housing rent settlement which will provide much needed long-term certainty for social housing providers, as well as £2.5 billion of low-interest loans for social housing providers to invest in new development and £1 billion to tackle issues of disrepair, damp and other issues in existing social homes. In addition, the National Housing Bank, a subsidiary of Homes England, will be publicly owned and backed with £16 billion of financial capacity, on top of £6 billion of existing finance to be allocated this Parliament. The Government expects it to unlock £53 billion in private investment and help deliver over 500,000 new homes.
What does this mean for Central London?
In her speech, the Chancellor stated that the focus would be ‘especially [homes] for social rent’, and yesterday, the Government announced that 60% of the Social and Affordable Housing Programme (SAHP) will go towards building homes for social rent. It was also announced that London will receive up to £11.7 billion over ten years, representing 30% of the total national value. This new programme would bring £1.17 billion a year to London, representing a significant increase from the £832 million a year under the previous Affordable Housing Programme (AHP).
While councils in London welcome the Government’s commitment to affordable housing, this is only part of the solution. According to housing charity Shelter, to meet its national target of 1.5 million homes, the Government should aim to deliver at least 90,000 social homes per year 4. This would mark a significant increase from the current delivery of around 9,000. Despite this urgency, there has been a 66% drop in new affordable homes being built in London in the last two years5. In addition, City Hall has reported that while Greater London has over 300,000 homes with planning permission, the delivery of these homes remains stalled6. High construction costs, labour shortages, council staffing constraints, and delays in affordable housing continue to represent significant challenges. Given this complex picture, the Spending Review’s capital funding commitments will be crucial to meeting these goals, but equally important are how local authorities are funded and how well the skills system is integrated with real-world job opportunities.
Central London plays a vital role in delivering the Government’s growth ambitions and in supporting prosperity across the UK. It has a strong and dynamic economy, with the highest productivity of any region. Yet it is also marked by deep inequality. These realities should not be ignored. Addressing housing need in Central London is essential for the city’s future and for national economic prosperity.
