How much does the UK Government spend on social housing?

The UK is currently facing a housing crisis, with a shortage of public housing and rising homelessness. In response to this issue, the UK government has allocated a budget for social housing. But how much exactly does the government spend on social housing? Find out below.

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The UK government social housing budget can be looked at through two main lenses:

• Direct spending on development and maintenance: This includes funding for building new social housing units and maintaining existing ones. In 2022/23, the government spent an estimated £11.4 billion on housing development, with the majority (£9.14 billion) going towards local authority housing
• Indirect spending through housing benefits:  This refers to financial assistance provided to low-income renters in the private sector. While not directly funding social housing itself, it supports affordability for tenants who might otherwise rely on social housing options. In 2022/23, housing benefit expenditure was estimated at £15.4 billion.

Key Data Points and Figures

• Investment Cuts for 2024: Housing associations in England have reduced their planned spending on new affordable homes by 9%, or £1.5 billion, for 2024 compared to the previous year.
• Decadal Funding Reduction: Over the next decade, there’s a 15% reduction in funding, amounting to a £20 billion cut.
• Projected Construction Decrease: There’s an expected decrease in the number of homes to be built by housing associations over the next five years, totalling 64,000 fewer homes.
• Social Housing Crisis: Approximately 1.2 million households in England are on waiting lists for social homes, with a net loss of 165,000 social homes in the decade to 2022. Currently, 279,400 people are in temporary accommodation.
• Recent Construction: In the year to March, housing associations and local authorities built 40,000 and 4,000 homes, respectively.
• Maintenance Spending: Repair and maintenance costs rose to £7.7 billion in the year to March 2023, marking a 20% increase from the previous year, in addition to £6 billion on building safety.

The reduction in housing investment is happening amid an acute shortage of social housing in the UK. This cutback is attributed to inflation, higher interest rates, and increased spending on upgrading existing homes, including addressing issues like mould and damp.

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Impact of Budget Pressures

The necessity to enhance building safety and energy efficiency has escalated operational costs for housing associations. These pressures have diverted funds from new construction to maintenance and safety improvements.

Political and Economic Challenges

The financial strain on housing associations stems partly from a 63% cut in government funding for affordable housing in 2010, pushing these organisations to depend more on private borrowing, which has become more expensive due to high interest rates.

Future Outlook

While there’s a commitment from political figures to increase affordable housing, the reality of reduced funding and higher costs poses significant challenges. Experts warn that these cutbacks will lead to long-term issues in addressing the housing shortage. The National Housing Federation (NHF) indicates that England needs 145,000 new affordable homes annually to meet demand, calling for increased funding, planning reform, and stable rent pricing to achieve this goal.

Government Response

Despite the cuts, the UK housing department points to the delivery of 696,100 new affordable homes since 2010 and plans for more through an £11.5 billion Affordable Homes Programme. Additionally, a recent announcement included £1.25 billion in funding to support the decarbonisation of social housing.

The overarching issue is the balancing act between managing rising costs, ensuring the safety and quality of existing homes, and the pressing need to significantly increase the supply of affordable housing in the UK.

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