This sum is part of a larger £1.9bn in unspent capital money that the Department for Levelling Up, Housing and Communities (DLUHC) has returned to the Treasury. The £1.9bn figure includes £1.2bn originally allocated for the Help to Buy scheme and £255m for affordable housing, with an additional £90m surrendered to the Ministry of Defence for military aid to Ukraine. The remaining funds are related to other housing initiatives.
The government stated that the £245m meant for building safety work was being returned because of the department’s efforts to compel developers to take responsibility for funding the remediation of fire risks. Housing Secretary Michael Gove has exerted pressure on building firms and developers over the past year, threatening to ban them from public sector contracts unless they sign contracts to address unsafe buildings.
The government assured that any unspent public funds would be allocated in future years to fulfill its commitment to the building safety program. However, a recent investigation by Construction News revealed that progress in rectifying unsafe buildings has been hindered by substantial increases in the cost of cladding materials. Manufacturers have raised prices by up to 45% during 2022, which has caused concerns among industry experts.
Government documents also cited reasons for the unspent funds, including lower demand for the Help to Buy scheme, delays in the Levelling Up Home Building Fund due to market uncertainty, and reduced appetite for loans in the Home Building Fund caused by market conditions.
Dr. David Crosthwaite, chief economist at the Building Cost Information Service, expressed concern that the government’s struggle to find housing schemes to invest in might be indicative of broader issues in the construction pipeline. Private developers currently control housing supply, limiting schemes in light of the current economic climate.
In response to the matter, a spokesperson for the DLUHC affirmed that these funding programs are flexible and can be spent over multiple years based on demand and economic conditions. The government aims to deliver 300,000 homes per year and remains committed to funding and implementing programs, including the £11.5bn Affordable Homes Programme, to achieve this target.