A report from Audit Wales has forecasted that the Welsh Government is likely to fall short of its ambitious goal of constructing 20,000 new social homes by around 20%, unless additional financial resources are provided.
The target, outlined in the Welsh Government’s 2021-26 programme for government, includes new properties delivered predominantly by housing associations, along with social homes supplied by private housebuilders through planning consent conditions and acquisitions of existing properties. At the end of the 2023-24 period, three years into the five-year programme, fewer than half of the planned 20,000 social homes had been secured. To mitigate this issue, the government focused more on acquiring existing properties.
Despite these efforts, Audit Wales highlighted that the projected 19,913 homes, either delivered or in the pipeline by March 2026, fall short of the target. Even with additional funding, there remains a notable risk that some of the more challenging schemes might not be completed in time or at all. Increased costs have led to higher-than-anticipated spending on affordable housing. Originally estimated at £1.6bn for core capital schemes, the Welsh Government had spent £1.1bn between 2021-22 and 2023-24, with a notional budget of £730m for the remaining years.
To get closer to the target by March 2026, it is estimated that an additional £580m to £740m in capital may be required. Without this, Audit Wales forecasts that the government and its partners will deliver between 15,860 and 16,670 homes towards the 20,000 target. Options to maximise funding include prioritising the acquisition of existing homes, although this may not offer long-term value for money.
Auditor General Adrian Crompton stated: “Price inflation has hit the affordable housing programme hard. The Welsh Government now faces difficult choices about its funding priorities and approach if it remains committed to meeting or getting close to its 20,000 social homes target by March 2026.” He also emphasised the need for the government to balance short-term and long-term needs and to maximise positive outcomes despite significant public expenditure.
A Welsh Government spokesperson acknowledged the report from Audit Wales, highlighting the challenging environment created by inflationary pressures. They reaffirmed the government’s commitment to tackling homelessness and delivering more homes, citing record levels of funding allocated to housing supply.
Welsh Conservative shadow housing minister Mark Isherwood described the projected shortfall as unacceptable, attributing it to governmental policies that reduce affordable housing supply and a focus on tourism and second homes. Plaid Cymru MS Mabon ap Gwynfor called on the Welsh Government to seek additional funding from the UK government to meet the target.
The Audit Wales report underscores the significant financial and logistical challenges faced by the Welsh Government in meeting its social housing target. Despite increased funding and strategic adjustments, the likelihood of falling short highlights the complexities of addressing affordable housing needs amidst rising costs and economic pressures.