New investigation reveals Labour plan to slash affordable homes target

An iPaper investigation has revealed a leaked memo which appears to show Labour’s plans to cut the affordable homes target in London. Currently, developers in London are required to earmark 35% of new build homes as affordable housing.

But, journalist Vicky Spratt has revealed this is set to be cut to 20%. It seems that Labour is attempting to salvage its target of building 1.5 million new homes by 2030. Realistically, Labour would have to build one in four of these – 440,000, in London.

During the first half of this year, developers only completed 3,950 new homes. This is despite a government target of 88,000 new homes per year.

According to iPaper, Steve Reed, Housing Secretary, and Sadiq Khan, London Mayor, have held talks over an “emergency reduction” to the Greater London Authority (GLA) target for developers to allocate 35% of new homes as affordable housing.

A leaked government memo shows they plan to cut this target to 20%. Of this, councils will pay for 10%, and developers will pay for the other 10%. But experts are warning that this cut will cause a ripple effect across the country, and developers will want to reduce the number of affordable homes they build.

Affordable housing

After the 2024 General Election,  Angela Rayner, Housing Secretary at the time, secured £1 billion for affordable housing in Labour’s first Autumn Budget.

Then, in June’s Spending Review, the government allocated a further £39 billion for a new 10-year Affordable Homes Programme. This aimed to deliver 300,000 affordable homes, with at least 60% of these being for social rent.

However, critics said that £39 billion would not be enough, and would actually result in 56,000 fewer homes than the Conservative government achieved.

Profit before people

Obviously, private developers have only one thing in mind – profit.

One report found that the largest housebuilders by volume – Taylor Wimpey, Barratt Homes, and Persimmon- have all consistently attained “supernormal” profit levels. All three have profit margins between 17% and 32%.

Importantly, this does not reflect an increase in either housing affordability or the quality of delivery.

So the developers are pocketing the cash, while houses become even less affordable.

The report recommends that:

To expand housing supply in a way that meets social and environmental needs, the state should take a larger and more active role in the housebuilding and land market.

‘Soft-testing alternatives’

In its new investigation, iPaper reported:

It is understood that in recent weeks, officials from the Ministry of Housing, Communities and Local Government (MHCLG), and GLA officials, have met developers, including Barratt and Berkeley Group, to “soft-test” alternative affordable housing requirements in London.

A memo from the meeting states that some developers asked for their 35 per cent contribution to be reduced to 5 per cent.

Developers have long complained that the 35 per cent target renders schemes unviable. Last month the Home Builders Federation (HBF), representing the majority of private sector developers, issued a report calling for 35 per cent affordable housing targets to be cut to 25 per cent.

In response to this, London councils are warning that they cannot afford to replace developers’ contributions. They also fear this will increase the shortage of affordable homes and the reliance on temporary accommodation.

So instead of taking on a more active role in the housebuilding process, which the experts suggest, the government is doing exactly the opposite. It’s giving developers even more power. How on brand.

Additionally, the iPaper suggests that ministers are also exploring cutting the Community Infrastructure Levy (CIL) payments to local authorities. These support building infrastructure like transport, schools, health services, and green spaces.

Steve Reed and the rest of the Labour government seem to misunderstand the concept of “affordable homes”.

It’s all well and good, Labour trying to meet housebuilding targets – but if they are not truly affordable, then it’s a pointless endeavour. Either the country will be full of empty new-build houses, or exploitative landlords will buy them up and rent them out at even more ridiculous prices.

Additionally, building new houses without building vital structures such as GP surgeries and schools is a disaster waiting to happen.

Feature image via Richard Webb/Wikimedia Commons