Rhea Stevens reflects on what the draft budget means for housing.
Public service spending choices have arguably never been more important than during the current cost of living crisis. Sustaining vital services and alleviating the pain communities are feeling, as well as investing for the future – in light of the real-terms cut to the Welsh budget – has left Welsh Government with difficult decisions in its recently announced draft 2023/24 budget.
There are certainly some important and welcome investments for housing in the draft. A safe, warm and affordable home is the foundation we all need for a decent life, and support services are essential to make sure everyone can access and maintain their home – but there are gaps in the funding needed to provide these.
Experience tells us that those on low incomes will suffer the most, and for the longest, as a result of the cumulative impact of financial challenges. Research from Joseph Rowntree Foundation confirms that ‘three quarters of those in the bottom 20 per cent of incomes [are] going without food or other basic essentials like clothing or toiletries. People on Universal Credit, private renters and young adults are all seeing rising and worrying levels of hardship’.
The cost of living crisis is not just a temporary economic squeeze: its consequences have the potential to last generations if we are unable to shield those most vulnerable to extreme hardship. And, unless our approach to tackling the climate and nature emergencies is in lockstep with our efforts to tackle the dual housing and cost of living crises, we will be trapped in a cycle of short-term measures that offer little protection against any future challenges.
In order to make the greatest possible difference, the final budget must prioritise investment in three main areas.
- Long term investment to deliver low carbon, affordable homes
In the draft, Welsh Government has honoured its commitment to invest capital funding in new affordable social homes for rent, with £330 million for 2023/24. Investment in housing brings about far wider economic and social benefits than the initial spend alone – with every £1 invested, £6 is reinvested into the wider economy.
However, we need a long-term programme that, as well as funding for new low carbon homes, also provides funds and a deliverable plan for decarbonising existing homes. Retrofitting every social housing property in Wales is conservatively estimated at costing between £4-£5 billion over a 10-year period. Some £72 million has been allocated via the Optimised Retrofit Programme for 2023/24, but to make progress and reap the wider benefits of decarbonisation for the Welsh economy, we need a programme that is proportionate to the scale of the challenge.
- A more agile and pragmatic funding approach so that we can be responsive to the current dynamic and challenging environment
In recent months, we have seen some real progress in addressing the urgent challenges we face. This includes the Transitional Accommodation Capital Programme, which aims to bring more than 1,000 additional homes into use over the next 18 months to enable people to move on from temporary accommodation.
We would like to see this approach to agile, focused funding rolled out more widely, to enable us to make the biggest difference to increasing the accessibility and quality of social housing, as part of a balanced investment programme that delivers the best outcomes for every pound spent.
- A reinvigorated focus on prevention
Losing focus on the potential impact of the crisis will result in devastating consequences for individuals, huge additional costs for the public purse for years to come, and limited protection against any future cost of living crisis.
In 2022/23, Welsh Government committed to maintaining the Housing Support Grant at a baseline of £166 million for the next three years. While this investment was welcomed at the time, its impact has been negatively affected by the cost of living crisis and extreme inflation. The significant numbers of people experiencing or at risk of homelessness is resulting in huge pressure on already stretched services.
Research shows that services funded by the Housing Support Grant deliver £300 million gross annual savings to public services in Wales by preventing homelessness, easing pressure on health and social care, and reducing interaction with the criminal justice system. If housing support providers are unable to maintain their service provision, the negative impact will be felt by a range of public services. We urge Welsh Government to increase funding for the Housing Support Grant in line with inflation.
The final budget in February evidently needs to go further to keep people safe and warm in their homes. As the Senedd scrutinises the draft in the coming months, we will be working with partners to continue to make the case for investment in the additional areas that the people of Wales so urgently need.
Rhea Stevens is head of policy and external affairs at Community Housing Cymru