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15 December 2023

Community Housing Cymru responds to the Finance Committee’s consultation on the Welsh Government draft budget 2024-25

Community Housing Cymru responds to the Finance Committee’s consultation on the Welsh Government draft budget 2024-25

Wales - like the rest of the UK - is in a housing emergency.

We are seeing increasing numbers of households in temporary accommodation, while waiting lists for social housing grow. Mortgage rates are still at high rates for owner-occupiers too, and media reports are abound of renters battling to find a home.

Even against this backdrop, Wales has continued to prioritise building low carbon social homes at pace and scale - but simply building affordable homes is not the only solution to coming out of crisis mode and ensuring we do not fall back into it.

In 2023-24, Welsh Government’s final budget allocated a total of £1bn for housing priorities, which enabled housing associations to continue building the affordable homes our country needs. In fact, they are currently building 80% of affordable homes in Wales. This funding also meant that they could invest in existing homes, and provide essential support to their tenants.

In our response to the Finance Committee’s call for information ahead of Welsh Government’s draft budget announcement for 2024/25, we were clear that while the previous level of investment must be protected, and the budget should respond to inflationary increases, our sector also needs renewed certainty and pragmatism. To get out of crisis mode, we need long-term plans and funding flexibility to make sure housing associations can deliver as much value as possible for the people of Wales.

For housing associations, there are three clear priorities:

A long-term investment programme that will support delivery of efficient and affordable homes in Wales

Investing in new and existing homes helps tackle the housing crisis, reduce carbon emissions and support the economy in Wales by creating jobs and supply chains. Despite the record capital investment from Welsh Government in the first two years of this Senedd term, however, building new homes has never been more difficult. Barriers including material costs, environmental concerns and lack of local skills are still slowing down and halting development across the country, and these need to be unblocked so we can continue to progress.

But unless our efforts to tackle the housing crisis are in lockstep with our approach to tackling the climate and nature emergencies we will be trapped in a cycle of short term measures. We need a long term investment programme to support us to build new low carbon homes, to decarbonise existing homes, and to provide the infrastructure we need for environmental and nutrient management. To do this, capital funding for new, low carbon, affordable homes for social rent through the Social Housing Grant must be protected in the 2024/25 budget.

In addition, the Welsh Housing Quality Standard 2023 demands ambitious energy efficiency improvements as well as increased requirements for flooring, biodiversity and water poverty. It is currently largely unfunded. Housing associations want to achieve the standard but the requirements cannot be met without an investment which in turn will provide an economic boost to our communities as well as warmer, more energy efficient homes for tenants.

Investment is also needed now in local capacity to build a land, planning and environmental management system that has the delivery of affordable homes for people in Wales at its heart.

A more agile and pragmatic approach to funding so that we can be responsive to the dynamic and challenging environment we find ourselves in

We have seen some real progress this Senedd term in establishing an agile and pragmatic approach to addressing the urgent challenges we face through the Transitional Accommodation Capital Programme, and a move to programme funding via the Optimised Retrofit programme. We would like to see this flexible approach rolled out more widely to enable our members to make the biggest difference to increasing the accessibility and quality of social housing.

It will be crucial to include funding for this within the 2024/25 Welsh Government Budget as part of a balanced investment programme that gets the most value for people out of every pound spent - both now and for future generations.

A reinvigorated focus on prevention

We know this is difficult during a crisis. However, it is because we are in a crisis that we must invest in prevention. Proper upstream prevention through support and investment in existing homes improves outcomes for people and reduces pressures on the NHS and local government. Losing focus on this will result in devastating consequences for individuals and huge additional costs for the state for years to come.

We need the 2024/25 Welsh Government budget to provide:

  • at least an inflationary increase to the Housing Support Grant, which funds the majority of homelessness and housing support services in Wales, helping tens of thousands of people every year to recover from trauma and to live safely and independently in their home;
  • adequate funding for social care providers that meet the true cost of providing quality care, helps them weather the storm of the cost of living crisis and pay their staff the Real Living Wage.

Welsh Government is due to publish its draft budget on 19 December 2023, while the final budget is currently planned for publication on 27 February 2024. We will be examining the draft closely, and assessing if or how Wales’s social housing sector will be supported to move forward, while continuing to supply high quality affordable homes and vital support services to the people who need them.

Our initial response will be published on our website, along with an open access member briefing.