Our response to Finance Committee’s consultation on 2025-26 Welsh Government draft budget
Each year, the Senedd's Finance Committee gathers views on where Welsh Government should prioritise spending in its next budget. For the forthcoming 2025-26 budget, we have once again taken up the opportunity to respond to the committee's consultation, which will inform later scrutiny of Welsh Government's budget.
In this blog, Bethan Proctor, head of policy and external affairs, sets out the funding that should be prioritised for social housing and tenants in the next financial year.
For 2024-25, Welsh Government allocated more than £1bn to housing priorities, across capital and revenue. This funding has meant that housing associations have been able to continue building new, affordable homes; invest in existing homes; and provide high quality support to their tenants.
However, to continue doing this important work that 10% of the Welsh population rely on, for 2025-26, Welsh Government must protect its investment of the previous year and respond to inflationary increases.
For housing associations, there are four clear priorities:
A sufficiently funded Housing Support Grant
Without investment that is at least in line with inflation for the Housing Support Grant (HSG) (the primary revenue stream that prevents and responds to homelessness, and helps people maintain their homes) services will not be able to pay frontline workers fairly, and overall will be reduced. This is not a sustainable option when demand is increasing.
2024-24 saw a £13m uplift for this grant to help address the pressure of inflation, particularly with regards to pay. This should be the new floor for investment in 2025-26 and going forward, as additional funding will be required each year to enable HSG-funded services to pay workers the Real Living Wage.
Download our consultation response to find out more, including our members' concerns about the impact of increases to employer National Insurance on their not-for-profit services.
Capital funding for more homes through the Social Housing Grant and the Transitional Accommodation Capital Funding Programme
Housing associations are set to deliver more than 70% of all new affordable homes in Wales this Senedd term, making a significant contribution towards Welsh Government's 20,000 target. If we want this to continue, we need to protect and enhance the Social Housing Grant (SHG), and develop a new, agile and pragmatic approach to funding.
While building new homes is the ultimate solution to the housing crisis, the Transitional Accommodation Capital Funding Programme (TACP) allows housing associations to create additional homes through remodelling, conversion and modular accommodation. If this fund is also protected, it will mean an additional 2000 homes can be delivered by the end of the Senedd term.
Welsh Government will release the affordable housing provision statistics for 2023-24 on 11 December 2024. Check our blog for our analysis of and reaction to the figures.
Protection of emergency support, including the Discretionary Assistance Fund
The Discretionary Assistance Fund (DAF) is a lifeline for people struggling through the cost of living crisis, and we must see support for this fund continue.
However, to ensure those in need get urgent assistance get quick, fair and reliable support, the system itself also needs to be improved.
Find out more about our calls for commitment to this fund, and how we think preventative measures could be integrated into this support, in our consultation response.
You can also read more about how Welsh housing associations are supporting tenants through the cost of living crisis in our new research report.
Funding to help social care providers with additional National Insurance and National Living Wage costs
Social care providers are already facing significant financial difficulty. Now, the additional National Insurance employer contribution announced in the 2024 Autumn Budget, and increases to the National Living Wage, have the potential to push these critical services over the edge.
We are seeking Welsh Government's assurance that it will step in to protect the social care sector, if a solution is not delivered by Westminster.
Read our consultation response to find out more about the financial impact of external factors on housing assocations' social care provision.
What's next?
Welsh Government is due to publish its draft budget on 10 December 2024, while publication of the final budget is currently planned for 25 February 2025. 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, with further details for our members to be shared on our Housing Hub.
