The UK government is likely to fall short of its housebuilding targets by 32,000 homes, a report from the Public Accounts Committee reveals.

The Department for Levelling Up, Housing and Communities (DLUHC) admits it does not expect to deliver the intended benefits of the 2021 programme.

DLUHC has already downgraded its forecast to achieve 157,000 new homes in its 2016 to 2021 programme of house building against a public target of 180,000. 

In the report, the committee says that DLUHC “does not seem to grasp the considerable risks to achieving even this lower number of homes”, including construction costs inflation running at 15% to 30% in and around London.  

The government has committed to building 300,000 new homes overall every year by the mid-2020s.

It says some of these homes will be delivered through the Affordable Homes Programme, but the Public Accounts Committee says there is no target for how many new builds should be affordable. 

The government recognises the saving on future housing benefit costs of building homes for social rent. However, the committee highlights that a ministerial decision means that half of the houses in the 2021 programme will be for ownership rather than rent.  

The report suggests it has not calculated potential savings from reducing the number of people in temporary accommodation, though it is costly for taxpayers and potentially disruptive for families.

It is also set to miss targets to deliver 10% of homes in rural areas and may struggle to deliver 10% of homes as supported homes. 

The failure to set any standards for homes to be net-zero may necessitate “expensive retrofitting in the future”. 

Councils face penalties and have few powers to insist that housing providers build the right type of homes for local people.

The committee has called on DLUHC to publish transparent data annually on where homes are built by the local authority, or information about the type or size of homes in a report. 

Committee chair Dame Meg Hillier says: “The Government knows affordable rented homes offer the best value for money. Many people in high-cost areas simply can’t afford to rent privately or buy their own home and there’s a desperate need for affordable, secure rented homes. But amid all the building targets there isn’t one for affordable or socially rented homes.”

“Local authorities know where and what homes must be built to address the national housing crisis but don’t have the power to act.”

“The human cost of inaction is already affecting thousands of households and now the building programme is hitting the challenges of increased building costs. This does not augur well for ‘generation rent’ or those in desperate need of genuinely affordable homes.”

The Levelling-Up and Regeneration Bill was introduced by Michael Gove earlier this year under Boris Johnson’s leadership.

Yesterday, Gove pressed the Competition and Markets Authority to open up a probe into the housing sector, after the government was forced to back down from its target to build 300,000 homes a year following threats of a rebellion from its own MPs. 

The DLUHC released a November letter on 5 December that the Secretary of State sent to CMA interim chief executive Sarah Cardell where he reiterated his support for a study into the housing industry.  

Gove wrote: “It is critical that we have a housebuilding sector that operates effectively to deliver the homes that people need.”

“Housing plays a key role in achieving our Levelling Up ambitions. Buying a home is one of the most important decisions a family takes, with huge financial implications, so making sure this market is working in the interests of consumers is of the highest importance.” 

He added the last housebuilding market study took place 14 years ago, and since then the market and the country faced “significant changes”, such as net zero, the altered structure of the market following the financial crisis and changing demographic trends.  

In an exchange of letters in November, the CMA’s Cardell replied that the regulator has been “developing proposals for work in this area”, adding that a decision on whether a year-long probe would go forward would be taken at its January board meeting.  

These letters were published yesterday, as Gove was forced to tell a number of Conservative MPs the government’s 300,000 homes a year target was a “starting point” and would be “advisory” rather than mandatory, according to Sky News. 

The move comes after a Commons vote on the Levelling Up and Regeneration Bill had to be dropped last month after 60 Tories signed an amendment calling for the target to be scrapped.  

Last week, Leeds Building Society director of mortgage distribution Martese Carton urged the government to adopt a long-term strategy to solve the housing crisis.

On 24 November, the government announced that the housing supply increased by 232,820 in England from 2021 to 2022, up 10% from 2020 to 2021.

Although this included 210,070 new homes, Carton said “it falls well short of the annual target, which was last achieved in 1977”. 

Carton commented: “There is no silver bullet when it comes to solving the UK’s housing crisis but nationally set housebuilding targets exist for a reason.”