Spring Budget: sector groups call for £2.8bn decarbonisation fund balance, to bring ‘certainty’

The NHF said in its submission to the Treasury that releasing the funds would provide “longer-term funding certainty”, grow the economy and create “hundreds of thousands of new jobs across the country”.

The organisation said: “This would unlock supply chains and give housing associations the long-term confidence and certainty to plan, contract for and deliver the large-scale retrofit projects required to meet net zero by 2050.”

A balance of around £2.8bn remains in the promised SHDF pot, after funding released to date of £979m (or £1.04bn, including the initial £61m ‘demonstrator’ scheme prior to the launch). Wave 1 saw £179m allocated for projects to be completed in 2022 and 2023, while Wave 2 made a further £800m available, to be spent before the end of March 2025.

Housing associations are weighing up the money they will have to spend on decarbonising homes against the more pressing issues of building safety, tackling damp and mould, and building new homes.  

This includes freeing up capacity to invest through negotiating flexibility on loan covenants – with 22 providers reporting they had obtained waivers in respect of energy efficiency or decarbonisation works, in the latest quarterly survey by the English regulator.

The Chartered Institute of Housing (CIH) said the government should “make good” its commitment to provide the full £3.8bn from the SHDF, while calling for more to be made available in the next Spending Review. 

Concern has also been growing about the the number of qualified retrofit specialists. The NHF said the government must “implement a comprehensive national retrofit strategy to scale up locally led initiatives and deliver joined-up action on retrofit skills development”. 

On new homes’ development, the groups asked for more grant funding to help build more social housing. 

The CIH said investment should be increased “immediately” to allow an extra 10,000 social rented homes a year to be built. It said the current Affordable Homes Programme (AHP) should be increased by 28 per cent to £2.44bn each year, based on a cost of £70,000 in grant funding per home. 

Existing homes replacement

The G15 also said grant funding should be increased but called too for the reintroduction of funding for replacing existing homes through future funding programmes. 

“Allowing Recycled Capital Grant Funding (RCGF) to fund building safety works has been added to Homes England’s capital funding guidance, and this move should be extended to all aspects of the Affordable Homes Programme,” the group said. 

The NHF said “more flexibility on existing funding” should include allowing for replacement of homes so that “high-quality, housing-led regeneration is delivered where it cannot be funded otherwise”. 

Homes for the North, an alliance of 16 housing associations across the North of England, said the government should also revise Homes England’s rules on ‘net additionality’ to bring more homes into scope for replacement. 

“Homes England’s net additionality rules are a barrier to housing associations in the North, and elsewhere, seeking to provide the right homes for their customers, support local economic growth, create high-quality places and cut the environmental impact of their portfolios,” the group said.

“The result is a large proportion of public housing funding being used to deliver new homes on greenfield sites, irrespective of the wishes of local people and ignoring the wider need to regenerate brownfield land and level up local areas.” 

Homes remediation 

Meanwhile, on the issue of post-Grenfell building safety, the NHF is calling on the government to pursue contractors in the same way it has developers over liability. 

“We strongly support the government negotiations that have led to the largest developers pledging to remediate the defective buildings they constructed,” the group said in its submission. 

“We are calling for the government to extend these negotiations to contractors, which have also constructed defective properties for housing associations that should have met regulatory requirements.”