Recommendation 7

The Department acknowledged that its section on risk within business case for the 2021 programme may have been inadequate. We pressed the Department and Homes England over significant risks that may mean housing providers build fewer homes than forecast.11 The Department told us that it has a fixed budget for the Programme, and must deliver within it.12 The Department acknowledged that these significant risks could mean that housing providers build fewer homes. Significant risks include large increases 5 C&AG’s Report, para 1.13 6 Q 38 7 C&AG’s Report, para 2.3 8 Q 39 9 Q 40 10 C&AG’s Report, para 2.13 11 Qq 63–64, 69–76 12 Q 52 The Affordable Homes Programme since 2015 9 in the cost of materials and labour.13 The G15, a group of large housing associations in and around London, told us that its members, in some areas, report 15%-30% increases in material and labour costs.14 The Department told us it expects that larger providers will manage cost pressures by using contingency funds and other sources of funding to plug the gap.15 We questioned the Department and Homes England further about the labour force, skills shortages and delays with the planning system. Homes England confirmed that these ‘non-inflationary headwinds’ led to around a 20-week delay in completions last year. The Department told us that it has secured some extra funding for local planning departments, and that housing providers are using modern methods of construction a great deal, and looking to a different labour model as well as a different construction model.16 Where homes are built