The National Audit Office has levelled several bits of criticism at the Department for Levelling Up, Housing and Communities over the Affordable Homes Programme since 2015.

In a stinging report, the NAO says the government should be “more ambitious” in how the programme could support wider objectives such as net-zero.

It also criticised the focus on number of new homes built instead of “wider factors such as the quality or size of homes or environmental standards”. They say government have “not fully defined” what else it wants from the AHP or what success would look like.

And even on the number of new homes built, the NAO says the government has shortcomings, with 32,000 fewer homes to be delivered compared to the 2016 and 2021 targets.

Under the 2016 programme, DLUHC forecasts it will achieve 96% of its target for housing starts, but some of these homes will not be built until 2032. DLUHC’s forecast is that Homes England and the Greater London Authority (GLA) will collectively achieve 241,000 starts, against a target of 250,000 starts, by March 2023 (this target includes some homes not directly funded through the Programme).

Under the 2021 programme, DLUHC expects 157,000 new homes will complete by the time the programme has ended in 2028-29 compared with its target of ‘up to 180,000 should economic conditions allow’.

It “does not expect to meet sub-targets for supported homes and is at high risk of not meeting a sub-target for rural homes”.

The NAO says there “is also a risk that fewer homes are completed than currently forecast because of building cost inflation, a shortage of materials and labour and other challenges.”

The NAO found that DLUHC had “inadequate oversight of the GLA” in the 2015 and 2016 programmes. DLUHC receives performance reports from the GLA, but these “contained insufficient information on GLA’s management of the Programme, for example lacking information on spending.”

In October 2021, DLUHC found that between April 2015 and October 2021, it had given the GLA £1.8bn of funding which the GLA had committed but not yet used to pay housing providers.

DLUHC accepts these payments were “a basic error of programme management”. DLUHC has started to make improvements to its governance and oversight of the Programme, including in data and performance reporting, the NAO reports.

Another fault in the AFP is the “lack of strong incentives for housing providers to deliver affordable homes in areas of high housing need or in the most unaffordable areas.” The report says that most of the homes delivered are not where the department assesses as having “high general housing need”.

Before the end of 2022, the NAO recommends that the DLUHC should develop plans to mitigate the risk that the objectives for delivering affordable homes may not be achieved, and continue to improve its oversight of the Programme.

For the next iteration of the Programme, DLUHC should “consider what information it needs to improve its understanding of housing need in local areas, and review how the programme sets and monitors the Programme’s targets and sub targets and be clear how the Programme is contributing, when feasible, to wider government objectives, such as net zero and savings for other departments and local government”, the NAO says.

Gareth Davies, the head of the NAO, concluded: “Since 2015, the Department for Levelling Up, Housing & Communities has made improvements to the running of the Affordable Homes Programme, but there are still areas it needs to address.

“It should reassess targets to ensure the Programme is delivering affordable homes in areas that need them the most. It should also use the Programme to bring about greater value to other parts of government, and advance wider efforts around net zero.”