Pricewaterhouse Coopers says funding has failed to keep pace with development targets

Housing associations require another £2.5bn of public funding to meet their targets for increased social housing construction, according to Pricewaterhouse Coopers.

The shortfall has been caused by a failure to fund the increase in social housing development targets for 2008-11. Planned output has risen 52% whereas funding has increased 36%.

The PwC study also found that Housing Corporation plans to make associations borrow more money would close the gap by less than £1bn.

Richard Parker, director of PPPs at PwC, said £10.5bn would be required between 2008 and 2011 for the 70,000 homes a year the government has asked for, rather than the £8bn allocated.

He said the government ought to look at fresh forms of funding, such as taking investment stakes in developments. He said this could give a return of £13,000 a house for reinvestment.

He said: “The question is whether the public agencies are willing to push at the frontiers of how they traditionally work.”

PcW’s analysis is contained in a book entitled Moving up a Gear: New Challenges for Housing Associations, by economic think tank the Smith Institute.

Parker’s position is supported in the book by David Cowans, chief executive of Places for People, one of England’s largest social landlords. Cowans calls for the government to abandon the traditional method of grant funding for social housing and to take long-term investments in mixed tenure projects.

A spokesperson for the Housing Corporation said: “Our modelling demonstrates that meeting our targets is achievable. However there is no doubt that new models need to be looked at and we are involved in discussions to develop these.”