Brexit and Covid blamed for Glasgow missing affordable housing targets last year

Glasgow fell 564 short of the intended number of completed homes as the construction industry faced “extremely challenging” circumstances.

The UK’s acrimonious exit from the EU, the coronavirus and the war in Ukraine were given as reasons for the failures, with construction costs soaring and materials in short supply.

And bosses have already warned that soaring fuel prices and ongoing instability around the world would make delivering this year’s targets “even more challenging.”

Glasgow’s goal had been 1443 completions, but only 879 homes (61%) were finished while site starts and approvals were also below the targeted amount. Over the year, 531 homes were approved, against a target of 756, and work began on 795, despite the aim for 1098 site starts.

The city had received a record budget of £120m for 2021/22 but almost £9.4m wasn’t used.

Almost £104m has been set aside for affordable housing delivered by social landlords this year (2022/23) but council officials have reported the programme will be “even more challenging to deliver” with the situation “exacerbated by large increases in fuel costs and energy prices”. A target of 919 completed homes has been set.

A report on affordable housing delivery will be presented to councillors next week and a council spokesman said it “outlines an extremely challenging set of circumstances for construction — with the pandemic, the Russian invasion of Ukraine and Brexit all contributing to delays, supply chain issues and significantly increased costs”.

He added: “Looking ahead, it identifies that the inflation of construction costs is being exacerbated by large increases in energy and fuel prices — meaning that meeting targets in the current financial year will be, if anything, more challenging.”

Glasgow City Council has been responsible for affordable housing funding, on behalf of the Scottish Government, since 2003, with almost £1.5bn allocated in that time and 19,121 homes developed. The city’s £120m budget for 2021/22 was made up of £64m from the local government settlement and £56m from the Scottish Government’s affordable housing supply programme.

The report by council officials stated: “The financial year 2021/22 proved extremely challenging for the delivery of new affordable housing due to the ongoing consequences of the coronavirus lockdown, compounded by Brexit issues and latterly by problems caused by the invasion of Ukraine, all of which have had an impact on the construction industry and its supply chain.

“This has created a unique set of circumstances which, for 2021/22, has resulted in significant construction price inflation, labour shortages and a lack of supply for some construction materials across the UK.”

They reported the average cost of works has increased from £1,437.93 per m2 in 2019/20 to £1,945.93 per m2 — an increase of 27.23%.

For 2022/23, Glasgow has been set a target of 919 completions, 691 approvals and 665 site starts. The report added significant funding commitments continue from projects approved in previous years.

Already committed projects include 178 homes for social rent from Queens Cross Housing Association at Hamiltonhill, 252 homes for mid-market rent on the former Meat Market site and 92 homes for mid-market rent from Govan Housing Association at Water Row.

New projects proposed for 2022/23 could be approved by councillors on Thursday, including 48 homes for social rent at Burnbank Gardens and 98 homes, for both social and mid-market rent, in Calton.

In 2020/21, the affordable housing allocation was revised due to the pandemic’s impact on the construction industry as site closures, furloughed workers and restrictions, such as social distancing, hit the housing programme.

Initially, Glasgow had been allocated £110m for that financial year and had been expected to deliver 1439 homes, however it was reduced to £80m in August 2020 with a target of 708 completions.

Only 397 units were finished but the council, through social landlords, did exceed its target for approved schemes (399) and site starts (1144), and an extra £5m was requested from the Scottish Government taking spending to £85m for the year.

The previous financial year, 2019/20, saw 1,002 new homes completed, beating the target of 954 units. However, approvals for new-build homes narrowly missed their 2168 target, with 2142 units agreed.