Corporate report

Homes England Annual Report 2022 to 2023: Chair's Forward and Performance Report, accessible version

Updated 25 July 2023

Applies to England

Homes England ^{[footnote 1]} Annual Report and Financial Statements 2022/23

Presented to Parliament pursuant to Paragraphs 11 and 12 of schedule 1 of the Housing and Regeneration Act 2008.

Ordered by the House of Commons to be printed on 18 July 2023.

1. Chair’s foreword

Peter Freeman CBE, Chair

This annual report marks not only the end of the financial year, but also the successful completion of Homes England’s initial mission set out in its 2018-2023 strategic plan and the start of a broader national programme under our new 2023-2028 strategic plan.

Since 2018, our primary role has been to support the building of new homes. We have achieved it with spades and in spades. Between 2018 and 2023, Homes England has supported the development of an incredible 186,413 new homes, and has helped 252,543 households ^{[footnote 2]} into home ownership. That means that hundreds of thousands of people across the country have been able to move into new homes because of the work we do. In this time, the Agency has also unlocked land that could deliver more than 392,000 additional new homes; not only invested £11.1bn but also recovered £3.6bn from land sales and loans repaid.

The Agency has increased not only the supply of new homes generally, but also its focus on high quality, affordable new homes. Last year, we closed the Shared Ownership and Affordable Housing Programme 2016-2021, which will deliver 132,000 affordable homes, exceeding its overall target of delivering 130,000 affordable homes. The current Affordable Homes Programme aims to deliver at least 89,000 affordable homes.

In addition, the Agency has achieved much more. It has managed applications for the delivery of three building remediation funds to help people caught by building safety issues. We have helped to diversify the market, supporting more than 200 small and medium sized builders to grow their business in the last five years.

The Agency has also embedded design and sustainability principles in our work where we can. We have used Building For Life 12 as a basis for design quality assessment to support our land disposals process since 2019. We have supported the NextGeneration Initiative, an annual sustainability benchmark of the 25 largest homebuilders in the UK, through our role on the NextGeneration executive committee. It has launched the Future Homes Standard Research Commission to investigate the impact of building homes to the national Future Homes Standard across all phases of the construction lifecycle.

Finally, we have never forgotten that housing and regeneration go hand in hand. Although property-led regeneration has not been the primary focus since we became Homes England in 2018, it has remained a core part of the Agency’s DNA, as our work with local authorities and other stakeholders in Bristol, Birmingham and Manchester demonstrates. I am delighted that our new strategic plan gives us the remit to support urban regeneration even more.

Our achievements are despite the global pandemic and a cost of living crisis that has disrupted the housing market. This has been felt acutely over the last year. Our annual business plan had been based on a strong post-pandemic recovery. It had assumed economic growth of 3.7%, minimal changes to interest rates and house price increases of 7.85%. The plan also incorporated overprogramming to provide a buffer against economic uncertainty.

However, as we all now know, the reality was quite different. Challenging economic conditions including abnormal inflation – especially in building material costs – escalating interest rates, and the growing cost of living crisis all disrupted housing delivery, particularly in the third quarter.

These economic conditions made it difficult for the partners we serve to progress housing development due to increasing costs, more expensive borrowing and reduced consumer confidence and purchasing power.

The Agency acted as quickly as it could, together with the Department for Levelling Up, Housing and Communities (DLUHC), to introduce flexibilities to ease the strain on our partners during this period. By making grants and loans available for infrastructure and construction, we enabled our partners- local authorities, housing associations and housebuilders- to build far more than they could without Homes England’s continued support. Even so, the economic conditions meant that housing development became less viable, and this had a clear and immediate impact on delivery, meaning that- despite all efforts- we fell short of our central targets.

My colleagues at Homes England, our partners in DLUHC, local authorities, housebuilders and housing associations have shown tremendous resilience during these times. I’d like to thank all my colleagues for their hard work, not just over the past year, but over the past five years. None of this has been easy but it has been immensely worthwhile, and I am incredibly proud of what has been achieved.

I have now been Chair of Homes England for nearly three years. I came to the Agency because I care about the built environment. I strongly believe that everyone should have a decent home. In the same way that access to effective health services or quality education has obvious and measurable impacts on opportunities and outcomes, access to good quality housing in well-designed communities has a hugely positive impact on society.

Our new strategic plan for 2023-2028, published in May 2023, recognises Homes England’s role as the Housing and Regeneration Agency and the societal impact of our work.

The Agency will continue to boost the supply of housing – and crucially affordable housing – but the strategic plan confirms the expansion of the Agency’s remit and ambition beyond this.

An unwavering commitment to quality and sustainability is baked into the heart of this plan, as is the belief that creating a good quality home is not just about the building itself, but the wider community in which that home is situated.

For the first time, the Agency’s role in providing capacity and capability support to local government, and at times, private sector is officially recognised.

This role is vital. A core aspect of the Agency’s strength is in the breadth of its expertise – it has a hugely skilled workforce of well over 1,000 people from multi-disciplinary backgrounds, including architects, civil engineers, economists, finance experts, housebuilders, infrastructure specialists, lawyers, regeneration experts, town planners, surveyors, and more. By bringing all these people together, the Agency provides the skillset and experience to deliver large and complex developments. In addition, it has the influence to convene stakeholders and broker agreements. We also have significant tools at our disposal – £16bn of combined capital to deploy by March 2028, a range of statutory powers, including Compulsory Purchase Orders, and 9,000 hectares of land. In short, the Agency has immense capability and capacity to drive transformational placemaking.

We do not seek to use those tools unilaterally. Rather we work closely with local leaders and other stakeholders who are best placed to understand the opportunities and priorities in their area. We are here to help them test ideas and to develop proposals which we can help promote through land acquisition, design, planning and finance. Our success in providing local government with in-depth capacity support to deliver their place-based ambitions is now one of our key performance indicators.

This ability of Homes England, as a national agency, to provide wraparound capacity and capability support to ever more devolved, empowered local places, will only become more important as the Government progresses with its devolution commitment. We have already agreed a strategic place partnership with the Greater Manchester Combined Authority, and we are developing one with the West Midlands Combined Authority – two authorities that have agreed trailblazer devolution deals with government. These strategic place partnerships provide a formal, structured, and replicable approach for providing our additional capacity and capability support to a place.

Crucially, the quality and sustainability of what is built – from housing to regeneration – must also take centre stage in our work with partners. More so than ever before, we will use our influence to champion the creation of brilliantly designed, high quality, sustainable homes, communities and places.

Finally, we will continue to work to build a housing and regeneration sector that works for everyone. We will continue to encourage market diversification and innovation, with the aim of creating a more productive sector.

Homes England has a strong track record of working with partners across the built environment. Over the last year, I have visited many sites and places where Homes England is working. It is heartening to see what has already been achieved in places like Ancoats in Manchester where the regeneration scheme is almost complete. While visits to places like Stoke- on-Trent, Sheffield, Newcastle and Salford have brought home how the Agency helps local leaders to deliver their vision. As we enter the next phase for the Agency, I am confident that we are in a strong position to work with our partners to deliver our new mission and objectives.

The Agency’s work is even more important during difficult economic times. As is explained in this report, we have worked closely with the Department of Levelling Up, Housing and Communities in recent months to understand the challenges our partners are facing and identify how we can adjust our programmes in response, to help ease the pressure where possible and maintain housing supply.

Our work is vital to the wellbeing and prosperity of the country. Improving the quality, quantity and affordability of England’s housing stock, regenerating our towns and cities, strengthening communities and combatting social injustice are the challenges we take on every day. It’s what makes us Homes England.

2. Performance report

Performance overview

This section is designed to give the reader sufficient information to understand Homes England, our purpose, the key risks to achieving our objectives and how we have performed during the year.

Chief Executive’s statement

Peter Denton, Chief Executive

During what’s been a profoundly disruptive year for the housing sector, I’m proud of how the Agency, and our partners, have responded to challenging circumstances.

We’ve continued to deliver more homes, refocused our efforts on the regeneration of our towns and cities across the country, supported local authorities to deliver their visions and all without compromising on the quality, sustainability, or affordability of what we create.

But the year will, in the end, be fundamentally characterised by the adverse economic impacts on our partners and programmes rather than fully meeting initial aspirations. Like the wider UK market, we have suffered but the Agency managed to contribute to approximately 20% of national housing starts and completions, as in previous years. This is partly thanks to the speed with which we were able to work with the Department for Levelling Up, Housing and Communities and HM Treasury to consider how best to respond to these circumstances. Against this backdrop I am pleased to note that all four major programmes that are now being wound up will exceed lifetime targets; the Shared Ownership and Affordable Homes Programme 2016-21 (SOAHP 16-21) will deliver 132,000 homes against a 130,000 target.

Whilst we will reflect on how this year has played out, it is also important to look ahead. With our strategic plan for the next five years in hand, it is incredibly exciting to think about what will come next. Our mission is to drive regeneration and housing delivery to create high quality homes and thriving places. This will support greater social justice, the levelling up of communities across England, and the creation of places people are proud to call home. It is about fairness, delivering equal opportunities to communities all across the country and helping people and places to realise their full potential.

We are ready to combine the full breadth of our powers and tools – including £16bn in capital to deploy, 9,000 hectares of land, Compulsory Purchase Order statutory powers, relationships, capacity and capability – to support the sector to tackle the housing and regeneration challenges faced by communities around England.

While economic concerns appear to be easing, they have not ceased. Core inflation is still high and interest rates reflect this. Values are declining, absorption reduced and confidence uncertain. These impacts are felt most profoundly by the partners at the heart of our support model – small and medium housebuilders, housing associations and regeneration investors.

In short, we are not out of the woods by any stretch. Our delivery and ambition may still be tempered.

Performance overview

We set stretching but initially realistic targets for 2022/23 that sought to maximise value for public money, underpinned by the best market intelligence available at the time. We also built contingency into our plans through over- programming, with potential expenditure and related outputs exceeding the delegated budget and approved delivery plan.

However, over the last financial year actual conditions diverged sharply from the original central forecasts. Economic growth faltered at 0.4% per annum rather than 3.7% assumed at March 2022. Cost inflation escalated to 10.4%, above the initial forecast of 7.4%. Added to this, construction materials were subject to extreme inflation, reaching 26% according to Office for National Statistics (ONS) figures ^{[footnote 3]}, the highest figure since the series began. The Bank of England base rate rose to 4.25% at 31 March 2023, nearly quadruple the central forecast.

It has been a tough year for the sector. In the first half of 2022/23, escalating costs reduced the viability of construction schemes, eroded over-programming and encouraged mothballing as market sentiment and appetite deteriorated across the sector, most notably at this time in our infrastructure programmes. However, our performance continued to track within close range of targets until the end of August.

In September, the housing market deteriorated. Borrowing costs doubled, whilst sentiment and market demand declined. The net balance of new sites entering the market and planning consent for homes fell to the lowest level in 10 years. This is the overall market impact but the Agency’s core role is to support the aspects of that market that were already the most challenged, and which were disproportionately impacted.

The affordable housing sector has had a particularly difficult time. More detail is provided on this in the performance section of this report, but in short, the impact of the events of September added to a series of issues which had crystallised in quick succession. There were already concerns over the funding available for development due to a constrained capped rent settlement and falls in private sales. There was also an increasing realisation of the impact of build cost inflation on delivery, and the need to respond to building safety, decency and net zero demands grew. New debt issuance doubled in cost virtually overnight and Boards’ confidence was very badly knocked. In combination, this fundamentally shifted appetite and stalled development activity.

As outlined in the performance section, infrastructure schemes were impacted by the challenging market conditions and planning issues too, with key schemes slipping into 2023/24. We also saw reduced appetite for development finance from smaller developers as their confidence was damaged and they were impacted by sub-contractor failure, reduced margins, lower scheme viability and declining sentiment and banking liquidity (further information is provided in the performance analysis section of this report).

In addition, declining confidence hindered the origination of investment loans and tempered demand for the Help to Buy product, as mortgage rates spiked.

Despite the fact that we had a pipeline of delivery opportunities which had the potential to over- deliver against our targets by 10 to 25%, these unforeseen economic headwinds impacted our delivery performance in 2022/23. With the public money we deploy typically directed to projects at the margin of viability, the deteriorating conditions had a magnified impact on our performance.

In spite of this, and thanks to the phenomenal efforts of my colleagues and the determination of the partners we serve, the Agency still achieved 33.7k completions, initiated 37.2k starts, unlocked 12.2k units of housing capacity, and supported 27.5k households into home ownership. Although these figures fall short of our central targets for the year (see outturn table in the performance analysis section of this report), when considered against the wider economic challenges facing the sector, I’m incredibly proud of these figures and what we’ve achieved, and the difference those homes will make.

Following the events of September, the Agency took rapid action, working closely with the DLUHC to gather market intelligence, quickly implement operational adjustments, and reset key programmes to maintain housing supply. The immediate priority was to revise the policy and investment aims of the largest supply programme, the 2021-26 Affordable Housing Programme, followed by the Housing Infrastructure Scheme. Additional management attention and capacity was directed to Investment programmes and Help to Buy. Land development activity was more insulated from the immediacy of the downturn due to its longer-term investment horizons.

Whilst we knew that we could not fully resolve the in-year pressures facing the sector, I’m proud to say that our actions helped to stabilise performance and support the sector to maintain the delivery of new housing supply. As noted above, the Agency still expects to directly contribute to approximately 20% of national housing starts and completions for the year, in line with previous years. Although delivery was short of central targets, we largely delivered within the ranges outlined in our annual business plan for 2022/23. Compared to the last financial year, the Agency has delivered 3.8% fewer starts, while completions are 9.6% lower.

Our delivery performance remains strong over the long-term and the actions taken have bolstered programme resilience. We are tracking to achieve the original lifetime targets for 11 of our 13 main programmes, and the in-year delivery shortfall is planned to be recouped in future years. The two exceptions to this are the First Homes programme and the Affordable Homes Programme 2021-26. The First Homes programme is a pilot to test the concept. For the Affordable Homes Programme 2021-26, we have worked closely, and at great pace, with DLUHC and HM Treasury (HMT) to reset the programme in response to the challenges facing the sector, increasing grant per unit, introducing additional flexibilities and adjusting the lifetime target. The reset has re-energised delivery and will contribute more homes for social rent. We are now tracking to achieve the revised lifetime target. For the major programmes due to end in 2023/24, Help to Buy, Home Building Fund – Short Term, Home Building Fund – Long Term, and Shared Affordable Homes Programme 2016-21 - lifetime targets will be exceeded.

However, we are not complacent, and continue to progress actions to strengthen operational management and drive better performance. The recruitment of a Chief Operating Officer and the strengthening of programme governance structures are recent examples. We’re also developing our new target operating model to ensure that our people, processes and systems are aligned to our new strategic plan, to ensure we are effectively supporting delivery of our programmes and wider activity.

It’s important to note that the value the Agency generates extends beyond delivery output, through non-capital interventions. We have provided support to catalyse regeneration in priority places, assumed additional responsibility for the building safety agenda, and continue to manage capital investments robustly, resulting in extremely high recovery rates. We provide much- needed capacity and capability support to local places, we leverage our network of 5,000 partners to act as a bridge between the public and private sector, and we use our influence to encourage further improvements in the design, quality, sustainability, affordability and safety of what is built.

We know that our partners in the housing and regeneration sector see us as more than just a lender or a landowner. The last year has seen an increase in partners accessing non-financial support, including advice, guidance, training and mentoring. For example, more than 15,000 people attended our Summer and Winter Learning Programmes from our Local Government Capacity Centre.

Our 2023-2028 strategic plan has a broader set of KPIs than our previous plan, to fully capture the impact of the Agency on the partners we serve, places, homes and the sector.

Placemaking and regeneration

A year ago, as I drafted my statement for the last annual report, I wrote about the Government’s Levelling Up White Paper and what it would mean for the Agency. There was a clear recognition that our work needed to be about more than making homes happen, with a greater emphasis on the community around those homes. It outlined that the Agency’s remit would be expanded, with a renewed focus on regeneration and creating sustainable, thriving places that foster a sense of community and pride. In addition, the paper set out the Government’s commitment to devolving power to local leaders, and how Homes England should enable this devolution by supporting local leaders to deliver their housing and regeneration priorities.

Although these themes are not reflected in our official performance metrics for this financial year, it is reflected in the KPIs in our strategic plan for 2023-2028 (launched in May 2023), and we’ve made great headway in this area over the last year. We’ve identified a number of places across England that are ripe for catalytic transformation, whose leadership have the vision and ambition to make this happen, but not always the full capacity or capability. We’re now working with the local leaders in these places to help them deliver their ambition. We’ve pulled together multi-functional teams with expertise from across the Agency to wrap around those places and support them to develop five-year business plans which will enable us to drive forward the housing and regeneration opportunities in those areas.

One of the five strategic objectives in our new strategic plan is to support the creation of vibrant and successful places that people can be proud of, working with local leaders and other partners to deliver housing-led, mixed-use regeneration with a brownfield first approach. The Agency’s impact here will be measured by – among other things – the amount of brownfield land reclaimed, employment floorspace created and the number of jobs created.

Our work in York Central is an excellent example of this. The Agency is working with Network Rail, the City of York Council and the National Railway Museum to regenerate 45 hectares of underused, brownfield land and create a new vibrant mixed- use neighbourhood, complete with residential, cultural, recreational, and commercial spaces. In July 2022, we appointed John Sisk and Son Ltd to deliver over £100 million of critical infrastructure over the next three years, which will make further development at York Central possible. This is a long-term regeneration project that will take a number of years, but when complete the site will provide up to 2,500 homes, at least 20% of which will be affordable, and over 1 million sq. ft. of commercial spaces for offices, retail and leisure which will provide a significant boost for the local economy.

We’re also supporting the creation of c.760 new jobs in Digbeth, Birmingham. The West Midlands Combined Authority (WMCA) and Birmingham City Council have a vision to transform Digbeth into a new, creative hub for the city. To support this, the Agency has assembled Warwick Bar – a collection of derelict and brownfield sites around Digbeth – and in March 2023 we signed a landmark new deal with Digbeth Loc Studios to transform some of these derelict buildings into state-of-the-art film and TV studios. The studios, set to open for bookings this summer, will catalyse further regeneration in Digbeth, creating hundreds of new jobs. Overall, there is potential to create almost 1,000 new homes in Digbeth – of which 35% will be affordable, more than four times as much as the required 8% – as well as 25,000 square metres of commercial floor space and significant improvements to the public realm.

The number of local authorities receiving in- depth capacity support from Homes England is another key metric in our new strategic plan. For us, this is about listening to local voices – no one is better placed than local leaders and other partners to understand the opportunities in their area. Our role is to bring to bear the Agency’s full capacity and capabilities and work with a place to implement their vision and achieve their ambitions.

When Sheffield was announced as one of the first priority places for transformational regeneration by the Government two years ago, the Agency launched a place-based collaborative partnership with Sheffield City Council, the South Yorkshire Mayoral Combined Authority, Sheffield Property Association, South Yorkshire Housing Association and South Yorkshire Housing Partnership, called Sheffield Together, to align resources and share priorities and objectives. We’ve since established six priority workstreams, and we’ve created a multi-functional internal team, drawing on expertise from across the Agency, to ‘wrap around’ Sheffield and provide additional capacity to help deliver these workstreams.

I really believe that the Agency has so much more to offer than capital, and our work with Sheffield perfectly exemplifies what we can do in this area without direct investment. One example of this is our work with housing associations in the city. Collectively, housing associations were delivering about 100 new affordable homes in Sheffield a year, far below the city’s target. Last year, the Agency convened the 11 biggest housing associations operating in Sheffield to identify the blockers to delivery in the city – and then work with the Council to unblock these. Those housing associations now have a combined aspiration to build c.880 new affordable homes in Sheffield per annum.

We’ve worked in a similar way with other places. In Wolverhampton, we’ve partnered with the council to identify housing-led opportunities in the city, culminating in the launch of the city’s Investment Prospectus in March this year. We’re now supporting the council to prepare a delivery plan for those opportunities, which considers site prioritisation and public sector intervention.

Meanwhile Stoke-on-Trent City’s Prospectus and subsequent housing strategy set out an ambitious plan for the city, including the rebalancing of the housing market through investment in the development of new homes as part of a broader regeneration strategy. The Agency has committed to developing a medium-term relationship of mutual support and benefit with the council to help them achieve these ambitions, and to leverage the private and public sector resources that will be required to do so.

Finally, we’ve supported the trailblazer devolution deals with Greater Manchester Combined Authority (GMCA) and the WMCA, announced by the Government in March this year. As part of our enabling role in the devolution deals, we have agreed a strategic place partnership with GMCA and are developing one with WMCA to develop a joint delivery pipeline. The strategic place partnerships provide a formal, structured and replicable approach for collaborating on shared delivery priorities and are underpinned by an annual business plan to hold all parties accountable and monitor progress. It’s a model that we’re working at great speed to replicate with other places – indeed, we recently signed our latest Strategic Place Partnership with West Yorkshire Combined Authority.

Looking back over the last year, and thinking about our new strategic plan, there is no denying that we are, now, returning to our roots as the housing and regeneration agency.

Quality and sustainability

The quality and sustainability of what we do has become ever more central in recent years. In our new strategic plan we have two specific objectives in these areas which set out our aspirations for the homes and places we work with partners to create, and will underpin everything we do. But this isn’t new.

The English Cities Fund, our long-term private public partnership with Legal & General and Muse, is delivering homes with long term measurable social value, helping occupants manage operational carbon emissions and energy costs. The partnership is currently bringing forward the largest Passivhaus-certified scheme in the North-West, and will be 100% affordable. The nine-story apartment block, Greenhaus, in Salford, will use up to 70 to 90% less energy than traditional housing, helping residents to reduce their fuel bills and cut their carbon footprint. Energy saving features include triple-glazed windows, the latest insulation technology, air source heat pumps and publicly accessible electric vehicle charging spaces.

In 2021, we launched the Greener Homes Alliance, in partnership with Octopus Real Estate, which provides loans to finance new small and medium sized house builders’ developments – but the homes must achieve a minimum Energy Performance Certificate rating of B. It also incentivises developers to go further than that by offering increasing interest rate margin discounts as the energy efficiency of the homes increases above this.

As well as our funding, we use our land to champion sustainable practises. The Agency has recently selected Keepmoat as our preferred development partner for Sandymoor South in Runcorn thanks to their approach that seeks to protect, conserve and enhance existing qualities and characteristics of the site. Their scheme has achieved an ‘exceptional’ Building for Healthy Life assessment by Homes England’s external consultant Places Matter (it was awarded 12 out of 12 greens).

Culture and diversity

I’m pleased to share that our latest gender pay gap report, published at the end of March 2023, shows that our gender pay gap continues to improve. As of 31 March 2022 our mean gender pay gap was 11.59%, a reduction of 5.31% over the last three years. Our median gender pay gap has also reduced to 7.74%, a 7.56% reduction since March 2020. This is a step in the right direction, and I’d like to acknowledge all the work that has been carried out on this since Homes England began publishing its Gender Pay Gap Report.

However, there is still more to be done. While I know that creating a more gender balanced workforce takes time and a holistic approach, I am committed to deepening our understanding of why we have any gender pay gaps at all. It is vital that, along with targeted interventions, we take action to create an inclusive environment, through the language and imagery we use, the issues we choose to highlight and the conversations we encourage – internally and externally. For example, during our Local Government Capacity Centre’s Winter Learning Programme, we hosted a session on “Inclusive Spaces for Girls and Young People”, in partnership with charity Make Space For Girls, designed to help local authorities understand the key elements of considering teenage girls in planning. It is initiatives like Make Space for Girls that can make a real difference, and I’m encouraged that we can use platforms like the Local Government Capacity Centre to promote them.

However, diversity, of course, means more than gender. The Agency is currently undertaking a review of our equality, diversity and inclusion (ED&I) strategy, first published in our ED&I report in 2020, after undertaking a National Equality Standards assessment in March 2022. The recommendations have influenced our approach to ED&I over the last year through our people and culture strategy. We will widen our approach in 2023 to include a focus on ethnicity pay gap, and are committed to trialling an ethnicity pay gap analysis, something I have been keen to do for some time.

I’d like to finish by saying thank you to all of my colleagues across the Agency for their continued hard work and resilience. It has been an economically challenging year, but not without its successes. Without the dedication of our staff, we would not have been able to respond in the way we have, or serve our partners as effectively as possible during an incredibly difficult time.

Thank you also to our partners, who have continued to trust us to support them through the most turbulent of times to ensure as many new homes can be built as possible, and that we’re creating places that work for our communities now and in the future. The 2023-2028 strategic plan legitimises our mission – to accelerate the pace of house building, remediation and regeneration across the country, as we seek to deliver ever more affordable homes in places people are proud to call home for generations to come. And we cannot do it alone. We look forward to continuing to work with you to achieve this.

Organisational overview

Who we are

Since 2018, our mission has been to increase the supply of quality homes, improve affordability and help create stronger, more vibrant places and communities. We are a national agency with experts based across the country.

Constitutionally, we are a non-departmental public body sponsored by the Department for Levelling Up, Housing and Communities (DLUHC). Our statutory objects are contained in the Housing and Regeneration Act 2008, the legislation creating the Homes and Communities Agency, which in 2018 adopted “Homes England” as its trading name to underpin its mission and purpose. The Homes England group structure can be seen in Note 11b of the Financial Statements.

We’re governed by a Board, appointed by the Secretary of State for DLUHC, and led by our chair, Peter Freeman. Our Chief Executive and Accounting Officer, Peter Denton, leads an executive team that includes specialists in land, investment, finance and risk management.

We play a key role in delivering the Government’s levelling up and housing agenda. Our ambition is to work in collaboration with equally ambitious partners to deliver the homes and places that our communities need, and to support the regeneration of our towns, cities and rural communities.

We have significant tools at our disposal. We own over 9,000 hectares of land and have £16 billion of combined capital spend (loan, grant and equity) to deploy by March 2028. We also have a range of statutory powers that we can use to deliver our objectives. In addition, we have the expertise to broker private sector investment, convene stakeholders, facilitate collaboration, improve quality across the industry and champion good practice.

We can collaborate in a unique way between government and the public and private sectors. We’re unified by our determination to embrace this crucial opportunity to help solve one of the country’s most intractable domestic policy issues.

We work with partners from across the country who share our ambition. These include local authorities, private developers, housing associations, lenders and infrastructure providers. Our activities are designed to respond to local needs, and make a difference where the market alone cannot do so. Robust leadership ensures we deliver best value for money in all of our interventions, including those delivered jointly with our partners.

Our statutory objects

These are set out in the Housing and Regeneration Act 2008, and are:

• to improve the supply and quality of housing in England;

• to secure the regeneration or development of land or infrastructure in England;

• to support in other ways the creation, regeneration or development of communities in England or their continued well-being; and

• to contribute to the achievement of sustainable development and good design in England.

All with a view to meeting the needs of people living in England.

 Our mission

We drive regeneration and housing delivery to create high-quality homes and thriving places. This will support greater social justice, the levelling up of communities across England and the creation of places people are proud to call home.

Our strategic objectives

We have five interconnected strategic objectives that work together to deliver our mission.

Three of our objectives focus on the distinct but overlapping categories of our work: places, homes and the sector. They reflect the broad range of interventions that we have already committed to deliver on behalf of the Government, as well as its future ambitions. Embedded across all of them is a firm commitment to working in partnership with a broad range of partners who share our mission and objectives.

We know that enabling the delivery of homes and places alone is not enough to fulfil our mission. Therefore, we have two objectives that set out our aspirations for the attributes of the homes and places we will work with our partners to create.

We will:

• Support the creation of vibrant and successful places that people can be proud of, working with local leaders and other partners to deliver housing-led, mixed- use regeneration with a brownfield first approach

• Build a housing and regeneration sector that works for everyone, driving diversification, partnership working, and innovation

• Enable sustainable homes and places, maximising their positive contribution to the natural environment and minimising their environmental impact

• Promote the creation of high-quality homes in well- designed places that reflect community priorities by taking an inclusive and long-term approach

• Facilitate the creation of the homes people need, intervening where necessary, to ensure places have enough homes of the right type and tenure

Performance summary 2022/23

• We’ve directly supported the completion of 33,713 homes

• Delivered 37,175 starts on site

• We’ve supported 27,534 households into home ownership

• Unlocked land with capacity for 12,248 homes to be built

• Supported our 387,879th customer into home ownership through the Help to Buy Equity Loan Scheme

• Appointed the Agency’s first ever Chief Operating Officer, Kirsty Shaw

• Launched a pilot for the new Cladding Safety Scheme which will provide £4bn of support to remediate thousands of buildings 11m high and over

• Agreed a multi-million pound finance package with HSBC that will see hundreds of families across Dorset, Hampshire and Somerset move into brand new homes over the next five years

• We appointed John Sisk and Son LTD to deliver over £100m of vital infrastructure at York Central, one of the UK’s largest regeneration sites. The 45 hectare site offers a unique opportunity to transform underused brownfield land into a vibrant and distinctive new mixed use neighbourhood

• We provided £233m of infrastructure loan funding to bring to life a new £3.5bn neighbourhood at Silvertown, East London, one of the country’s most significant regeneration projects

• Agreed a £30m loan to continue the transformation of Middlewood Locks, in Salford, which will see a further 189 new homes built on the 25-acre brownfield site

• Agreed a £1.3m investment through the Housing Growth Partnership to support the creation of 39 new homes in Digbeth, as part of our commitment to regenerate the neighbourhood

• Partnered with Newstead Capital to provide a cornerstone investment in its new long-term development finance fund to support SME housebuilders

• Signed a landmark Strategic Place Partnership with Greater Manchester which will support the city to achieve its housing and regeneration ambitions

• Entered into a new deal with West Midlands Combined Authority and Birmingham City Council to transform derelict buildings on Homes England’s Warwick Bar site in Digbeth into state of the art film and TV studios, Digbeth Loc. Studios

• Provided £95m in government funding to the regeneration of Bristol Temple Quarter supporting the creation of thousands of new homes and jobs

• Launched an innovative new long-term partnership model with Hyde and AXA IM Alts to deliver thousands of new affordable homes of all tenures across the Southeast

• Invested £43m to unlock Burtree Garden Village in Darlington. The funding will provide green infrastructure and transport links for a new sustainable community of 2,000 homes

Performance analysis

The purpose of the performance analysis section is to highlight Homes England’s performance against both key indicators and prior year results. We also outline any factors which may have limited our ability to achieve our targets both internally to Homes England and within the market and economy.

2022/23 Performance review

At the start of 2022/23, the Agency developed stretching, but initially realistic, annual targets in anticipation of a strong post-pandemic recovery following the disruption associated with COVID-19 and the UK’s exit from the European Union.

The plan was founded on a healthy market outlook, which assumed post pandemic economic growth of 3.7%, minimal changes to interest rates and house price increases of 7.7%.

Economic conditions, however, shifted quickly and significantly during the year, with the initial recovery from the pandemic giving way to weaker economic growth, increasing inflation, escalating interest rates and a cost-of-living crisis. These conditions departed significantly from the Agency’s expectations at the start of the year, and from the consensus projections of market commentators including the International Monetary Fund, KPMG and EY ITEM Club.

Central economic assumptions compared to actual economic performance

Indicators	Measure	Central Economic Forecast[footnote 4]	Actual Economic Performance[footnote 4]
GDP	YoY %	3.7	0.4
Inflation	YoY %	7.4	10.4
Bank Rate	%	1.1	4.25
House Prices	YoY %	7.7	4.8
Unemployment	%	4.0	3.7
Earnings Growth	YoY %	5.9	4.9

Economic growth which had reached 7.4% in 2021/22, faltered during the year. Growth was reported as 0.1% in the first quarter of 2022/23, -0.2% in the second quarter, and 0% in the third quarter ^{[footnote 5]}. While a technical recession was avoided, this reflected a worsening of the economic environment.

Inflation continued to rise. Based on the Office for Budget Responsibility forecasts, the Agency anticipated inflation would peak at 7% in the summer of 2022. Year-on-year consumer price inflation, however, peaked at over 11% in October 2022. While it subsided slightly towards the end of the year, it was still above 10% in March 2023.

Within the construction sector, the Building Cost Information Service indices showed construction materials costs rising at 19.8% in 2021, with building costs and tender prices rising at 10.6% and 4.9% respectively. In early 2022, Russia’s invasion of Ukraine triggered further increases in the price of energy and commodities, which affected construction materials. By June 2022, the construction materials price inflation peaked at 26%. Similar levels of inflation were last seen in the 1970’s. Alongside downward pressure on house prices, housebuilders found it challenging to pass rising costs on to consumers, resulting in the viability of schemes becoming strained. This was most fundamentally the case in the affordable housing sector.

In response to rising inflationary pressures and amplified by the adverse reaction of the financial markets to the events of September, the Bank of England base rate increased from 0.75% in April 2022 to 4.25% in March 2023. This resulted in a steep increase to commercial and retail borrowing costs.

The changing conditions profoundly impacted the housing development cycle – with increasing material, labour and borrowing costs reducing the capacity of the sector to build new homes, whilst also reducing consumer purchasing power. These shifts in the economic landscape had a profound impact on sentiment in the housing sector. Homes England’s annual partner perception survey^{[footnote 6]} stated that optimism in the broader economy and housing sector collapsed. Optimism about the state of the national economy dropped to 6%, a 28 percentage point drop from 2021 and optimism about house prices dropped to 32% optimistic, from 54% in 2021. Through Quarter 3 and Quarter 4, Homes England’s ongoing market intelligence continued to emphasise this finding. 255 partners were spoken to during this period, most of whom expressed concerns and caution about the changing market conditions. The Federation of Master Builders reported the third lowest level of buyer demand since the start of the research in 2015, and there was a 40% drop in new build reservations. This created challenges for the housing market and the partners on which the Agency relies to deliver outputs.

The challenges were particularly acute in the second half of the financial year, with the Federation of Master Builders reporting a significant fall in the net balance for housebuilding activity from the third quarter of the financial year. In the same quarter, Savills reported that the net balance of new sites entering the market had fallen to the lowest level for 10 years at-54%. While the number of homes securing planning consent declined by 31% to reach pre-2016 levels, impacting future starts.

Resulting agency performance in 2022/23

During the first half of 2022/23, abnormal inflation, labour availability and site viability had started to fundamentally bite across segments of the housing market, particularly within the affordable sector and for smaller developers. Delivery of specific programmes was impacted, and the contingency introduced through overprogramming was eroded.

Year to date delivery and full year forecasts were still tracking close to plan to August, with most delivery measures within a 5% tolerance of central targets. There were some early indications of a slowdown especially in starts. However, it was the economic volatility around September that saw performance diverge from central targets. The remaining contingency evaporated, and forecasts for all performance indicators shifted downwards sharply. The extent of the drop could not have been foreseen.

Full year performance forecast: August 2022

Metric	Plan	Forecast	Var (#)	Var (%)
Completions	39,008	37,920	(1,088)	(3%)
Starts	52,967	49,468	(3,499)	(7%)
Unlocked Housing Capacity	30,773	34,921	4,148	13%
Home Ownership	39,632	39,141	(491)	(1%)
Financials (£m)
Expenditure	5,399	5,557	158	3%
Receipts	(1,016)	(950)	66	(6%)
Net	4,383	4,607	224	5%

Full year performance forecast: September 2022

Metric	Forecast	Var (#)	Var (%)
Completions	32,979	(6,029)	(15%)
Starts	42,739	(10,228)	(19%)
Unlocked Housing Capacity	21,878	(8,895)	(29%)
Home Ownership	28,689	(10,943)	(28%)
Financials (£m)
Expenditure	4,714	(685)	(13%)
Receipts	(914)	102	(10%)
Net	3,800	(583)	(13%)

Unlike most government entities, the Agency does not have direct control over spending. It is dependent on the willingness of counterparties to take decisions, commit, build, or contract. DLUHC and the Agency responded immediately to the situation, commencing extended market engagement and analysis, developing counter-cyclical policy options and bolstering management of distressed investment. An economic downturn playbook was deployed, with more than fifty practical actions identified to support delivery in the event of a downturn. These included; helping partners with cashflow requirements by increasing grants, extending repayment timeframes and relaxing contractual obligations where this protected delivery.

The key actions taken to protect delivery focused on the programmes most impacted by the economic downturn, and included:

• Agreeing £60m additional grant in 2022/23 for the 16-21 Affordable Homes Programme, which safeguarded delivery of 6,000 starts.

• Increasing grant rates, changing tenure profiles, extending longstop and funding deployment dates to protect the delivery of affordable housing starts and completions for the 2021-26 Affordable Homes Programme.

• Resetting the parameters of business cases and investment periods for the Housing Infrastructure Fund, Home Building Fund – Infrastructure Loans and the Levelling Up Home Building Fund.

Programme mitigation plans included actions to de-risk and protect remaining delivery, along with steps to bolster outputs. For instance, amend grant payment terms for registered providers, allowing changes to tenure mix for current and future allocations to mitigate sales risk and extending repayment terms for borrowers to support cashflow management. The Agency also engaged in more proactive market engagement implementing social media strategies such as ‘thunderclaps’ etc. to widen and deepen the pipeline of opportunities and compensate for in-year attrition where possible.

The Agency also adopted a flexible project management approach, as changing economic conditions required constant monitoring, evaluation and adjustment of strategies and resources. This required coordination and communication across the organisation, as well as effective collaboration with partners, stakeholders, and clients. Multi-disciplinary teams were established to rapidly develop and evaluate proposals for critical projects, create rapid feedback mechanisms with partners and ensure the response was informed by real time analytics. A streamlining of the governance channels with DLUHC and HMT enabled critical approvals to be accelerated.

Unsurprisingly, despite the prompt actions taken by the Agency and DLUHC, actual performance finished behind the central targets for the year.

Outturn

Delivery	Outturn	ABP Lower Range	ABP Central Target	ABP Upper Range	Variance Outturn v Target
Total completed new Homes	33,713	27,086	39,008	43,434	(14%)
Total households supported into home ownership	27,534	20,000	39,632	58,900	(31%)
Total starts supported by Homes England	37,175	37,837	52,967	63,420	(30%)
Total unlocked housing capacity	12,248	15,386	30,773	39,419	(60%)

Notwithstanding the turbulence that beset the housing market in 2022/23 and the impact on the Agency’s partners, the Agency delivered outputs at a similar level to previous years. There were around 3.8% fewer starts than last year, while completions finished around 9.6% below last year. This was achieved with net programme expenditure stable at £3.7bn. Despite working in challenging areas of the market – we performed close to sector average, with the ONS reporting a 2% increase in the number of homes started in England during 2022 compared to the previous year (178k v 175k), and 175k of housing completions in both years. The ONS has yet to release the numbers for the first quarter of 2023 enabling a like-for-like comparison, but the National House Building Council has reported a 40% year-or-year fall in starts for the first quarter of 2023.

The chart ‘2020/21 - 2022/23 performance^{[footnote 7]}’ has been removed because it could not be made accessible. If you need this information please email webaccessibility@homesengland.gov.uk and include the name of the document.

The units of housing capacity unlocked by the Agency dropped by 79% compared to 2021/22. While specific performance issues encountered by infrastructure projects were a key factor, the scale of the year-on-year decline was also due to the closure of the Home Building Fund – Long Term Fund, the transition of the Housing Infrastructure Fund from contracting to portfolio management, the slow ramp-up to contracting via the new Home Building Fund-Infrastructure Loan Fund, and delays in converting the pipeline that was established.

With the managed closure of the Help to Buy Equity Loan scheme, consumers only had six months to apply and reserve a property. As the scheme drew to a close, regional price caps and alternate products, combined with the cost-ofliving crisis and a steep increase in mortgage rates to dampen consumer demand. Consequently, legal completions were below original estimates, causing households supported into home ownership to fall below the central target.

Delivery performance review

The factors contributing to the in-year delivery shortfall are considered in detail below. While the adverse impact of deteriorating economic conditions is starkly apparent, the review highlights compounding issues for affordable housing, where providers were constrained by the rent cap consultation and the duty of care required in response to the cost-of-living crisis. In addition, delays in launching the Levelling Up Home Building Fund, revised guidance on the classification of Collective Investment Schemes, and project-specific contracting, planning and stakeholder challenges also contributed to under-delivery against targets.

Most of the shortfall in delivery compared to the central targets can be attributed to a small number of programmes:

• 72% of the shortfall in completions is attributed to affordable housing programmes
• 71% of the shortfall in starts is attributed to affordable housing programmes, with a further 18% relating to the Levelling Up Home Building Fund
• 97% of the shortfall in unlocked housing capacity is attributed to the Home Building Fund – Infrastructure Loans
• 99% of the shortfall in households supported into home ownership is due to lower-thanexpected demand for Help to Buy

Completions

The affordable housing sector was acutely sensitive to the economic circumstances of 2022/23. In the early part of the year, providers faced unprecedented material and labour cost inflation. This led to sub-contractors going bust, renegotiation of contracts, and difficulties accessing the labour needed to complete development. Partners also faced delays in securing local authority sign-off, utility connections and s278 notices. These factors contributed to delays in housing being completed by the Agency’s partners, eroding the contingency built into delivery plans.

The situation was then exacerbated by the economic turmoil of September, along with the financial uncertainty created by the consultation on social housing rents which proposed a cap on rent increases for the sector. This resulted in affordable completions slipping into 2023/24. Despite the delays, the lifetime delivery targets for the 16-21 Affordable Housing Programme will still be delivered.

Starts

Following the allocation of c.£5.2 billion to the 2021-26 Affordable Housing Programme and the launch of the Levelling Up – Home Building Fund, the Agency set an ambitious target for the number of starts to be delivered in 2022/23. Increasing delivery targets by 37% on 2021/22. A range of macro-economic factors and policy decision impacted the Agency and its partner’s delivery plans, and subsequently tempered aspirations.

Affordable Housing

As already noted, the affordable housing sector faced significant challenges in the early part of the financial year. Build cost inflation, rising labour costs, material availability, building remediation issues and the duty to support tenants through a cost-of-living crisis hindered investment in new homes. Relative to volume developers, housing associations were faced with greater viability challenges due to their fixed funding model and inability to pass on cost increases to the end consumer. This led to the financial case for new schemes to be re-assessed.

Housing associations reported increasingly difficult relations with contractors, with firms requesting fluctuation clauses, re-negotiation of fixed price contracts and in some instances withdrawing from negotiations totally. This eroded the contingency built into the plans for the Agency’s affordable housing programme.

Due to the short-term nature of development plans, reliance on smaller sub-contractors and fixed funding formula, the sector was acutely sensitive to the economic turmoil, and the doubling of borrowing costs, that followed the events of September. As conditions deteriorated, the Government was also undertaking a consultation on rent increases, which brought further uncertainty to the sector.

In combination, these inter-connected issues created a ‘perfect storm’ which engulfed the development plans of providers, with many pausing and re-evaluating plans, with some housing associations refocusing on core activities, and development appetite reduced by up to 30%.

Levelling Up – Home Building Fund

The Levelling Up-Home Building Fund was launched in 2022/23 with an objective of diversifying the housing market by supporting small and medium sized housebuilders. An inability to pre-market the fund during the ninemonth delay to the launch meant that pipeline had to be generated from a standing start when the fund was finally launched in February 2022. The lag between marketing, contracting and spend constrained initial performance, and then economic factors materially contributed to reduced programme outputs.

In the first half of the year, build cost inflation caused widespread sub-contractor failure, reduced developer margins and lowered scheme viability. As a result, borrowers shelved plans to open new sites and schemes were deferred, leading to unprecedented levels of attrition in the pipeline. Later in the year, the market turbulence and interest rate increases compounded the situation, particularly for smaller developers exposed to interest rate rises and a tightening of terms and availability of development finance, as lenders became increasingly cautious, if not indeed closed for new business.

The rapid rise in interest rates, accompanied by a withdrawal of mortgage products, dented consumer demand for new build homes. Data from the Home Builders Federation indicated that the level of buyer demand for new build homes began to diverge from previous years in mid-2022. This had a disproportionate impact on Small and Medium Enterprise (SME) developers who often rely on sales to fund further development. Volume developers were more insulated from the fall in reservations and were able to forward sell stock to maintain demand and pricing.

These factors led to SME confidence in progressing housing development drop significantly, as observed in the two SME roundtables held by the then Housing Minister in the autumn of 2022. Decision making paused, scheme commencement stalled, and development was deferred into future years, as partners waited for the market to settle. This rapidly resulted in approximately half the pipeline of committed opportunities not being progressed in-year.

One of the main areas of activity expected to support delivery was equity deals. While UK equity investment volumes were strong in the first quarter, they deteriorated significantly during the third quarter, coming in 51% lower than the previous year, and falling to 2018 levels. The outlook for equity remained bleak with market intelligence indicating early-stage finance will continue to decrease in the next 12 to 18 months.

Unlocked housing capacity

The unlocking of housing capacity by the Agency is heavily reliant on a small number of large-scale infrastructure projects. Contracting is complex and ultimately binary, and there is vulnerability to delays in planning approval.

Infrastructure projects must contend with uncertainty throughout their lifecycle, placing demands on project management, risk management and stakeholder engagement. Housing infrastructure projects are approved and announced early in their lifecycle, with design still at an early stage. This has meant that issues, such as planning and factors uncovered as a result of environmental surveys, are not always clear or resolved until later in the delivery process.

The inherent uncertainties facing infrastructure projects have been exacerbated by elevated levels of inflation, supply chain issues and Local Authority capacity constraints. The economic climate in 2022/23 added to these challenges, and structural problems with infrastructure programmes also contributed to performance being lower than planned, with issues encountered on twelve Home Building Fund – Infrastructure Loan schemes the primary contributor to the shortfall in unlocked housing claimed in 2022/23.

The Home Building Fund – Infrastructure Loan programme targeted the delivery of 20,000 units of unlocked housing capacity (after adjustments for overprogramming). This included projects with the potential to deliver a total of 26,000 units of unlocked housing capacity. A combination of delays relating to market conditions, planning and third-party activities pushed contracting of these schemes into future years, with the majority being deferred during the period from September 2022 through to November 2022, when confidence was at its very worst.

Due to the challenging circumstances, programme delivery fell short of expectations. The future for infrastructure loan activity assumes more effective pipeline development and conversion as the programme matures, which aligns with performance that similar programmes achieved in the past.

Households into home ownership

The shortfall in households supported into home ownership was almost entirely associated with the Help to Buy scheme. The second iteration of the scheme was launched in April 2021, where additional eligibility criteria were introduced, including regional price caps, and restriction to first time buyers. This limited the pool of applicants, and with continued growth in house prices, particularly in the North and Midlands, the number of eligible new build properties were reduced. Consumers also started to explore alternative products such as 95% mortgages and developer schemes. Finally, the steep increase in mortgage rates post September tempered demand, leading to a decline in residential property transactions towards the end of 2022. As a result, the expectations for households supported into home ownership in 2022/23 were revised downwards.

Help to Buy has supported over 380,000 households into home ownership. When the scheme was launched in 2013, it was anticipated that 74,000 households would be supported.

A wider lens on performance

The shift in economic conditions has made it more challenging to achieve lifetime programme objectives with business case parameters typically designed for a benign market. Except for the affordable housing programmes, however, the in-year delivery shortfall from 2022/23 will be broadly recouped over the upcoming five-year planning cycle, with overall programme lifetime targets not materially affected. The decision to support affordable housing partners with increased grant rates in response to inflationary pressures faced by the sector has resulted in a deliberate reduction in the lifetime target for the 2021-26 Affordable Housing Programme, with the fund now targeting a minimum of 89,000 starts.

For several of the larger programmes about to end lifetime performance targets will be exceeded:

• Help to Buy has supported over 380,000 households into home ownership. When the scheme was launched in 2013, it was anticipated that 74,000 households would be supported.
• The Home Building Fund - Short Term Fund has directly supported the development of 44,000 homes against a programme target of 43,000, with 96% of transactions with SME developers. In doing so it has also achieved value for money already returning £400 million to the exchequer.
• The Home Building Fund - Long Term Fund having already unlocked 158,000 homes the fund will achieve its lifetime target of unlocking 160,000 homes in 2023/2024.
• The Affordable Housing Programme 16-21 was launched in 2016 with an objective to deliver 130,000 affordable homes. The programme will exceed its target, delivering 132,000 homes by the end of 2023/24.

Lifetime performance by programme

Type	Investments	End	Delivery: Lifetime objective	Delivery: Delivery to date	Delivery: Lifetime forecast	Financial: Funding allocation	Financial: Actual expenditure	Financial: Forecast outturn
Affordable Housing	SOAHP 16-21	21/22	130,00 starts	126,395 starts	132,000 starts	£4.9bn	£4.8bn	£4.9bn
Affordable Housing	Affordable Homes Programme 2021-26	26/27	89,000 starts	26,116 starts	89,000- 106,000 starts	£7.4bn	£1.3bn	£7.4bn
Home Ownership	Help to Buy 1 & 2	22/23	292,000 legal completions	387,879 legal completions	388,000 legal completions	£21.1bn	£23.2bn	£24.2bn
Home Ownership	Help to Build	26/27	2,000 legal completions	Launched June 2022	2,000 legal completions	£150m	£0.3m	£155m
Home Ownership	First Homes	23/24	1,500 legal completions	242 legal completions	1,300 legal completions	£139m	£18.3m	£92m
Market Diversification	Levelling-Up Home Building Fund	26/27	42,475 starts, 9,300 UHC/ MMC	3,956 starts	42,475 starts, 9,300 UHC/ MMC	£2bn	£131.1m	£2.2bn
Market Diversification	HBF Short-Term Fund	26/27	43,000 homes	49,303 homes	60,376 homes	£2.2bn	£1.8bn	£2.2bn
Infrastructure	Home Building Fund - Infrastructure Loan	24/25	100,000- 116,000 homes unlocked	7,053 homes unlocked	107,000 homes unlocked	£1.5bn	£32m	£1.5bn
Infrastructure	HBF Long-Term Fund	22/23	116,000 homes unlocked	158,435 homes unlocked	160,000 homes unlocked	£1.7bn	£1.4bn	£1.7bn
Infrastructure	Housing Infrastructure Fund	23/24	285,000 homes unlocked	281,176 homes unlocked	285,000 homes unlocked	£3.6bn	£862m	£3.6bn
Infrastructure	LA Accelerated Construction	24/25	up to 10,000 homes	3,573 starts	10,060 starts	£136m	£136m	£136m
Development	Land Assembly Fund	N/A	12,800 starts by March ‘26	3,094 starts	37,000 starts	Recycling fund - £657m secured at Spending Review 21	Recycling fund - £657m secured at Spending Review 21	Recycling fund - £657m secured at Spending Review 21
Development	Single Land Programme	N/A	No targets set post Public Sector Land	No targets set post Public Sector Land	No targets set post Public Sector Land	Recycling fund - £817m secured at Spending Review 21	Recycling fund - £817m secured at Spending Review 21	Recycling fund - £817m secured at Spending Review 21

In addition, in-flight programmes continue to exceed value for money benchmarks and the 70% target recovery rates set in original programme business cases. As at the end of 2022/23, the Agency was recovering 99% of its capital investment.

Outside the Agency’s direct contribution via programme delivery, the Agency has also bolstered market delivery by deploying its soft powers, convening stakeholders to progress stalled opportunities, supporting deals, and adding capacity and capability to the market and leveraging public investment. The outcome of these activities is not captured in the currently reported delivery metrics.

The Agency has refocused on the regeneration of our towns and cities across the country and supported local authorities to deliver their vision.

York Central is example of our working with local leaders and commercial partners to deliver mixed-use regeneration. One of the UK’s largest regeneration sites, York Central will transform 45 hectares of brownfield land into a vibrant and distinctive neighbourhood – complete with residential, cultural, recreational, commercial and outdoor amenity spaces. The site is being brought forward by Homes England and Network Rail in collaboration with the City of York Council and the National Railway Museum. Critical infrastructure will pave the way for 2,500 homes and over one million square foot of commercial space providing a significant boost for the local economy.

The Agency is supporting the creation of jobs in Digbeth, Birmingham. West Midlands Combined Authority (WMCA) and Birmingham City Council have a vision to transform Digbeth into a new, creative hub for the city. The Agency has assembled a collection of brownfield sites around Digbeth – and signed a deal to transform derelict buildings into state-of-the-art film studios. The studios will catalyse further regeneration in Digbeth, creating hundreds of new jobs.

In addition, the Agency is providing essential capacity support to several local authorities. Sheffield Together, a housing growth board, has been launched with capacity provided by the Agency. In Wolverhampton, the Agency has worked with the council to identify housing-led opportunities in the city, culminating in the launch of the City’s Investment Prospectus. The Stokeon-Trent City Prospectus and subsequent Housing Strategy sets out an ambitious plan for the city, including investment in new homes as part of a regeneration strategy. The Agency has committed to supporting Stoke and leverage private and public sector resources. The Agency is also supporting the trailblazer devolution deals with Greater Manchester Combined Authority (GMCA) and the WMCA.

The recent partner perception survey emphasises the positive market view of the Agency, and the value attached to ‘softer’ interventions noting:

• While the Agency’s core role is to provide funding and grants, there is an increasing perception amongst partners of the role being played by the Agency in facilitating the market.
• In addition to accessing our funds, more partners have accessed non-financial support, including advice, guidance, training, and mentoring. On advice and guidance, this mainly related to support in understanding policy requirements. These ‘softer interventions’ have had tangible impact on partner operations. For instance, 85% of partners who accessed training or mentoring reported an improvement in the knowledge/capacity of their staff.
• The importance of this wider role was expressed in the relatively high priority given to non-financial support – one fifth of partners cited providing advice and guidance as a priority for Homes England in the next 12 months, fourth of all priorities cited, behind only funding, affordable housing, and unlocking land supply. Between 18-24% of partners said that they may access training, advice or guidance in the future, if they had not already.
• The extent to which partners agree that Homes England is effective at supporting the housing industry across key cross-cutting topics of sustainability, building safety, design and modern methods of construction has improved, with high levels of demand, particularly amongst local government and housing associations.

Having adapted our funds, and poised to secure approval for the new Brownfield, Infrastructure and Land programme, the Agency is confident in continuing to optimise performance and deliver on the Government’s housing and regeneration agenda.

We have improved the extent to which partners agree that Homes England is effective at supporting the housing industry across key cross-cutting topics of sustainability, building safety, design and modern methods of construction.

Our suite of key performance indicators

In the 2022/23 reporting cycle we continued to monitor and track performance across our suite of key performance measures and two forwardlooking indicators.

The reporting of KPI 3 – Total completions supported by Homes England Indirectly is reliant on third party datasets and was paused during the year due to reliability and availability of data.

There was the intention to report the share of supported completions which use Modern Methods of Construction (MMC) (KPI 9) and throughout the past year we continued to work with the industry and market partners to encourage MMC delivery and promote its use, as adoption of MMC solutions remained nascent. Our ambition to measure the extent and type of MMC used across our portfolio has, however, evolved as the sector has developed at pace. As a result we have submitted a refreshed MMC strategy to HM Treasury for approval and have continued to work with industry partners to progress use of MMC on housing developments.

Throughout the past year we continued to work with the industry and market partners to encourage MMC delivery and promote its use, as adoption of MMC solutions remained nascent.

Our ambition to measure the extent and type of MMC used across our portfolio has evolved as the sector has developed at pace. We submitted a refreshed MMC strategy to HM Treasury for approval and have continued to work with industry partners to progress use of MMC on housing developments.

Suite of key performance indicators

Key Performance Indicator	Key Performance Indicator	2022/23
KPI 1	Total Completions Directly Supported by Homes England	33,713
KPI 2	Total Completions Directly Supported by Homes England, which are Additional to the Market	21,354
KPI 3 [footnote 8]	Total Completions Supported by Homes England Indirectly	N/A
KPI 4	Share of Funding to the Top 50% Local Authorities by the median house price to median workplace-based income ratio	71%
KPI 5 [footnote 9]	Total Economic Benefit of Homes England Programmes	£11.72bn in 2021/22
KPI 6	Total Affordable Completed Homes Supported by Homes England	23,318
KPI 7 [footnote 10]	Total Households Supported into Home Ownership	27,534[footnote 11]
KPI 8	Share of Transactions with Low/Medium Volume Builders	80%
KPI 9	Share of supported completions using Modern Methods of Construction	N/A
KPI 10	Average Building for Life 12 Score for Supported Completions	9

Additional performance indicators

Key Performance Indicator	Key Performance Indicator	2022/23
PI 1	Total starts supported by Homes England	37,175
PIs 10&11	Total unlocked housing capacity	12,248

Evolve

We continue to deliver an important and significant programme of change. Evolve is Homes England’s ambitious programme that will improve our digital services for our customers, partners, and colleagues.

Evolve will deliver shared tools and common ways of working that enable teams and directorates to work collaboratively and consistently to deliver the homes and communities of the future. As a result of revenue budget constraints in the financial year 2022/23, the Evolve portfolio is re-phasing in order to deliver the technical capabilities in a logical prioritised sequence with some elements now delivering into 2024/25.

Countering economic crime

We are committed to the effective management and application of public funds, setting high ethical standards while achieving value for money. Our five-year counter-fraud and antibribery and corruption strategy continues to be delivered by our Anti-Economic Crime (AEC) team. Our AEC Framework and 7 associated policies (including anti-money laundering and financial and trade sanctions) are reviewed annually and updated accordingly. All reported cases of fraud are investigated and actioned accordingly, with case progression and disposal monitored closely. Additionally, and as part of our reporting function, all cases of confirmed fraud, error or loss are escalated and reported quarterly to DLUHC, Cabinet Office and the new Public Sector Fraud Authority.

Whilst we continue with our counter fraud workshops; the AEC team has embedded a New Programme Risk Assessment (NPRA), incorporating the standard Fraud Risk Assessment, across the business to ensure that new programmes and products are reviewed at their inception and design state to identify, mitigate, and propose treatment strategies for AEC type risks. This allows us to further understand and monitor the AEC risk landscape in relation to internal and external threats and the effectiveness and adequacy of our fraud prevention controls. The NPRA identified risks are incorporated into the new “ARMS (Automated Risk Management System)” operational risk management system, to manage the AEC risk on an ongoing basis. This enhances our rolling programme of improvements, including mandatory fraud awareness training for all staff and the implementation and use of our e-learning platform which helps us measure the effectiveness of our compliance training.

We continuously examine our existing internal fraud control environment to improve them wherever necessary. Reporting of fraud continues to be a centralised electronic function managed by AEC team. This ensures that all cases reported to AEC can be analysed, managed and where necessary investigated.

As part of our commitment to achieving greater social value benefits, we are committed to eradicating modern slavery across all our business activities and in our supply chains. In the financial year 2022/23 we reviewed our modern slavery policies to reflect our changing environment.

Engagement with the Office of the Independent Anti-Slavery Commissioner and the Gangmasters Labour Abuse Authority has continued, this has aided in benchmarking and endorsing our risk approach. We are proud to hold the status of being one of their approved employers. Together with construction industry partners, we signed the Gangmasters and Labour Abuse Authority intelligence sharing protocol and we maintain relationships with UK law enforcement bodies. The removal of COVID-19 restrictions has allowed us to concentrate on delivering external training to our panel firms and framework partners; so, we can instil the need for compliance with our policies. We require our partners to identify and report suspicious activity and welfare concerns.

We continue to prepare and deliver internal training to Homes England staff in the form of presentations and workshops in relation to identifying modern slavery risks. We have also developed our proactive reassurance plan to deliver inspection activities in conjunction with our monitoring surveyors at our high-risk sites throughout the UK.

We continue to monitor the UK Sanctions regime against our consumers. We have completed a review exercise of overseas owned Help to Buy developers ensuring compliance with the UK’s Office of Financial Sanctions Implementation’s (OFSI) UK Consolidated List. We continue to ensure that internal and external due diligence providers meet the UK’s OFSI sanctions regime requirements i.e., to ensure we are not doing business with any person or organisation who is subject to sanctions. Homes England’s risk to sanction exposure has been discussed further in the Corporate Governance report.

Market context and managing risks

Homes England has an ethos of delivering for the public good in the long-term. It is required to be active in areas of regeneration and the residential market which are considered unattractive by private sector organisations. A substantial portion of the activity required to deliver our strategic plan carries an inherently higher risk than the activities of commercial organisations in the broader market. The nature of our approach to the market is underpinned by our risk management strategy. Taking risks to fulfil public policy objectives is underpinned by the adoption of best practice in risk management. Through the proper application of our risk appetite, we recognise that this better enables us to respond to changes in the marketplace, not just in terms of meeting demand but also responding to supply side stresses.

Our governance structure provides points of escalation for risks and issues from the operational layers of the business and duly empowers individuals, with the required delegated authority, to make and be held accountable for risk management decisions. The Executive Team is responsible for managing risk in the organisation, overseen by Homes England’s Board and specialist Audit, Assurance and Enterprise Risk Committee.

The individual members of the Executive Team also own those risks which have been identified as Principal Risks facing the Agency and are accountable for their appropriate management and mitigation.

See our Corporate Governance Report to understand how we manage risk and a description of our Principal Risks.

Impact of macro-economic uncertainty

Homes England produces a range of economic forecasts to help manage financial risk. The forecasts are based on a combination of scenarios from the Office for Budget Responsibility (OBR) and Oxford Economics (OE), a global independent forecasting organisation.

The scenarios account for the key macroeconomic risks and uncertainty facing the Agency. They encompass:

• a central scenario, which assumes squeezed household finances due to high fuel and food costs and higher interest rates, which slows housing market activity. In this scenario house prices are forecast to fall by 7.1% between the quarter ended 31 March 2023 and the quarter ended 31 March 2024;
• an upside scenario, which assumes a faster fall in inflation and interest rates while investment picks up, leading to improved long term growth prospects. Housing market activity still slows in 2023/24 as the market adjusts to previous rapid price increases and the deterioration of affordability. Under this scenario house prices fall 6.7% between the quarter to 31 March 2023 and the quarter to 31 March 2024; and
• a downside scenario of persistent inflation and tighter monetary policy, which leads to an asset price crash, tighter credit conditions and a recession. This has a larger impact on housing market activity and house prices. Under this scenario house prices fall 14.6% between the quarter to 31 March 2023 and the quarter to 31 March 2024.

These scenarios are applied by Homes England to its portfolio of assets, to assess the financial implication on the portfolio and for the delivery of Homes England’s objectives.

The valuation of the Agency’s assets may be estimated with reference to key market indicators, such as house price growth, economic growth and unemployment. This is the case for financial assets measured at fair value and land and property assets. Similarly, expected credit loss forward looking models for assets held at amortised cost are calculated with reference to these same economic metrics.

Impact on Help to Buy portfolio

The Help to Buy portfolio is particularly sensitive to market risk from changing house prices. Decreases in house price lead directly to a reduction in the market valuation of the Agency’s home equity loan portfolio. Large falls in house prices could lead to a disproportionately large reduction in the market value due to Homes England’s equity ranking behind the mortgage from the primary lender.

Regional and property type concentration exists within the home equity loan portfolio, and divergences in house price between regions are a source of additional market risk (for example, an adjustment to the prices of London flats).

A fall in house prices might also lead to a reduction in the ability for customers to remortgage or to redeem their equity loan share, either due to being constrained by loan to value requirements or the removal of products from the marketplace. This would lead to a slowing in the redemption rate on the equity loan portfolio which, in turn, would result in a higher yearly interest fee income return on the portfolio and interest fee income being generated over a longer time period.

As movements in house prices are directly related to the market value of the Agency’s home equity loan, a fall in house prices may result in an increase in customers redeeming to crystallise the lower equity value. However, refinancing options in the marketplace are likely to be limited in this scenario, reducing customers’ ability to exit.

The Agency performs a market risk analysis (note 14) which considers how the valuation of this portfolio would change with movements in house prices and a further sensitivity analysis (note 15a) which looks at the key modelling assumptions and illustrates the effect of varying them.

Impact on recoverable investment portfolio

For the recoverable investment portfolio, comprising loans, debt and equity, the main type of security held is land. Falling land values would therefore result in increasing Expected Credit Loss (ECL) estimates on loans held at amortised cost, although the effect on the ECL would not be material due to the Loss Floor of 35% being applied to the calculation at 31 March 2023. If land prices were to decrease by 10%, it is estimated that this would result in an increase in the ECL of £4.1m (see note 15b). Falling house prices, particularly if combined with increasing developer costs, would result in loans becoming less viable, leading to an increased risk of default. This may in turn lead to a further increase in the ECL estimate for loans held at amortised cost.

Falling house prices would likely be combined with falling demand for housing, resulting in delays to delivery on the recoverable investment portfolio, and could impact project viability if sales cannot be recycled into the funding required to maintain project development.

Potential impact on asset valuations from alternative economic scenarios during 2022/23

To aid users of the accounts in understanding the potential risks posed by future macro-economic uncertainty to the assets managed by the Agency, we have used the scenarios developed by the OBR and OE to estimate the impact on the Agency’s key asset classes. By applying relevant metrics from these scenarios, we can model the potential impact of ongoing market uncertainty on assets disclosed in the 2022/23 Financial Statements.

Home equity loans (including Help to Buy)

For home equity loans, the principal driver influencing changes to the valuation of assets are house prices. To demonstrate the potential impact on the portfolio of house price changes, the forecast house price movements used to inform the Agency’s downside economic scenario have been applied to the valuation. These forecasts predict a low point in house prices in Quarter 3 of 2024/25, with the movement in house prices forecast to reduce by 18.4% from reporting date to the lowest point. For the portfolio that exists at 31 March 2023, the estimated effect would be to result in a reduction in the valuation of the portfolio from £19,130m to £14,960m, a reduction of £4,170m.

Loans

For loans measured at amortised cost, the ECL reflects a weighted average of the outcomes which might be expected under each of the three scenarios. To model the effect of each scenario individually we have considered the outputs from each individual scenario ECL calculation. In addition, we have considered whether the creditrisk stages of assets (based on an assessment of Significant Increase in Credit Risk (SICR)) might change under each scenario.

We have modelled the impact under each scenario if all assets were moved to stage 2 (indicating a significant increase in credit risk for all assets), with the modelling for the downside scenario producing an increased ECL of £125.6m under these assumptions.

Scenario	ECL as applied in the Financial Statements (£m)	ECL if SICR stages are adjusted to stage 2 for 100% of portfolio (£m)
Upside scenario	46.6	65.0
Central scenario	68.8	94.9
Downside scenario	87.3	125.6

For loans measured at fair value through profit or loss (FVTPL), the fundamental contractual nature of these loans and primary exposure to variation in returns is comparable with loans measured at amortised cost, and so the ECL percentages estimated for the loans measured at amortised cost are considered to be a suitable measure to estimate loss allowances on loans measured at FVTPL. The valuation of loans measured at FVTPL was £344.8m at 31 March 2023.

Scenario	Estimated ECL on loans measured at FVTPL using ECL percentages applied to loans measured at amortised cost (£m)	Estimated ECL on loans measured at FVTPL using ECL percentages applied to loans measured at amortised cost, assuming all assets move to Stage 2 (£m)
Upside scenario	10.8	15.1
Central scenario	16.0	22.1
Downside scenario	20.3	29.2

Land

The carrying value of the Agency’s land and property portfolio at 31 March 2023 is £1,069m (net realisable value £1,382m). Subjecting this figure value to metrics for upside, central and downside scenarios, shows the land and property portfolio decreasing over the next 12 months in all cases, as below:

Scenario	Estimated value at 31 March 2024 (£m)	Base value at 31 March 2023 (£m)	Reduction since 31 March 2023 (£m)
Upside scenario	1,014	1,069	(55)
Central scenario	1,017	1,069	(52)
Downside scenario	953	1,069	(116)

Looking beyond the next 12 months, the lowest point in each of the 3 scenarios occurs in Q3 2024 in the downside scenario. In this scenario, the land and property portfolio would be valued at £922m, a decrease of £147m from the 31 March 2023 figure.

Further analysis of the sensitivity of significant valuation modelling assumptions, which include more severe scenarios, has been carried out in note 16 of the Financial Statements. Given current macro-economic uncertainties it is possible key contributing economic factors could have a greater impact than the scenarios presented.

Future impact of macro-economic uncertainty

We manage our performance and Key Performance Indicator delivery as a portfolio. The risk profile and uncertainty attached with specific projects is spread over the portfolio, enabling us to effectively manage risk and uncertainty. Delivery of our performance is secured through partners, who independently manage their own risk and uncertainty. Partner delivery represents an additional factor that can impact our performance and requires the Agency’s proactive management.

The Agency operates early warning and watch systems for our lending facilities, which provides alerts where individual positions are showing signs of increased pressure. It also provides an overview that allows active management where the economy is showing signs of additional strain, or where there are other issues that can affect delivery, cashflow and repayment. In response to current uncertainty, we are reviewing our processes and resources to ensure they are adequate to manage emerging risks to our investments in a downturn, should one occur. We continue to work closely with DLUHC and other stakeholders to gather and share market intelligence to understand the emerging challenges the sector faces and respond appropriately.

Going concern

Homes England’s net asset position takes into account liabilities falling due in future years, which, to the extent that they are not to be met from Homes England’s other sources of income, may only be able to be met by future grants or grant in aid from our sponsoring department, the Department of Levelling Up, Housing, and Communities. Grants may not be issued in advance of need and grant in aid for the year ending 31 March 2024, taking into account the amounts required by our liabilities falling due in that year, has been approved by Parliament.

As Homes England and our sponsoring department have previously agreed a rolling five-year business plan and delegated authority limits for the period, the Board considers it appropriate to adopt a going concern basis for the preparation of our Financial Statements.

Financial summary

For the financial year 2022/23, Homes England’s performance against its budgetary control totals is summarised below:

Financial programme performance £m	2022/23: Budget	2022/23: Outturn	2022/23: Variance	2022/23: Variance %
Capital Financial Transactions	2,261.4	2,165.6	(95.7)	(4.2%)
Capital Non Financial Transactions	1,669.3	1,649.4	(19.9)	(1.3%)
Resource	(43.6)	(70.4)	(26.8)	(61.5%)
Total Programme	3,887.1	3,744.6	(142.5)	(3.5%)

Financial performance in 2022/23

The Agency agrees its annual budgets, once approved by its Executive team and Board, with DLUHC and HM Treasury at the start of each financial year through the Main Estimates process. Any subsequent refinements are made through the Supplementary Estimates process mid-way through the year. Budgets submitted to DLUHC are accompanied with ranges to capture deliver volatility as a result of project, market or economic conditions. A number of the Agency’s key programmes generate income as well as incurring expenditure. HM Treasury delegate budgets to DLUHC, and therefore onto the Agency on a net expenditure basis.

Programme budgets for 2022/23 were refreshed through Supplementary Estimates Budgets in October 2022. Due to the demand led nature of Help to Buy, revised budgets were submitted in January 2023 to reflect the latest data from housing developers. The Agency is given the opportunity to update its spend and income budgets using revised forecasts at Supplementary Estimates but corresponding delivery KPIs continue to be reported against the start of year Annual Business Plan figures.

The Agency is delegated programme and administrative budgets. Within both Programme and Administrative budgets, funding is either Capital or Resource in nature – known as CDEL or RDEL. Capital budgets are segregated further into CDEL Financial Transactions (FT) – Loans and Equity and CDEL Non-FT (or CDEL Grant) – Grants and investment in Land activities. Resource DEL refers to the expenditure incurred in the course of day-to-day business activities. This can be spend which enables CDEL spend, support to partners or which pays for the Agency’s running costs, including staff salaries.

In 2022/23, against the revised postSupplementary Estimate annual budgets, the Agency successfully deployed 97% (£4.8bn) of its total expenditure budget delegated from DLUHC and 98% (£1.1bn) of the total income forecast with a breakdown of financial performance by programme as follows.

Charts ‘% expenditure budget achieved’ and ‘% income budget achieved’ have been removed because they could not be made accessible. If you need this information please email webaccessibility@homesengland.gov.uk and include the name of the document.

The majority of programmes saw strong financial performance against budgets, despite the economic and delivery challenges encountered in the year.

The Development programmes are managed on a net basis (expenditure less income) across all funding types including CDEL grant, CDEL FT and RDEL. A number of land disposals were delayed in the year due to planning delays and demand within the market, which resulted in reduced income. These disposals are expected to complete in the following financial year. In order to manage to an overall net budget position, land acquisition expenditure had to therefore also be managed and re-profiled into 2023/24. The mitigated net budget position overall was a £12m net underspend against the budget.

The Agency’s Investments programme achieved 90% of its budget expenditure. This was driven by slippage in expenditure of £65m against budget, of which £50m related to Capital FT on the Levelling Up Home Building Fund. In the first half of the year, build cost inflation caused widespread subcontractor failure, reduced developer margins and lowered scheme viability. As a result, borrowers shelved plans to open new sites and schemes were deferred, leading to unprecedented levels of attrition in the committed pipeline. Later in the year, market turbulence and interest rate increases compounded the situation, particularly for SMEs who were more exposed to interest rate rises and a tightening of terms and availability of development finance, as lenders became more cautious.

In March, ministers announced a moderate extension to the Help to Buy programme (to 31 May 2023) to allow potential homeowners who were unable to complete before the end of the year, to complete their home purchase. The additional period of forbearance has not significantly impacted delivery and financial spend in 2022/23.

Growth of assets in 2022/23

In 2022/23 the Agency’s balance sheet continued to grow, driven mainly by a £506m valuation growth in Help to Buy, which represents 83% of net assets. This has been counteracted slightly by a decrease in both Other Financial Assets and Land, which is a result of a combination of reduced capital expenditure, increased disposals and increased impairment within the portfolio.

The chart ‘Change in net assets during 2022/23 (£m)’ has been removed because it could not be made accessible. If you need this information please email webaccessibility@homesengland.gov.uk and include the name of the document.

Projected change in net assets

Over the next five years, based on programme expenditure and income predicted in the Annual Business Plan, the Agency’s net asset position Projected change in net assets is predicted to change as illustrated below, peaking at c.£23bn this year, as the Help to Buy programme closes 31 May 2023.

The chart ‘Projected change in net assets over time, based on the Agency’s Annual Business Plan’ has been removed because it could not be made accessible. If you need this information please email webaccessibility@homesengland.gov.uk and include the name of the document.

The Agency’s performance has remained resilient over the last year despite the economic challenges. The Agency’s Land assets are forecast to grow at a steady state, increasing by c.60% to £1.7bn over the next 5 years with Investments growth peaking at 39% in 25/26 to £3.0bn.

Changes in the level of administrative costs in relation to assets managed

During 2022/23 the Agency utilised £113.8m (91%) of the original budget settlement of £124.8m provided by DLUHC compared to £115.4m (83%) in 2021/22.

Following a reduced administrative budget allocation of £124.8m in 2022/23, £14m lower than the 2021/22 settlement, the Agency has accelerated and delivered efficiencies of £11m in long-term Admin budget requirements against a target of £5.7m and plans to deliver further efficiencies in 2023/24.

Reduced pay expenditure contributes the largest variance against the 2022/23 administrative budget as a result of high staff attrition compounded by difficulty recruiting in an extremely competitive labour market. In addition, some non-pay expenditure was delayed into 2023/24 as the Agency focused on in-year work in response to economic challenges. This has resulted in an overall Admin budget underspend of £11m (9%).

2023/24 is expected to be a transitional year for the Agency, with operating adjustments required to enable the delivery of the new strategic plan as government’s housing and regeneration agency. There has been an increase in recruitment activity to bring in additional skills and resources required to support delivery of the new strategic plan. Alongside that, the Agency is continuing delivery of an ambitious change programme to realise significant efficiencies over the next few years.

The administrative costs expressed as a percentage of net assets managed were 0.50% in 2022/23, broadly similar to the prior year and significantly lower than 1.13% in 2015/16.

The chart ‘Change in the relationship between administrative costs and net assets’ has been removed because it could not be made accessible. If you need this information please email webaccessibility@homesengland.gov.uk and include the name of the document.

Operating expenditure

Operating Expenditure totals £2,418m in 2022/23. This is an increase of £703m (41%) from the prior year. Of this increase, impairment of financial assets measured at Fair Value Through Profit or Loss makes up £419m of the movement. This has swung from an impairment credit of £164m in 2021/22 to an impairment charge of £255m this year. Help to Buy is the biggest contributor to this difference.

£182m of the movement in operating expenditure from the prior year is due to an increase in grant spend which has risen from £1,482m in 2021/22 to £1,644m in 2022/23. This is largely due to increases across our Affordable Homes Programmes.

The impairment of land and property accounts for £88m of the increase from the prior year. This is a result of inflationary pressures, lower demand for new build homes and increases in base rates, which have all negatively impacted the valuation of land in 2022/23.

The remaining £14m is due to small movements across the remaining financial statement line items.

The chart ‘Analysis of the components of operating expenditure’ has been removed because it could not be made accessible. If you need this information please email webaccessibility@homesengland.gov.uk and include the name of the document.

Operating income

Operating income totals £1,140m in 2022/23, a decrease of only £60m (5%) from £1,200m last year. This is a result of the movement in the valuation change of £143m being somewhat offset by slight increases in operating income across the other financial statement line items.

With interest income being the largest offset, increasing by £37m in the year. This is due to the rise in EC reference rate which results in higher interest charges on our loan portfolio where, for the most part, interest rates track the EC reference rate.

The chart ‘Analysis of the components of operating income’ has been removed because it could not be made accessible. If you need this information please email webaccessibility@homesengland.gov.uk and include the name of the document.

Help to Buy: Equity Loan repayment statistics ^{[footnote 12]}

The table below summarises the number of Help to Buy: Equity Loans issued in each financial year and the cumulative repayment of those loans at the end of 2022/23:

Financial year	Number of equity loans issued	Cumulative equity loans repaid 2022/23: Number of loans repaid	Cumulative equity loans repaid 2022/23: Original cost of repaid loans (£m)	Cumulative equity loans repaid 2022/23: Receipt from repaid loans (£m)	Cumulative equity loans repaid 2021/22: Number of loans repaid	Cumulative equity loans repaid 2021/22: Original cost of repaid loans (£m)	Cumulative equity loans repaid 2021/22: Receipt from repaid loans (£m)
2022/23	26,011	8	0.4	0.4	n/a	n/a	n/a
2021/22	32,684	316	17.0	18.3	16	1.2	1.2
2020/21	55,682	3,399	209.0	226.6	570	34.7	37.4
2019/20	51,449	6,990	434.4	465.0	3,316	204.2	215.5
2018/19	52,467	13,554	829.6	883.6	7,017	410.5	427.3
2017/18	47,587	25,194	1,509.7	1,609.4	13,210	766.3	797.2
2016/17	39,807	25,261	1,401.4	1,491.6	21,174	1,149.3	1,223.2
2015/16	33,873	23,727	1,116.1	1,238.7	21,797	1,020.7	1,127.9
2014/15	27,874	21,051	921.2	1,053.9	20,043	874.4	999.2
2013/14	19,754	15,046	619.7	730.7	14,382	587.0	694.8
All years	387,188	134,546	7,058.5	7,718.2	101,525	5,048.3	5,523.7

The repayment statistics show that between April 2013 and March 2023 a total of 387,188 households bought homes with a Help to Buy: Equity Loan. By March 2023 a total of 134,546 households (35%) had repaid their loan. The repayment statistics also show that Homes England received £7,718.2m from these 134,546 households, when the original cost of the loans was £7,058.5m.

The realised gain on disposal of £659.7m reflects the Agency’s share of increases in the value of homes between the time the loan was issued and repaid.

Sustainability report

The Housing and Regeneration Act 2008 that created Homes England sets out four statutory objects, including “to contribute to the achievement of sustainable development and good design in England”. We are committed to creating well-designed and sustainable places where people want to live and minimising the environmental impact of our activity while doing this.

We work in a number of different ways to achieve this. We use our land and development expertise to work with key industry bodies, such as the Future Homes Hub, to push the sustainability agenda further and drive higher standards in housebuilding. We provide funding for ground-breaking activity such as the Greenhaus development in Salford through the English Cities Fund, a public-private partnership established by Homes England, Legal & General and Muse. The scheme, which is being built to Passivhaus specification, is delivering long-term social value. We’re also supporting the sector to develop commercially viable, sustainable solutions that allow our homes to contribute to combatting climate change, and we use key partnerships with registered providers to drive up sustainability standards in the Affordable Housing sector, creating better homes regardless of the tenure.

The safety and longevity of the homes we support is also a crucial part of sustainability for us, which is why we’re a member of the Early Adopters Group. Over the past year we have worked with DLUHC to develop the Cladding Safety Scheme and have amended our contracts to embed the Building a Safer Future Charter in our work with partners.

Sustainability leadership and governance

Homes England Board members are active in the drive towards developing ambitious sustainability targets. Sadie Morgan is a non-exec director on our Board who is dedicated to championing Sustainability and Design, and throughout 2022/23 has chaired the Cross Cutting Committee. The Committee is tasked with:

• Promoting high quality homes in well-designed places that reflect community priorities; and
• Increasing Homes England’s focus on enabling sustainable homes and places, maximising their positive contribution to the natural environment and minimising their environmental impact.

The Cross Cutting Committee meets regularly to share expertise from across the industry and to review and support the Agency’s ongoing work to develop sustainability quality standards, ensuring they are embedded in our activity. They work closely with our Executive Leadership Team to develop our sustainability and design agenda with a focus on increasing sustainable practices in our operations and in our decision making.

To emphasise the importance of sustainability and design to all our activities, new high-level objectives around sustainability and design quality are included in the Agency’s new strategic plan, which is due to be published this year. This renewed strategic focus is in step with government housing and planning policy, most notably ‘The 25 Year Environment Plan’ and the Net Zero Strategy - Build Back Greener’.

Embedding sustainability and design

Over the past year we have continued to develop our approach to sustainability and design, including how to embed it throughout our culture and processes. Through exploring ‘what good looks like’, we have enabled colleagues from across the Agency to come together and emphasise the value and importance we will place on the delivery of sustainable, well-designed homes.

Part of this work has involved looking at the key stages in which we can integrate sustainability Embedding sustainability and design and design considerations into the appropriate systems and governance processes. We have also recognised the importance of engaging, empowering and inspiring colleagues through enhanced training, guidance and communication, so that they have the necessary skills to deliver our objectives.

This work has taken place in the context of the 17 UN Sustainable Development Goals, which the UK Government, along with 192 other United Nations members, committed to achieving.

Sustainable development goals

1. No poverty
2. Zero hunger
3. Good health and well being
4. Quality education
5. Gender equality
6. Clean water and sanitation
7. Affordable and clean energy
8. Decent work and economic growth
9. Industry, innovation and infrastructure
10. Reduced inequalities
11. Sustainable cities and communities
12. Responsible consumption and production
13. Climate action
14. Life below water
15. Life on land
16. Peace, justice and strong institutions
17. Partnerships for the goals

A number of ambitions were set out in previous Annual Reports which have evolved along with the work we have done around sustainability over the last two years. We have refined and expanded these ambitions to include:

• Supporting partners to deliver sustainable, well-designed places through our ongoing package of learning sessions;
• Collaborating with the industry to identify innovative products and processes that speed the transition to net zero, embedding these within the market where possible;
• Providing continued building safety technical support to colleagues at the Agency, its partners and the wider industry;
• Collaborating closely with the Future Homes Hub to refine and align industry standards on carbon reporting and implement the outcomes in our day-to-day work;
• Continuing to develop design quality assessment across Development services, using Building for a Healthy Life1 as our baseline tool, and disseminating the importance of improving design quality across our activities; and
• Mobilising private capital to invest in more sustainable and better designed homes and places, through our early-stage interventions with fund partners and due diligence engagement and monitoring on strategic Environmental, Social and Governance matters.

To expand on these ambitions further, focus groups made up of colleagues with expertise in key areas were created to discuss our emerging sustainability and design outcomes. These focus groups looked at specific technical areas, such as whole life carbon and design, and have worked hard to make recommendations around how we could set high ambitions as an organisation and how we could include these in our day-to-day operations across different business areas and intervention types.

Local Government Capacity Centre

Between January and February 2023 our Local Government Capacity Centre provided 16 free webinars for attendees across all levels of local government in our Winter Learning Programme. Topics covered ranged from transport planning for carbon reduction to future proofed energy solutions.

Cladding Safety Scheme

The Homes England Building Safety Team has made significant progress on the Cladding Safety Scheme (formerly the Mid-Rise Remediation Programme) over the past year. Working collaboratively with industry experts including risk assessors, the team have developed a new system which will be hosted on gov.uk and is currently in testing stage. The new system will enable the person responsible for the external repairs of a building to apply for a grant for removal of unsafe cladding and will provide a digital platform for them to follow the application through the different stages.

Modern Methods of Construction (MMC) Research Commission

The MMC Research Commission represents one of the largest studies undertaken to date in the UK to review the performance of a range of MMC technologies in development projects. This is being undertaken on sites owned and controlled by Homes England. The selected sites within the study will deliver over 1,000 new homes, using a wide spectrum of MMC technologies.

The aim of the study is to provide evidence and an objective assessment of the outcomes achieved by embracing the use of more advanced MMC technologies in respect of housing delivery. It is anticipated that the findings of the study will be of direct interest to a wide range of stakeholders in the housing sector, including developers, contractors, financiers, local planning authorities, mortgage providers and insurers.

In 2023, the Research Commission will ‘take the pulse’ of the MMC industry through a detailed survey and an ‘MMC Industry Leaders’ half-day workshop in central London. It is anticipated that the results of this study will form the basis of an annual report produced for Homes England, plus academic research papers, presentations, and lectures led by the research team.

Future Homes Standard Research Commission

The Government has set out a roadmap for stepped improvements in the carbon efficiency of new built homes over time. The Future Homes Standard will come into effect in 2025 with the aim of reducing carbon emissions by 75-80% compared to current building regulations.

The Future Homes Standard Research Commission commenced in late 2022 with the creation of a three-year project plan, agreement of a study methodology and metrics, and the introduction of additional ‘tier 2’ and ‘tier 3’ datasets from industry developments to ensure a robust dataset.

Delivering sustainability – Case studies

Case study: Burtree Garden Village

Homes delivered: 2,200

Sustainability: retaining key biodiversity; park and village greens; integrated SUDS; active transport.

At Burtree Garden Village, Homes England has worked alongside Hellens Land Limited, as part of a Joint Venture, and Darlington Borough Council to deliver up to 2,200 homes, of which 1,600 will be built on Homes England land. Prior to Homes England’s involvement, the combination of five separate landowners and significant upfront costs made the development unviable for the market to deliver.

There has been a clear objective from the beginning of the project to take a landscape-led approach to design, working with the site constraints and retaining as many of the veteran trees and hedgerows as possible. The required new link road has been designed not just to be a new section of key infrastructure but a central green spine, linking in with a new park and village greens and integrated Sustainable Drainage System features. There are also a number of walking/ cycling routes for the residents to allow easy and car-free access to the park, school and public transport links.

Looking after the project’s landscape for the long-term is crucial, which is why a plan has been developed alongside stewardship providers. The scheme will achieve at least 10% biodiversity net gain and is expected to go beyond, creating a new central park and a significant number of new trees, with the hope to deliver an arboretum with learning links to local schools.

Case study: Back of Ancoats

Homes delivered: 1,509

Sustainability: zero-carbon housing; sustainable travel modes; green corridor.

At the Back of Ancoats area in Manchester, grant investment of £28.1 million will address market failures and remove development constraints to unlock the delivery of 1,509 new homes, without which it would be unviable. The grant will also leverage c.£392 million in private sector investment through a range of developers, generating a gross development value of £446 million.

The project supports several Homes England objectives through: unlocking land and investment, supporting local communities, delivering home ownership and promoting high-quality sustainable design. The project is a brownfield regeneration opportunity in a currently deprived area, supporting both the levelling up agenda and Homes England’s sustainability objectives.

There will be zero-carbon-ready housing delivered in accordance with government targets. On top of this, the significant infrastructure works includes the Ancoats Mobility Hub, which is designed to provide access to sustainable travel modes including cycling and walking, public transport and car clubs. It will be integrated with enhanced cycling and walking routes, including the green corridor canal towpaths and the route towards New Islington Metrolink stop. There will also be public open space, pedestrian-prioritised green streets.

Case study: Broadnook

Homes delivered: 14,000

Sustainability: wide, tree-lined boulevards; sports and recreation areas; parkland and woodland; active travel.

Homes England funding was required to fund a portion of the land assembly, and to unlock the delivery of the scheme by funding initial enabling infrastructure of Broadnook Garden Village, where commercial funding was not sufficient to support the level of investment necessary to unlock the first phases of development activity.

As well as presenting a major contribution to Charnwood’s housing delivery target of 14,000 new homes by 2028, this aims to be an exemplar of the Garden Suburb principles through the provision of high-quality design. Through promotion and development of the site by a partnership of ambitious SME developers, we received a positive Independent Design Review from Design for Homes for the emphasis on wide tree-lined boulevards, public open spaces and large interconnected sports and recreation areas. In addition, there is provision of comprehensive green infrastructure with extensive natural open space, parkland, woodland, sports facilities and allotments throughout the Garden Village; and, Great places to live supported by a network of cycle routes and footpaths within a walkable neighbourhood.

Case study: Houlton

Homes delivered: 6,200

Sustainability: nature corridors; foot/cycle paths; public transport connections.

At Houlton, Rugby, we were able to unlock 6,200 homes through the provision of large site infrastructure alongside Urban and Civic and Aviva. Crucially, a flexible repayment process allowed receipts from the sale of early development parcels to be recycled into sustainability priorities prior to loan repayments commencing.

The project’s sustainability emphasis is diverse with substantial achievements to date, including heritage regeneration and community wellbeing. Sustainability and placemaking have been central to the development approach. The scheme has also delivered biodiversity benefits through the creation of an extensive network of nature corridors and foot/cycle paths, which encourage the use of active travel, whilst the provision of bus services linking Houlton to Rugby and wider employment areas ensure public transport is a viable option.

Case study: Brookleigh

Homes delivered: 3,500

Sustainability: extensive community engagement.

Homes England acquired land from several landowners at Buckley, following market failure to deliver a comprehensive delivery and place-based strategy, to deliver a new place of 3,500 homes, employment land, new leisure facilities, and additional key infrastructure, as well as green infrastructure, including an extension to Bedelands Nature Reserve.

The project highlighted the importance of community engagement to effective housing delivery, particularly through the formation of a positive working relationship with supportive local authorities (Mid Sussex District Council and West Sussex County Council). Homes England is using its Community Engagement Strategy to inform the project team’s approach, encourage and inform more inclusive approaches to engagement, and support this with messaging and communications, to ensure that delivery on the ground is closely aligned with local aspirations. To capture the benefits of this approach, we will be developing and reporting on the Social Value of Brookleigh.

Performance and Greening Government Commitments (GGCs)

We subscribe to the GGCs to drive reductions and continually improve our environmental performance across our office estate and business operations, including official business travel. In October 2021, Greening Government Commitments for 2021-2025 were published with new targets and a revised baseline (2017/18) against which to compare performance.

Notes

Utilities and waste data are presented for the operational offices we either directly manage (Northstowe) or those where we are tenants in a building which is not a government hub (Coventry, Liverpool and Newcastle).

Waste costs relate to Northstowe only, as all other offices include waste services under a combined service contract.

Utilities and waste volumes apportioned to nongovernment tenants in these offices are excluded.

Travel and paper use data is for the whole organisation.

Following a detailed review of past annual reports, several errors in the reported emissions for the years 2019/20, 2020/2021 and 2021/22 have been identified and revised to reflect those that were recorded in line with our GGCs.

The different organisation emissions are categorised by scopes 1 to 3. Those presented below are the mandatory reported scope emissions including:

• Scope 1 emissions, which this year includes all direct emissions from leased vehicles in the Homes England fleet. But in prior years also included direct emissions from gas used in heating our offices. The offices we now manage and for which we report utility emissions, no longer use gas.
• Scope 2 emissions, which comprises indirect emissions from energy use (electricity, heating and cooling) in our managed offices.
• Scope 3 emissions, which comprises those from business travel by public transport (domestic flights, rail, underground, taxi, bus) or in privately owned staff vehicles.

Greenhouse Gas Emissions	2017/18 (Baseline)	2018/19	Restated 2019/20	Restated 2020/21	Restated 2021/22	2022/23	Comparison to 2017/18 Baseline	Comparison to prior year	Target and Status
Non-financial indicators (tonnes CO2e): Total Scope 1 (direct) emissions	386.8	349.1	400.4	85.4	76.9	64.6	Down - 83% Reduction	Down - 16% Reduction	25% Reduction against baseline Target met
Non-financial indicators (tonnes CO2e): Total Scope 2 (indirect) emissions	303.3	222.1	215.5	176.4	62.3	57.1	Down	Down
Non-financial indicators (tonnes CO2e): Total Scope 3 emissions	352.7	439.7	476.9	33.5	110.6	231.5	Down	Up
Non-financial indicators (tonnes CO2e): Total Emissions (Scope 1, 2 and 3)	1,042.8	1,010.9	1,092.8	295.3	249.8	353.2	Down - 66.1% Reduction	Up	47% Reduction against baseline Target met
Non-financial indicators (tonnes CO2e): Domestic flight emissions	5.06	8.32	3.32	0.00	3.04	6.07	Up - 21% increase	Up	30% reduction against baseline Target not met
Related Energy Consumption kWh: Gas consumption	550,000	516,000	842,470	383,000	214,000	0	Down	Down
Related Energy Consumption kWh: Electricity consumption	789,000	723,000	701,619	393,000	218,000	152,150	Down	Down
Related Energy Consumption kWh:District heat consumption					65,685	139,018	No baseline data	Up
Total Flights (number): Domestic flights	95	130	246	0	60	113	Up	Up
Total Flights (number): International flights					42	26	No baseline data	Down	New GGC metric
Business Travel (000s of km): Domestic flights	34	53	21		24	47	Up	Up
Business Travel (000s of km): International flights (short haul economy)						24	No baseline data		New GGC metric
Business Travel (000s of km): International flights (long haul economy)						22	No baseline data		New GGC metric
Business Travel (000s of km): Total business travel	6,572	8,157	8,296	314	2,078	4,997	Down	Up
Business Travel (000s of km): Car Travel Total (Combined fleet and private car use)	2,371	2,375	2,524	247	513	835	Down	Up
Business Travel (000s of km): Total distance per full time equivalent (FTE) staff	8.0	8.0	7.9	0.2	1.5	3.6	Down	Up
Financial Indicators (£000’s): Energy consumption	132	134	130	105	85	38	Down	Down
Financial Indicators (£000’s): Expenditure of accredited CRC Allowances (scheme ended in 2019)	74	3	0	0	0	0	Down	Equal
Financial Indicators (£000’s): Expenditure on accredited offsets	0	0	0	0	0	0	Equal	Equal
Financial Indicators (£000’s): Official business travel	1,772	2,433	3,164	437	1,052	1,169	Down	Up

Resources Waste and Recycling	2017/18 (Baseline)	2018/19	Restated 2019/20	Restated 2020/21	Restated 2021/22	2022/23	Comparison to 2017/18 Baseline	Comparison to prior year	Target and Status
Non-financial indicators (tonnes): Total waste generated	26.70	37.39	43.0	62.60	19.57	26.22	Down	Up	15% reduction Target not met
Non-financial indicators (tonnes): Hazardous waste: landfill	0.03	0.02	0.00	0.00	0.00	0.00	Down	Equal
Non-financial indicators (tonnes): Non-hazardous waste: landfill	1.1	0.91	1.00	3.70	0.00	0.00	Down	Equal
Non-financial indicators (tonnes): Non-hazardous waste: incineration with energy recovery	2.74	2.53	2.00	3.90	4.00	4.00	Up	Equal
Non-financial indicators (tonnes): Non-hazardous waste: recycled	16.49	32.90	40.0	55.00	16.00	22.08	Up	Up
Non-financial indicators (tonnes): Non-hazardous waste: ICT reused / recycled	6.34	1.03	0.00	0.00	0.00	0.51	Down	Up
Non-financial indicators (%): Recycling rate (%)	85	91	98	94	82	84	Down	Up
Non-financial indicators (%): Landfill Rate %	4	2	2	6	0	0	Down	Equal
Non-financial indicators (No.): No of A4 reams consumed	5,542	5,287	8,755	234	1,384	747	Down	Down	50% reduction against baseline Target met
Non-financial indicators (No.): No. of reams per FTE staff	7.1	6.1	9.5	0.2	1.0	0.5	Down	Down
Financial indicators (£’000): Landfill/ Incineration	15	11	14	42	24	0.78	Down	Down
Financial indicators (£’000): Recycling	9.0	18.0	29.0	19.8	19.0	5.7	Down	Down
Financial indicators (£’000): Total ICT waste recycled, reused and recovered (externally)						3.99			New GGC metric
Financial indicators (£’000): Paper Procurement	19	21	26	0.96	1	3	Down	Up
Water Consumption - Non-financial indicators (m3): Water consumption - supplied (none abstracted)	1,553	1,689	3,439	3,131	1,592	205	Down -86.8% Reduction	Down	8% reduction against baseline Target met
Water Consumption - Non-financial indicators (m3): Consumption per FTE staff (HE owned offices)	4.5	4.2	4.3	3.4	1.1	0.3	Down	Down
Water Consumption - Financial Indicators (£’000): Water Supply and Sewage Costs	19.0	19.0	20.0	24.0	8.0	3.9	Down	Down

Mitigating climate change: working towards net zero by 2050

Following a return to flexible working practices after the pandemic, we have noted a 42% increase in total greenhouse gas emissions compared to last year. This year’s emissions are 66% less than the 2017/18 baseline which exceeds the target of a 47% reduction.

Our energy usage in the Agency’s office space was also reduced in comparison to the previous year and baseline year by 41% and 78% respectively. This reduction in consumption is reflected in the performance of our offices such as The Lumen, Newcastle. Where for the month of February 2023, we recorded the lowest carbon footprint per square foot of all the tenants in the building.

Waste management

Despite staff numbers nearly doubling from 785 in 2017/18 to 1,415 in 2022/23 we have managed to achieve a 1.8% reduction in waste compared to this baseline year. We have maintained a zero position with respect to ICT and will continue to encourage staff to recycle and minimise waste. This year our recycling rate was 84%. We have met the GGC sub targets to reduce waste to landfill to less than 5% of waste produced and recycle at least 70% of waste produced.

Finite resource consumption: water

We have met the commitment to reduce overall water consumption by 8% against the 2017/18 baseline; and achieved a decrease of 87%. This has been achieved through a combination of moving offices with water saving devices and water saving initiatives such as changing zip tap sensors to push buttons in refurbished offices to improve the efficient use of water for hot drinks.

Finite resources consumption: paper

Against the 2017/18 baseline we have reduced paper consumption by 87% compared to 2017/18 which exceeds the target of 50% reduction against baseline by a considerable margin. This achievement can be attributed to changing behaviours by staff to reduce printing and photocopying.

We continue to review and report our GGC performance quarterly and are proactively working to meet our commitments.

Business travel

Overall, our total distance travelled for business purposes remains below the baseline year of 2017/18, but shows an increase compared the distance travelled last year. This increase is primarily as a result of the relaxation of COVID-19 restrictions.

This year we have monitored the distance travelled on international flights as well as those on domestic flights. In 2022/23 there were two international travel business trips: a researchoriented visit to Tokyo, Japan and attendance by a small delegation to the annual MIPIM conference in Nice, France. Our domestic flight travel has increased this year compared to last year and the baseline year in 2017/18 by 99% and 21% respectively. Taken overall, we have not met the GGC sub target to reduce emissions from flights by 30% from the 2017/18.

Performance against 2017/18 Headline GGC targets

Greenhouse gas emissions

Target 47% reduction. We achieved 66% reduction.

Water consumption

Target 8% reduction. We achieved 87% reduction.

Waste management

Target overall 15% waste reduction. We recorded 1.8% reduction. Target reduce paper use by 50%. We achieved 87% reduction.

Sustainable procurement

We take account of the Government’s mandatory Buying Standards when procuring goods and services, and our procurement policy follows Crown Commercial Service principles. Where relevant, we are embedding procurement policy notices on social value and carbon management plans in our procurements.

We are working with others in government to introduce Whole Life Carbon reporting across our activity, and this will of course include working with the construction and housing sector to monitor and report embodied carbon.

Homes England now requires that any new contract which it tenders that exceeds £5million includes a carbon reduction plan for the scope of works outlined in the contract.

Sustainable construction

The Agency does not build homes directly; rather it provides resources, either in the form of derisked land or funding support to others to do this. Through our relationship with housebuilders, we are encouraging them to consider ways to improve the energy performance of the homes they build and to implement sustainable construction practices.

Where we are directly involved is in the de-risking of land and the provision of infrastructure, we are making use of Crown Commercial Services Construction Works framework and the principles in the Construction Playbook. The procurement process and associated commercial agreements set out relevant regulation and industry best practice to ensure that construction activity is undertaken as sustainably as possible to, for example, reduce waste and water consumption.

Our Delivery Partner Dynamic Purchasing System Framework was revised in September 2021 and provides a platform through which developers can bid to acquire our land. The updated qualification process for this framework now requires prospective developers to demonstrate a commitment to environmental protection in their operations through ISO 14001 accreditation or equivalent environmental management systems. Furthermore, at the tender stage for sites, sustainability is a key part of the technical scoring criteria of prospective bids.

Looking ahead we will be working with others across government and the housing sector to introduce formal reporting of whole life carbon.

Biodiversity Net Gain (BNG)

We continue to work closely with Defra, Natural England and planning authorities to implement biodiversity net gain on those schemes which will be built on the land in our ownership. Since the Environment Act, we have accelerated our efforts to prepare for implementation from November 2023, preparing and refreshing guidance, briefing staff and raising awareness.

As part of the development of the updated Homes England strategic plan a Key Performance Indicator (KPI) has been established for BNG. This KPI will be used to monitor BNG on all development sites brought forward by the Agency. In support of the new KPI, a process for recording and tracking BNG delivery is being developed which will be implemented in the coming year. This will form part of the Agency’s Nature Recovery Plan which is planned to be developed in the coming year.

Land that has little or no development potential can be improved for wildlife and used to provide a biodiversity net gain for schemes where BNG is not possible on the development site. In 2021, the Agency carried out a review of its non-development sites. Ecologists surveyed over 30 sites and used the data to calculate the potential BNG uplift that could be delivered if appropriate ecological improvements were undertaken and secured. The average size of the sites was 5ha and taken together, they had potential for delivering over 450 biodiversity habitat units. A second phase of work to plan and cost the ecological improvement works in more detail has now been undertaken for the most promising sites, which is now being used to inform their future use or disposal strategy.

ICT and Digital

ICT and digital are increasingly being championed as part of the solution for the global climate crisis but there is a risk that the impact of ICT and digital services are also part of the problem. Homes England staff now embrace flexible working, and many split their week between home and office working. As a result, we have witnessed huge reductions in carbon and air pollution from reduced commuting since the 2017/18 baseline year while use in ICT and digital services have increased.

Homes England’s Digital Team are now taking part in cross-government network groups such as OneGreenGov, Defra e-sustainability Network and the cross-Whitehall sustainability group, which will support and inspire how we approach digital sustainability across the Agency. There is also a cross-government Sustainable Technology Advice and Reporting (STAR) working group which is in place to deliver the commitments as set out by the Greening Government Commitments.

Ultra low emissions vehicles (ULEV)

The Agency has made significant progress with respect to its Car Lease Scheme and transitioning from petrol and diesel cars to ULEV. 73% of cars under our lease scheme are ULEV cars, exceeding the target for 25% of fleet to be ULEV by 31 December 2022. We are working towards increasing our percentage of 100% ULEV during 2023 and 2024, and meeting the Government ambition of being fully electric by December 2027.

Environmental incidents

There were no significant environmental incidents on Homes England operated estates in this financial year. Six minor environmental incidents were reported that included contractor incidents relating to waste management, surface water management, minor pollution incidents and vegetation management.

Consumer single-use plastics

Homes England has been demonstrating its commitment to reducing the use of Consumer Single-Use Plastics across the office estate.

The number of items classified as Single-Use Plastic is now officially reported on a quarterly basis and applies to departmental bodies that personally procure the items themselves. Having this insight helps us to begin to make a shift away from using Single-Use Plastics. Prior to procuring items, the Facilities Management Team are now able to assess the sustainability credentials of the supplier during the pre-order stage. This allows them to make informed procurement choices and select more sustainable and ethically sourced products and services.

Banner UK is our office supplies partner. Overall the number of Single-Use Plastic items procured through Banner across the year has reduced from 72,000 items last year to 28,000 items this year. Homes England, as an employer, through our general duties under Health & Safety legislation to reduce the risk of transmission in relation to COVID-19, had previously provided coffee and tea products throughout the office environment in sachet format. Now that COVID-19 restrictions have eased, the remaining stock of these items continues to be utilised but will no longer be procured going forward and substituted with single drums of loose coffee and tea bags in containers. The number of teabags procured that contain plastic has significantly reduced to move to sustainable alternatives of teabag supplies.

Biodegradable, disposable wipes wrapped in plastic packaging have been procured and used to support the regular cleaning and sanitation regimes of office workstations in response to COVID-19. The use of this item is expected to reduce going forward.

To increase our efforts in making a move to more sustainable stationery choices, we are working with Banner to procure items from their ‘Green Choice’ list of items that contain 30% less plastic. 60 stationery products have already been swapped so far.

Some more longer standing initiatives to reduce plastic in the offices has been the provision of crockery and metal cutlery items in all office kitchens to replace plastic disposable versions. Pre-ordered lunches for meetings consist of more sustainable packaging. Plastic milk bottles are also being phased out in all offices staffed by facility managers and replaced by glass bottles that are re-used.

Significant progress has already been achieved in this area and by working collaboratively with our supply chain, we will seek out more opportunities to reduce Single-Use Plastics throughout our estate.

Sustainable employer

It’s important that everyone at Homes England is able to bring their whole self to work and in doing so, help us to deliver meaningful and inclusive changes within the organisation and the wider housing sector. That’s why our colleagues have established staff networks that help us to define and shape the way we do things.

Homes England strives to be an employer of choice, recognising diversity through our values.

We know that a diverse and inclusive organisation empowers teams to perform better and that diversity of backgrounds, perspectives, thoughts and ideas will provide a richer platform for us to do things differently and challenge the status quo.

We continue to support the learning and development of all our colleagues, often in the form of professional qualifications, apprenticeships and through formal training courses. Our colleagues are proactive in organising training sessions across a range of key themes including investments, planning and sustainability amongst others.

Climate change and adaptation

We have limited scope to change the approach to managing our offices as we are primarily located in Government Hubs or offices managed by third party landlords. At the Agency owned office in Northstowe we have taken measures to improve water efficiency through upgrades to an automated irrigation system to reduce water loss. Our intention is to develop a climate change adaptation strategy in the coming year. This will be developed as part of our sustainability implementation plan.

Forward look

This coming year we will be reinvigorating our network of sustainability champions to promote better behaviours in our offices around travel, resource use and waste. We also plan to initiate work on our nature recovery plan and climate change adaption strategy.

The Performance report is signed on 13 July 2023 by Peter Denton, Chief Executive and Accounting Officer.

The Homes England Group is consolidated into the 2022/23 Financial Statements of the Department for Levelling Up, Housing and Communities.

1. The Homes and Communities Agency is an executive non-departmental public body and statutory corporation created by the Housing and Regeneration Act 2008 (as amended by the Localism Act 2011), trading as Homes England. It is sponsored by the Department for Levelling Up, Housing and Communities. This Annual Report & Financial Statements presents the audited consolidated results of the 2022/23 Financial Year for the group of entities of which Homes England is the parent. ↩

2. The figure for the number of households helped into ownership includes delivery from the Affordable Homes Programme and other Development and Investment programmes. ↩

3. Building materials and components statistics: April 2023 ↩

4. Source: Oxford Economics, Homes England Analysis. ↩ ↩²

5. Source: Office for National Statistics. ↩

6. Homes England conducts an annual quantitative and qualitative survey of existing partners from across the housing sector to understand their views on market sentiment, strategic issues facing the housing sector, and perceptions of the Agency. c.4,000 partner organisations are invited to take part who work with Homes England in strategic and/or contractual ways. ↩

7. Source: Homes England housing statistics. ↩

8. Data availability issues mean that this measure is not available. ↩

9. This metric is evaluated a year in arrears. ↩

10. The reporting of this indicator is subject to the publication of the official Help to Buy statistics for 2022 - 2023 by the Department of Levelling Up, Housing and Communities. ↩

11. We have also supported 9,336 households through our investment, Affordable Homes and Development programmes but which, for targeting purposes, are not included. ↩

12. In relation to this data, and any other data within the report which refers to Help to Buy or households supported into home ownership, to achieve data currency, and in the public interest, we have used ‘emerging’ management information available from Homes England which will be published by DLUHC as ‘final’ figures as soon as possible. Published official statistics relating to Help to Buy can be found at https://www.gov.uk/government/collections/help-to-buy-equity-loan-and-newbuy-statistics ↩