Corporate report

Homes England Annual Report 2021 to 2022: Performance Report, accessible version

Updated 3 August 2022

Applies to England

Performance review

This section is designed to give the reader sufficient information to understand Homes England, its purpose, the key risks to the achievement of its objectives and how it has performed during the year.

Peter Denton: Chief Executive’s statement

As my first year at Homes England draws to a close, it’s impossible to reflect back without thinking about what’s to come.

In recent years, our primary role has been to support the building of new homes. We’ve formed a vital link between national policy and delivery on the ground in towns, cities and rural communities, working with public and private sector partners to find the best solution for the different housing challenges the country is facing.

But in February, the Government’s Levelling Up White Paper made it clear that the Agency’s remit is set to expand, with an enhanced focus on regeneration and placemaking. This means we will not only deliver the homes this country needs, but we will also work with partners to revitalise run-down and derelict sites in order to bring confidence, pleasure and pride back to our town centres.

With a renewed focus on regeneration, a more place-based way of working will be central, bringing together all our tools and capabilities to support local leaders to deliver their vision for their towns, cities and rural communities.

Work is already underway to explore how we might do this. The scale of ambition and the breadth of expertise within both the Agency and our many partners across the industry are some of the reasons I wanted to be Chief Executive of the Agency. As we prepare to enter this new phase, it’s clear that we’re building on a really strong foundation that the Homes England team has created.

Our performance

Against a backdrop of continued economic uncertainty, we’ve sought to maximise our delivery performance over the last year. Despite these headwinds, we’ve directly supported the completion of 37,632 new homes, 26,953 of which are affordable. 25,279 new homes have been built that would not have happened without Homes England intervention, and we’ve unlocked land with capacity for more than 58,900 homes to be built.

The Agency’s activity is not immune to wider market conditions. Capacity issues in the planning system, nutrient neutrality challenges, and material and labour shortages with increased associated costs have caused delays to housing provisions, impacting the Agency’s delivery against its KPIs. These challenges have not resulted in lost delivery, and across the longer-term Homes England remains on course to achieve its objectives.

However, continued uncertainty could have potentially significant consequences for our equity and loan portfolio. The increase in the cost of living is one of the factors that could lead to a slowdown in the housing market, and perhaps even a reduction in house prices – prices continue to grow at present, but this growth has slowed in recent months. As specifically discussed in the Impact of Macro-economic uncertainty section of this report, if there is a decrease in house prices, this would lead directly to a reduction in the future market valuation of the Agency’s home equity loan portfolio. Any fall in house prices could lead to a disproportionately large reduction in its market value, due to Homes England’s equity ranking behind the mortgage from the primary lender. Rising costs could also lead to an increase in customers defaulting on their first-charge mortgages or being unable to meet interest payments, which could also lead to a reduction in the future market valuation of the portfolio.

The potential impact of key macro-economic risks is discussed in more detail in the Impact of Macro-economic uncertainty section of the report.

The annual independent Assurance Opinion for 2021 to 2022 has improved to provide a moderate level, following significant cross-agency change to improve the control environment. We’re pleased with this progress but recognise that the organisation will continue to face challenges in the external environment, and that we need to be ready to address these potential future risks. Work is already in train to address these issues and we will continue to focus our efforts on ensuring that enables us to effectively manage our risks and achieve our mission.

Delivery successes

What makes being at the Agency exciting is our ability to intervene in the housing market in different ways, across different economic cycles. In the last year, we have closed 2 flagship funds with very solid results.

We closed the Shared Ownership and Affordable Housing Programme 2016 to 2021. To date, the programme has successfully delivered over 110,000 starts with 80,000 completions – the remaining starts will be delivered in the next financial year, and all completions will be achieved by 2023 to 2024. Our latest forecasts show that we’re on track to exceed the overall programme lifetime target of delivering 130,000 affordable homes.

The impact of this cannot be underestimated. We heard earlier this year how The Buchanan Trust is using affordable homes grant funding to transform a redundant farmyard into 6 new, mixed sized accessible homes for former service personnel living with physical injuries or reduced mobility. The homes are built around a courtyard, helping to create a sense of community, and enabling the veterans to support each other as they start to think about their futures. Affordable homes grant funding makes schemes like this possible. Behind each scheme we support, there’s someone – often a whole family – getting the stability and security that comes with a safe, secure and decent home of their own.

We’re now building on this success with the Government’s Affordable Homes Programme 2021 to 2026. Through the Programme, we’re providing £7.32 billion in grant funding to help build up to 126,000 affordable homes outside of London by March 2026. In September, we committed almost £5.2 billion of this through 31 new strategic partnerships with 35 organisations, which will contribute to the delivery of almost 90,000 affordable homes, as well as enable around 100,000 non-grant funded homes.

For the first time, our strategic partners include for-profit registered providers and developers, enabling us to tap into the appetite, experience and capacity to deliver affordable housing that exists beyond housing associations.

In the last year, we have also closed the Home Building Fund Short Term Fund to new applicants. This provides development finance to small and medium housebuilders struggling to access finance from the market. Designed to deliver 57,200 new homes, the Fund has already seen more than 46,000 new homes built since it launched in 2016, and we’re currently projecting to have delivered around 65,000 new homes across the lifetime of the programme – again, exceeding the initial target. This is all in addition to already returning £700 million of residual funding to HMT for repurposing.

As well as bolstering house building in England, the fund has helped to diversify the housing market by supporting small and medium builders like Rhodes Homes. As a new entrant, Rhodes Homes was struggling to access finance to convert a disused Mill in Morley, Leeds, to 11 much-needed 3-bed townhouses, as well as build 3 additional new homes. We seized the opportunity to regenerate a stalled brownfield site, and were able to provide £1.85 million of development finance to help Rhodes Homes bring the Mill back to life. The homes have now all sold, and Rhodes Homes is seeking larger brownfield schemes to develop in the West Yorkshire area. Through the fund, we’ve been able to help hundreds of small builders grow their business in this way.

We’ve also used the funding to develop more sophisticated financial arrangements with the private sector, leveraging their support to increase the amount of funding available to the housebuilding sector. Last September, we partnered with Lloyds Banking Group to commit £300 million equity funding to the Housing Growth Partnership II (HGP), a new fund designed to support Small to Medium Enterprise (SME) housebuilders with the development of 10,000 new homes by 2025. We also launched the Regional Growth Initiative – a new scheme that enables HGP to commit a higher level of dedicated equity support to the most ambitious SME housebuilders in the UK, allowing them to invest in and grow their businesses and target larger and more strategic sites. The first 5 regional partnerships are already in place across 4 different regions of the UK with Genesis Homes, Durkan Homes, Stonewood Partnerships, Briar Homes and Cruden Homes.

This level of support for small and medium housebuilders will continue through the Levelling Up Home Building Fund, which launched in February and will provide development loans to small and medium housebuilders like Rhodes Homes, as well as invest with specialist lenders.

Supporting home ownership

Of all our programmes, Help to Buy arguably has the most immediate impact on people; it has helped over 350,000 households into home ownership since its launch in 2013. The last year has seen the closure of the original Help to Buy: Equity Loan scheme and the launch of the 2021 to 2023 scheme, a transition that involved contracting and carrying out due diligence on 4,000 homebuilders, as well as updating application processes, operational procedures and customer information from the old scheme to the new. Once again, the Agency has delivered in excess of its targets, with a spend of £2.4 billion and 32,000 homes supported.

As we prepare for the closure of the scheme in 2023, our focus is on ensuring our partners and our customers understand relevant deadlines and what this means for them.

Whilst not our traditional core business, we have played a key role as a government delivery partner in managing public funds made available to ensure high rise buildings have unsafe cladding systems remediated as quickly as possible and residents made safe. The first Fund has enabled the remediation of buildings with Aluminium Composite Material (ACM) cladding in the social sector and is drawing to a conclusion with only a handful of registered provider buildings yet to reach completion.

The second Fund to launch, focussed on buildings with ACM in the private sector, is moving into a final phase with almost all affected buildings now on site with their remediation work and a significant number complete. The third, Building Safety Fund (BSF), for other types of unsafe cladding is by far the biggest challenge with a much greater number of affected buildings; we are currently managing over 300 applications for BSF funding with potentially more to come.

In 2022 to 2023, Homes England is working with Department of Levelling Up, Housing and Communities (DLUHC) on measures to extend remediation funding to the large cohort of residential buildings which are 11 to 18 metres tall, where the cladding system presents an unacceptable risk to life-safety, and which do not have an alternative source of funding to make them safe.

Design and sustainability

In addition to making sure the homes the country needs are built where they are most needed, we’re committed to creating sustainable and well-designed places that protect and enhance the natural environment. The Agency is undertaking several strands of work to support this.

We’re using our land and development expertise to support a series of trials for the new Future Homes Standard (FHS), which is expected to come into effect from 2025. The findings from these trials, expected to be available from 2023 onwards, will be shared with the industry to support developers to prepare for the FHS.

We also use our funds to promote good design and sustainable practices. In October, we teamed up with Octopus Real Estate to create the Greener Homes Alliance, a £175 million fund (of which we’ve committed £46 million) that will provide loan finance and expert support to SME housebuilders to enable them to build more high quality, energy efficient homes throughout England. The Alliance will support the construction of up to 750 new homes whilst also equipping SME housebuilders with knowledge and expertise around low carbon construction, allowing them to build to higher environmental standards, now and in the future.

In addition, in August, Lea Castle Village became Homes England’s first site to gain Building with Nature accreditation, a voluntary scheme that sets out standards for high quality green infrastructure at each stage of the development process.

Local capacity

We know that supporting local government partners to deliver their housing ambitions is central to creating great places. That’s why we launched the Local Government Capacity Centre (LGCC) in May 2021, to develop, curate and design offers for local government with the aim of increasing capacity and skills.

Since then, LGCC has run 2 Learning Programmes for local government officers. Homes England presenters were joined by local authorities, consultancies, private and public sector partners and DLUHC. All 2,790 online places on the 11-session Summer Learning Programme booked out within a week, and the 12 Winter Learning Programme sessions attracted 7,381 registrants from 280 different local and combined authorities, demonstrating that there is a real need and demand for this type of support from our local government partners.

The LGCC has also led the Agency’s investment in not-for-profit Public Practice, a social enterprise with a mission to build the public sector’s capacity to improve places through placing experienced built environment professionals in authorities. That funding will be crucial to supporting Public Practice’s expansion outside of London, helping them to bring their vital services to public sector organisations across the UK.

As we shift our capabilities to better support places, working closely with, and supporting, local government will become an even more crucial part of our work, and the LGCC’s work to date has put us in good standing for this.

Culture and diversity

Creating an inclusive and diverse culture is something that is incredibly important to me and the broader Executive Leadership Team. Our latest Gender Pay Gap report, published at the end of March 2022, shows that our gender pay gap continues to decline – as of 31st March 2021 our medium figure was 7.9%, compared to 15.3% in March 2020. But, whilst we celebrate this success, our focus has to be on further closing that gap.

This year will see the publication of Homes England’s updated People and Culture framework. Key to improving the Gender Pay Gap and diversity overall is to ensure a fair and equitable environment at Homes England in which everyone can bring their whole self to work. A focus on diversity in the recruitment and talent attraction strategy will continue to support the downward trend.

In 2022 we will also begin reporting on the Ethnicity Pay Gap and enlisting the support of an Equality, Diversity and Inclusion working group which is representative of our workforce. The group will guide Homes England’s strategy to promote an environment in which Equality, Diversity and Inclusion is built into the foundations of the decision-making process within the organisation.

I’m pleased to report that our health and safety performance has remained strong through 2021 to 22. Key achievements are set out later in this report, but for the fourth year running our Accident Incident Rate was zero per 100,000 employees. We also met or exceeded all 18 of the Agency’s annual corporate health and safety targets for completing risk assessments, training, site inspections and audits.

Finally, I would like to personally thank my colleagues across the Agency for their hard work and determination over the last year. I’d also like to thank our partners across the sector for their continued innovation, collaboration and support – it’s only by working together that we’ll be able to deliver our housing and regeneration ambitions for the country. We look forward to continuing to work with you to achieve this in the next year.

Organisational overview

Who we are

Homes England was established by government in 2018 to increase the supply of quality homes, improve affordability and help create stronger, more liveable places. 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 & Communities (DLUHC). Our statutory objects are contained in the Housing and Regeneration Act 2008.

We’re governed by a Board, appointed by the Secretary of State for DLUHC, and led by 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 work in collaboration with partners who share our ambition. These include Local Authorities, private developers, housing associations, lenders and infrastructure providers. Our activities are always in response to local needs, in cases where the market alone cannot deliver, and robust leadership ensures we deliver best value for money in all of our interventions, including those delivered with 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, with a view to meeting the needs of people living in England

Following the launch of Homes England in January 2018, in addition to our statutory objects, we launched our new Mission and Strategic Objectives, aligning Homes England to the Government’s housing priorities, and have been flexing them to meet new priorities as they emerge.

Our mission is to intervene in the market to ensure more homes are built in areas of greatest need, to improve affordability. We will make this sustainable by creating a more resilient and diverse housing market.

Unlocking land

We’ll unlock public and private land where the market will not, to get more homes built where they are needed.

Driving market resilience

We’ll create a more resilient and competitive market by supporting smaller builders and new entrants, and promoting better design and higher quality homes.

Unlocking investment

We’ll ensure a range of investment products are available to support housebuilding and infrastructure, including more affordable housing and homes for rent, where the market is not acting.

Increasing productivity

We’ll improve construction productivity.

Delivering home ownership products

We’ll effectively deliver home ownership products, providing an industry standard service to consumers.

Supporting local areas

We’ll offer expert support for priority locations, helping to create and deliver more ambitious plans to get more homes built.

Market disruption and managing risks

As an organisation, 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 whereby we adopt best practice in managing risk, while taking risks to fulfil public policy objectives.

We continue to deliver an important and significant programme of change, under the Evolve portfolio. The Evolve portfolio programmes will provide the Agency with the right tools, data, skills, and ways of working to enable us to deliver against our strategic objectives. During 2021 to 2022, the Evolve portfolio has been reset and mobilised, in response to the business impacts from the COVID-19 pandemic. The Evolve Portfolio has been formally integrated into the Digital Directorate, providing a clearer line of oversight, increased cooperation between teams and reduced siloed working. The Evolve Portfolio will continue to deliver and enable change throughout 2022 to 2023.

Our governance structure provides points of escalation for risks and issues from the operational layers of the business and duly empowered fora and 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 of Budget Responsibility (OBR) and Oxford Economics (OE), a global independent forecasting organisation.

The scenarios account for the key macro-economic risks and uncertainty facing the Agency. They encompass:

• a central scenario carried out against the backdrop of the conflict in Ukraine;
• an upside scenario which assumes that fading coronavirus concerns drive a more rapid return of confidence; and
• a downside scenario of protracted war which assumes that the conflict in Ukraine lasts well into 2023.

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 re-mortgage 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 15) which considers how the valuation of this portfolio would change with movements in house prices and a further sensitivity analysis (note 16a) 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 2022. If land prices were to decrease by 10%, it is estimated that this would result in an increase in the ECL of £0.4m. 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 2021 to 2022

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 2021 to 2022 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 to 2025, with the movement in house prices forecast to reduce by 8.28% from reporting date to the lowest point. For the portfolio that exists at 31 March 2022, the estimated effect would be to result in a reduction in the valuation of the portfolio from £18,640 million to £17,081 million, a reduction of £1,559 million.

Loans

For loans measured at amortised cost, the ECL reflects a weighted average of the outcomes which might be expected under each of the 3 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 credit-risk 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 £104.7 million under these assumptions.

	ECL as applied in the Financial Statements (£ million)	ECL if SICR stages are adjusted to stage 2 for 100% of portfolio (£ million)
Upside scenario	16.0	38.3
Central scenario	38.4	71.2
Downside scenario	53.7	104.7

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 £467.8 million at 31 March 2022.

	Estimated ECL on loans measured at FVTPL using ECL percentages applied to loans measured at amortised cost	Estimated ECL on loans measured at FVTPL using ECL percentages applied to loans measured at amortised cost, assuming all assets move to Stage 2
Upside scenario	5.2	12.4
Central scenario	12.4	23.0
Downside scenario	17.3	33.8

Land

The carrying value of the Agency’s land and property portfolio at 31 March 2022 is £1,169 million (net realisable value £1,576 million). Subjecting these values to metrics for downside, central and upside scenarios, shows the land and property portfolio increasing over the next 12 months in all cases. Therefore, within the downside scenario, we have modelled the expected impact based on land price indices and house price indices from now until the lowest point in the medium term, 2024 to 2025. This provides the clearest indication of the downward pressures on the land and property portfolio.

Within the downside scenario from now to the lowest point in 2024 to 2025, there is an expected reduction in house prices of 8.28%. This translates into a reduction in value of the land and property portfolio of £66 million from the current position. From now until the floor in 2024 to 2025, there is an expected reduction of 1.53% in land prices. This translates into a reduction in value of the land and property portfolio of £12 million from the current position.

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 (KPI) 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 an 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 which 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 2023, 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 5-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.

Performance summary 2021 to 2022

Leading the sector by building our capacity and living our values

Welcomed our new Chief Executive, Peter Denton, marking a new phase for the Agency.

Invested in public practice, the social enterprise with a mission to build the public sector’s capacity to improve places, to help it expand across the country.

Welcomed 4 new Board members, with a diverse range of skills, passion and experience to guide the Agency in its next phase.

Updated our procurement process with the introduction of the Delivery Partner Dynamic Purchasing System, opening opportunities to a wider spectrum of housebuilders.

Launched our Local Government Capacity Centre to help increase housing capacity and skills in local government. So far, we’ve hosted 23 online Learning Sessions for local government officers.

We’ve helped more than 350,000 households become homeowners since the launch of the Help to Buy equity loan scheme in 2013.

We’ve closed the original Help to Buy scheme and launched the Help to Buy 2 scheme – a transition that involved contracting and carrying out due diligence on 4,000 homebuilders as well as updating application processes, operational procedures and customer information from the old scheme to the new.

Unlocking development across the country

Delivered 38,562 starts on site.

Directly supported the completion of 37,632 new homes, including 26,953 affordable homes.

25,279 new homes have been built that would not have happened without Homes England intervention.

Unlocked land with capacity for over 58,993 homes to be built.

Committed £5.2 billion in affordable housing grant through 31 new strategic partnerships with 35 organisations to deliver nearly 90,000 affordable homes.

Recommitted to the English Cities Fund, our long-running partnership with Muse Developments and Legal & General to deliver transformational regeneration, for a further 10 years. This will allow for an additional 6,600 homes to be built, and enable us to reinvest capital into new, long-term urban regeneration schemes, starting with St Helens and Salford.

Lea Castle Village became our first site to gain Building with Nature accreditation.

Launched our £175 million Greener Homes Alliance with Octopus Real Estate to support SME housebuilders to build high quality, energy efficient homes.

Launched our Housing Growth Partnership II with Lloyds Banking Group, with £300 million equity funding for SME and regional housebuilders to support the delivery of 10,000 new homes by 2025.

Invested £20 million into Man Group’s Community Housing Fund, Man Group’s £400 million fund to deliver over 3,000 new homes.

Committed £123.9 million of infrastructure funding to deliver 4,000 new homes, a mixed-use centre, 2 primary schools and a range of open spaces in the new town of Northstowe.

Submitted an outline planning application for over 5,500 new homes for Langley in Sutton Coldfield, Birmingham, as part of a new Sustainable Urban Extension.

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.

Performance review

Sustained delivery performance despite strengthening economic headwinds.

Throughout 2021 to 2022 we have continued to intervene and positively support the market by enabling the build of 37,632 new homes, supporting households to buy their own home and unlocking land that will deliver 58,993 homes in the future.

Our performance this year has reflected the evolution of the programme portfolio with a slight uptick in completions and starts due to several programmes reaching peak delivery. We have seen a decline in unlocked housing capacity as our funding commitments have reduced on our infrastructure programmes, whilst households supported into home ownership continues to track market demand.

At the start of 2021 to 2022 we set a series of stretching targets that assumed a recovering and positive economic environment following the pandemic and the prompt launch of new programmes. We expected our completions to increase by 27%, with affordable housing expecting an increase of c.10,000 completed homes from 2020 to 2021. Starts were set to increase by over 30% based on plans to launch the new Housing Delivery and Diversification programme announced at SR20 and the strong pipeline of projects.

We enabled 37,632 new homes to be built.

We unlocked land that will deliver 58,993 homes in the future.

Output	2016 2017	2017 to 2018	2018 to 2019	2019 to 2020	2020 to 2021	2021 to 2022	Target
Completions	31,094	33,906	40,086	40,345	34,995	37,632	44,275
Starts	41,150	42,151	45,978	47,808	37,330	38,562	48,810
Unlocked Housing Capacity (UHC)	51,252	39,322	35,500	115,454	170,276	58,993	94,863
Households Supported	43,820	53,242	61,271	61,260	64,475	Awaiting final Help to Buy statistics release	42,184

Setting the Scene: Economic Conditions and Risks

After the flurry of property transactions following the period of retrenchment in 2020 to 2021, resultant from the COVID-19-induced lockdowns and fiscal policy, 2021 to 2022 has seen the demand in the housing market continue, with on-line portals and surveyors reporting buyer demand and sales subject to contract well above pre-pandemic levels and mortgage approvals for new purchase remaining strong. House prices continue to grow with few signs of cooling, as low stock availability supports rising prices.

The diagram ‘Annual change in UK house prices (%)’ has been removed as it could not be made accessible. Please contact [email protected] citing the name of the document if you need this information.

Over the past year, the market has seen starts on site activity reaching pre-pandemic levels.

There has been a pronounced shift in the size of site coming forward, with smaller developments becoming more popular. Completion of larger developments during 2020 to 2021 has contributed to this shift, alongside rising land prices. The rise in land prices has seen higher competition on smaller sites, with the volume builders competing for short-term land banks, which are usually of interest to housing associations and smaller builders.

Whilst the market has seen starts activity return to 2019 levels, the rate of completions has experienced a slower return due to greater challenges. Energy Performance Certificates (EPCs) remain a good proxy for housing completions and net additions to the housing stock. Across 2021 to 2022 there were c. 240,000 EPCs registered for new homes. This is c. 20,000 above the 2020 to 2021 total, however, remains below 2019 to 2020 levels by 5.7%. The recovery to pre-pandemic levels has been hindered by tailwinds from COVID-19 with the ‘pingdemic’ and self-isolation rules impacting on the volume of tradespeople available on site to finish the homes.

The diagram ‘New housing supply, net additional dwellings and EPCs lodged for new dwellings, England)’ has been removed as it could not be made accessible. Please contact [email protected] citing the name of the document if you need this information.

Market completions have also been increasingly hit by inflationary pressures, with availability and cost of key housebuilding supplies including bricks, timber and concrete affected. The Building Cost Information Service (BCIS) Material Costs Index has risen since the start of the previous financial year and has reached a generational high, with few indications of slowing. This combined with shortages in skilled labour and the continued demand for housing has resulted in labour costs climbing. All of which has created a difficult environment in which to complete the build of new homes.

The diagram ‘BCIS Materials Cost Index Rolling Annual Change (%)’ and ‘BCIS Labour Cost Index Rolling Annual Change (%)’ has been removed as it could not be made accessible. Please contact [email protected] citing the name of the document if you need this information.

Our activity hasn’t been immune to these wider market conditions. The sustained demand in the housing market resulted in increased liquidity in the market, as a result several of our projects planned for this year were able to source finance from the market. Equally, there has been a reduced requirement from existing borrowers for additional funding. There is anecdotal evidence that developers are reluctant to progress schemes due to the cost volatility increasing risk

Our partners have reported increased challenges in being able to complete homes and sign-off as fit for habitation. Common themes affecting completion rates include limited availability of materials, increased associated costs and lengthy delivery delays for materials required to finish the build of homes. These challenges meant capacity to complete homes in the original timescales was reduced, therefore developers had to extend delivery timescales. Low-to-medium volume builders were particularly impacted due to their lower purchasing power, dependence on multiple supplier chains and limited financial capacity to absorb additional costs.

In many cases, Local Authorities continued to be affected by the impact of the pandemic, with resources diverted to front line services, coupled with budgetary pressures. Capacity in the planning system was reduced, however demand for planning services continued to surge. The loss of resource led to delays in receiving planning outcomes, conducting searches and land registry, as well as the deferment of planning committee meetings. As a result, delays to housing provision occurred.

Given the wider macro-economic nature of these factors, we were not in a position to directly influence. We therefore sought to manage the impact on our overall delivery as best possible through our organisational levers. It is important to note that our challenges in completing homes have not resulted in lost delivery. Whilst we are below where we wanted to be for 2021 to 2022, across the longer-term Homes England is on course to achieve its objectives.

Our performance - Overview

In the 2021 to 2022 reporting cycle we continued to monitor and track our 8 key performance measures and 2 forward-looking indicators. In addition, the Agency has begun reporting against a further metric agreed with our sponsoring department.

• Share of Transaction with low/medium volume housebuilders (KPI 8).

There was the intention to report the share of supported completions which use modern-methods-of-construction (MMC) (KPI 9). 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 and our forthcoming refreshed strategic plan informs the implementation plan. We continue to work with DLUHC to support the Government’s MMC policy across our portfolio.

KPI / PI		2021 to 2022	2021 to 2022 target	Variance
KPI 1	Total Completions Directly Supported by Homes England	37,632	44,275	(6,643)
KPI 2	Total Completions Directly Supported by Homes England, which are Additional to the Market	25,279	30,922	(5,643)
KPI 3	Total Completions Supported by Homes England Indirectly	11,036	-	-
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	Total Economic Benefit of Homes England Programmes	£2,66 billion**	-	-
KPI 6	Total Affordable Completed Homes Supported by Homes England	26,953	34,349	(7,396)
KPI 7	Total Households Supported into Home Ownership	These statistics are pending the publication of the official Help to Buy statistics for 2021 to 2022 from the Department of Levelling Up, Housing and Communities.
KPI 8***	Share of Transactions with Low/Medium Volume Builders	83%	-	-
KPI 10	Average Building for Life 12 Score for Supported Completions	9	-	-

(*) The 50% least affordable Local Authorities are determined using the ratio of median house price to median workplace-based income, published by the Office for National Statistics (ONS) on an annual basis. The metric is calculated by deriving a median affordability ratio from each of the 326 local authorities in England, with those with a ratio greater than or equal to the median defined as the least affordable.

(**) This relates to the economic benefit delivered through investments made in 2020 to 2021.

(***) Transactions with registered providers, local authorities and financial institutions are excluded from this metric.

In addition to our official completions targets, we also assess performance using 2 forward-looking indicators:

KPI / PI		2021 to 2022	2021 to 2022 target	Variance
PI 1	Total Starts Supported	38,562	48,810	(10,248)
PI 10 and 11	Unlocked Housing Capacity	58,993	94,863	(35,870)

Our performance - Detail

Completions

At the start of 2021 to 2022 our target anticipated a 27% rise on our previous year’s performance. This was based primarily on the expectation that a significant number of Affordable Housing projects would complete this year, after starting on site in previous years. Whilst completions finished 15% below target, we achieved an 8% increase on 2020 to 2021.

Our Affordable Homes Programmes are a core contributor towards our completions and over the past year partners have reported challenges in delivering completions. This has mainly been due to delays and access to labour supply and materials. Schemes approaching completion were more directly impacted by labour and materials shortages because it is at this stage where the need for resource is greatest. Delays added c. 20 weeks to delivery times, reducing capacity to complete homes in the original timescales (in Quarter 3 and Quarter 4).

With the Shared Ownership and Affordable Housing Programme 2016 to 2021 timebound, our strategic partners and housing delivery partners raised a legitimate concern of losing delivery because of limited access to materials and labour, and no capacity to stockpile. Homes England was able to protect this delivery, by securing budget flexibility from our sponsoring department in 2022 to 2023 to cover our commitments. This support helped to absorb delays to material delivery, providing housing associations with the confidence to continue delivering.

Across our Development programmes delivery was less impacted by delays to supply and ongoing market issues. The scale and capacity of developers operating on land parcels provided the flexibility to manage supply chain risk and inflationary pressures.

Whilst completions finished 15% below target, we achieved an 8% increase on 2020 to 2021.

Starts

In 2021 to 2022 we had targeted our starts to reach 48,810. This was based on the expectation that post pandemic there would be an influx of pipeline activity and our new investment programme announced at SR20 would come forward this year. Whilst our performance is 21% below our target, we exceeded 2020 to 2021 by 3%.

Our starts performance has been principally supported by our Affordable Housing Programmes. The Shared Ownership and Affordable Homes Programme 2016 to 2021 reached its final year that starts can be claimed, as a result there was a major drive by our delivery partners to start on site. We have also launched the new Affordable Homes programme 2021 to 2026, which has been met with enthusiasm, resulting in making allocations and entering into contract through 2 funding routes (continuous market engagement and strategic partnerships). These allocations provided certainty to partners to progress their affordable housing pipelines, securing c. 11,000 starts for the new programme in 2021 to 2022.

The Home Building Fund – Short Term Fund closed to new business in 2021 to 2022, with focus now directed to managing remaining deployment and recovery of funds committed on contracted schemes. The programme continues to deliver strongly against the Agency’s objective to support SMEs, with most of our spend and starts linked with SMEs, plus 95% of our contracted deals are with SME borrowers. We expect that the Short Term Fund will deliver above 65,000 homes once all funding has completed, well in excess of the original programme target set.

Across 2021 to 2022 a number of issues have affected SMEs in particular, including challenges in the planning system (with additional impact on SMEs who do not have the financial capacity to hold consented sites) and supply chain and materials availability, as well as labour shortages. Where limited resources were available, these were focussed towards completion activity over new starts on site. There remains the potential for these to continue to impact directly on delivery performance, so we continue to monitor the situation closely through 2022.

In February 2022, we launched the Levelling Up Home Building Fund which builds on the success of the Short Term Fund. The new programme increases access to tailored lending facilities for both small and medium developers, provides further capability and support to the wider sector through alliances with both established and challenger lenders, and encourages greater private investment into the sector through use of innovative joint ventures and funds.

A number of our other programmes have seen their starts implicated by the wider economic conditions. The planning delays in the sector, coupled with the reduced capacity of Local Authorities, has meant that several projects with our Local Authority partners have been managed out of 2021 to 2022 and reallocated into future years. The Local Authority Accelerated Construction programme has been impacted by these conditions and with the programme closed to new applicants, there are few mitigations available to us. However, to support Local Authorities, we have deployed capacity funding to bring in additional technical resource to supplement their existing teams and support project delivery. In some cases, as a result of the on-going inflationary pressures, some projects became unviable and withdrew.

Unlocked Housing Capacity

The 2021 to 2022 target (of 94,863) is lower than previous years, as a number of infrastructure programmes come to the end of the funding deployment phase and move to portfolio management. In addition, the 2021 Spending Review announced further infrastructure funding through the new Brownfield, Infrastructure & Land Fund, the details of which are being worked through with the Department and HM Treasury. The number of homes unlocked through infrastructure and land finished 38% below our intended target.

As part of SR20 the Brownfield and Infrastructure Land – Financial Transaction (BIL FT) was announced as a continuation of our existing infrastructure loan funding. Collaboration across multiple government departments has been ongoing throughout the year, with BIL FT formally commissioned and delivery enabled in Quarter 4.

Delivery conditions have remained very challenging with Local Authority capacity reduced throughout the year, delays to activities such as planning decisions and statutory consultation periods which have led to time lost which cannot be recovered in the short-term. This coupled with industry demand exceeding supply, leading to rising material costs and supply chain disruption placed a further squeeze on Local Authorities’ ability to maintain projects within time and budget.

As a result, there has been a handful of scheme withdrawals, and a number of slippages experienced on our Housing Infrastructure Fund projects, but positively, the fund did exceed its forecast by securing 44,512 unlocked homes by year end.

Our Infrastructure Grants team has been working closely with Local Authority and delivery partners to mitigate scheme delays already incurred due to tailwinds from COVID-19, and wider sectoral challenges. Our support has included providing Local Authorities with both advice and capacity funding to resolve technical and resourcing issues, where possible.

Households Supported into Home Ownership

In early 2021, we seamlessly transitioned from Help to Buy 1 to Help to Buy 2. Although Help to Buy 2 is available to fewer customers due to increased criteria measures, the new phase has seen the high levels of demand continue as buyers looked to take advantage of both the product and the ending of the stamp duty holiday. With the rise in house prices seen in 2021 to 2022, Help to Buy has experienced an impact on demand largely due to the regional price caps set. This has impacted the North in particular, where we’ve seen the number of sales reduce during Help to Buy 2. After a buoyant start, this has contributed to reservations slowing down due to property exclusions. Overall Help to Buy 2 continues to support households to buy their own home and the recent launch of Help to Build looks to add to existing products by enabling households to custom build or self build their own home.

Summary of 2021 to 2022 performance – non KPI & PI achievements

First Homes

We are facilitating and delivering the First Homes Programme, where homes are sold at a discounted rate. Our 4 pilot sites are all delivering successfully, with legal completions achieved from November 2021. With the success of the pilot, First Homes has rolled out further, with contract awards made from November 2021.

Building Remediation

Following the opening of the Social Sector Cladding Fund in 2018, all buildings are now in the final stages of remediation. The Private Sector Cladding Fund which opened in 2019 is well advanced, with most projects on site by December 2021. We have so far successfully remediated 68% of buildings registered under this fund.

Development

We have replaced our delivery partner panel with our new dynamic purchasing system. The new system means it is easier than ever for housebuilders to bid for the land sites we’re bringing to market, and they can apply to join when it suits them.

Anti-corruption, anti-bribery, modern day slavery and human trafficking

We are committed to the effective management and application of public funds, setting high ethical standards while achieving value for money. Our 5-year counter-fraud and anti-bribery and corruption strategy continues to be delivered by our Financial Crime Compliance Team (FCC). Our FCC policies are reviewed annually and updated accordingly. All reported cases of fraud are triaged, actioned accordingly and progress monitored. Additionally, and as part of our reporting function, all cases of confirmed fraud, error or loss are escalated and reported periodically to DLUHC.

We have continued with our counter fraud workshops; this has developed an agency wide internal fraud risk register. This allows us to further understand and monitor the landscape in relation to internal and external fraud threats and the effectiveness and adequacy of our fraud prevention controls. These assessments form part of 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 and gifts and hospitality is a now a centralised electronic function managed by FCC. This ensures that all cases reported to FCC can be analysed, managed and where necessary investigated.

In 2022, we are creating a new Commercial Excellence function, bringing together our Procurement team with other staff who undertake procurement or framework management activity. This will enable us to improve our supplier engagement and management, and use our purchasing power to improve social value outcomes and measure the impact we are having. This helps discharge Homes England’s legal responsibilities under the Public Sector Equality Duty and also aligns with the Government Commercial Function’s social value model and Procurement Policy Note – Taking Account of Social Value in the Award of Central Government Contracts.

One example of this was the First Homes Pilot in 2021, where we invited developers to bid for funding to deliver homes for sale to first time buyers at a discount to the market price. Our Invitation to Tender made it clear that only developers who had signed, or agreed to sign, the Building a Safer Future Charter were welcome to bid. The Charter promotes the creation of a positive culture and behaviour change in the safety of the built environment, putting people’s safety first in how we plan for, design, build, maintain, and look after the safety of the buildings we live, work or play in and protect those that use them.

As part of our commitment to achieving greater social value benefits, we are committed to playing our part in eradicating modern slavery from our supply chains. In the financial year 2021 to 2022 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 continued, which aids benchmarking and endorses our risk approach. We enjoy 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. COVID-19 restrictions impacted our opportunities to deliver external training to our panel firms and framework partners; this will change as we emerge from restrictions, and we can again ensure that our compliance requirements are met. 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.

In the final quarter of the year, as a result of the Russian invasion of the Ukraine, we have closely monitored the UK Sanctions List, which is being updated on a daily basis, 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.

Financial summary

For the financial year 2021 to 2022, Homes England’s performance against its programme financial control totals is summarised below:

Financial programme performance £ million	2021 to 2022			2020 to 2021
	Target	Outturn	Variance	Target	Outturn	Variance
Capital Financial Transactions	2,560	2,303	(257)	4,346	4,201	(145)
of which: Expenditure	3,247	2,997	(250)	4,685	4,587	(98)
Receipts	(687)	(694)	(7)	(339)	(386)	(47)
Capital Grant	1,704	1,532	(172)	1,756	1,615	(141)
of which: Expenditure	1,945	1,686	(259)	1,977	1,818	(159)
Receipts	(241)	(154)	87	(221)	(203)	18
Resource*	14	(146)	(160)	66	(147)	(213)
of which: Expenditure	227	73	(154)	300	79	(221)
Receipts	(213)	(219)	(6)	(234)	(226)	(8)
Total Programme	4,278	3,689	(589)	6,168	5,669	(499)
of which: Expenditure	5,419	4,756	(663)	6,962	6,484	(478)
Receipts	(1,141)	(1,067)	74	(794)	(815)	(21)

(*) Resource results have been adjusted. Expenditure has been increased by Expected Credit Loss and budget write off charges. Receipts have been increased to include relevant ‘Admin’ income budgets. These adjustments allow a consistent comparison between actual and target results.

Financial performance in 2021 to 2022

During 2021 to 2022, despite a strong housing market, wider economic headwinds created challenges for the Agency and our partners. Cost inflation, labour market shortages, supply chain disruptions and planning issues contributed to delays and extended build-out timelines. The financial results indicate the Agency ultimately deployed 86% (£3.7 billion) of the net expenditure budget of £4.3 billion.

In particular:

• A significant portion of the Financial Transaction expenditure relates to Help to Buy Equity Loans (where the new 2021 to 2023 programme was launched in the year) where the cost of new loans equity advanced totalled c. £2.4 billion against a budget of £2.5 billion, with developers citing supply chain issues, build delays and the impact of the regional price caps, particularly in the North, as barriers to delivery in year.
• A continued strong housing market has led to the increased repayment of investment loans of c. £638 million, an increase of c. £300 million compared to the value of loans redeemed in 2020 to 2021. In terms of expenditure, the impact of cost inflation and supply chain shortages has further led developers to pause drawdowns as they re-assess their funding structures and requirements, resulting in an overall variance against budget of c. £150 million across the portfolio of Investment programmes.
• Strong private sector market activity has led to a reduction in land acquisition based intervention for the Agency, whilst planning delays have also impacted works starting on existing sites.
• Supply chain and labour shortage challenges have reduced expenditure across Affordable Homes by c. £60 million compared to 2020 to 2021.
• Across the Housing Infrastructure programme, despite the difficulties faced by our Local Authority partners to respond locally to the continuing impact of the pandemic, and inflationary pressures, the programme has delivered £115 million more in funding compared to 2020 to 2021.

Growth of assets in 2021 to 2022

In 2021 to 2022 the Agency’s balance sheet continued to grow, driven mainly by a £1.38 billion net growth in Help to Buy, which represents 82% of net assets (2020 to 2021: 82%).

The diagram ‘Chart: Change in net assets during 2021/22 (£m)’ has been removed as it could not be made accessible. Please contact [email protected] citing the name of the document if you need this information.

Future growth of net assets

Over the next 5 years, based on programme expenditure and income predicted in the Agency’s Annual Business Plan, the Agency’s net asset position and the relative proportions of the key components are predicted to change as illustrated below, peaking at £22.9 billion in 2022 to 2023, as the Help to Buy programme closes.

The diagram ‘Chart: Projected change in net assets over time, based on the Agency’s Annual Business Plan’ has been removed as it could not be made accessible. Please contact [email protected] citing the name of the document if you need this information.

Against a backdrop of social and economic disruption, the Agency’s performance has remained resilient over the last year. We are well positioned to pivot our strategy and operations to reflect the Government’s ambitions around levelling up and regeneration.

The Levelling Up Whitepaper, published in February, set out Homes England’s role in delivering on these ambitions, outlining that the Agency will be repurposed to have a renewed focus on the regeneration of towns and cities, in addition to its existing functions.

Following the publication of the Chair’s Review last year, work has already started to transition towards a more place-based way of working. Later in the year, the Agency will complete its new Strategic Plan, which will formally set out how Homes England will use its funding, powers and expertise to deliver on government priorities.

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

The Agency’s administrative costs expressed as a percentage of net assets managed are currently less than half the level observed in 2015 to 2016, at 0.53%, and are expected to remain at below 1.00% of net assets through until 2026 to 2027.

The increase in percentage terms over the next 5 years however is not driven by increases in running costs; it is driven largely by 3 factors:

1. an increase in depreciation charges due to past and current activity, including depreciation associated with the Evolve programme;
2. the impact of IFRS 16: Leases a new accounting standard which is explained further in Financial Statement note 1: Accounting policies. This results in peaks in specific years as a charge is recognised; and
3. as the Help to Buy equity-loan programme ends and the portfolio reduces in size. Budgets for running costs (pay and non-pay) have yet to be determined beyond 2022 to 2023, however the working assumption in the analysis is that further efficiencies will be required.

The Agency acknowledges the challenging fiscal environment and, following the Chair’s Review, measures have been implemented to realise some early operating efficiencies across both pay and non-pay costs, with further efficiencies being targeted in the Spending Review 21, facilitated by the Evolve programme and other change initiatives.

An extremely active and competitive labour market has led to recruitment and retention challenges, with higher-than-expected levels of staff turnover in 2021 to 2022 and this is evidenced through Admin budget underspends which have been in excess of 16%. Anticipating the efficiency challenges going forward and the strategic pivot to supporting levelling up and regeneration, the Agency has also carefully managed recruitment in the latter stages of 2021 to 2022 to enable sufficient strategic flexibility in future years and this too has contributed to budget underspends.

The diagram ‘Chart: Projected change in the relationship between admin costs and net assets over time, based on the Agency’s Annual Business Plan’ has been removed as it could not be made accessible. Please contact [email protected] citing the name of the document if you need this information.

Operating expenditure

Operating expenditure totals £1,715 million in 2021 to 2022, a reduction of £439 million (20%) from £2,154 million last year. The key driver for the reduction is the decrease in impairment charges of financial assets measured at fair value through profit or loss. In 2020 to 2021, there was an impairment charge of £285 million; this year, there is an impairment credit of £164 million, a swing of £449 million. The Help to Buy portfolio is the largest contributor to this movement, and has moved from an impairment charge of £243 million in 2020 to 2021 to an impairment reversal of £144 million in 2021 to 2022 driven by strong growth in house prices.

In addition to the above, land and property portfolio impairment charges have reduced £48 million since last year, from £67 million to £19 million this year. Whilst some assets continue to be impaired, the overall value of the portfolio has increased reflective of the housing land market in general.

The diagram ‘Chart: Analysis of the components of Operating expenditure’ has been removed as it could not be made accessible. Please contact [email protected] citing the name of the document if you need this information.

Operating income

Operating income for 2021 to 2022 is £1,200 million, which is an increase of £393 million (49%) from 2020 to 2021. The main driver for the increase is the valuation of assets held at fair value. Valuation gains of £444 million were recognised in 2020 to 2021 with £790 million valuation gains recognised in 2021 to 2022, an increase in credits to the SOCNE of £346 million year on year. £708 million of the fair value gains recognised in 2021 to 2022 relate to the Help to Buy portfolio, reflecting significant increases in house prices over the course of 2021 to 2022. The gain on disposal of assets measured at fair value relate to the gains recognised on disposal of home equity loans. The gain on disposal recognised in 2020 to 2021 reflects the moving housing market with proceeds received exceeding the fair value of the assets disposed. In addition, the profit earned on the disposal of financial assets, is reported to be £25 million, (compared to a loss of £7 million reported in 2020 to 2021). Other operating income has increased by £17 million (29%) predominately driven by increased income generated through Home equity loans (referred to as Home owners fees) where income reported in 2021 to 2022 is c. £39 million, an increase of £12m, and this reflects an increased interest bearing Help to Buy portfolio (following the 5 year interest free period).

The diagram ‘Chart: Analysis of the components of Operating income’ has been removed as it could not be made accessible. Please contact [email protected] citing the name of the document if you need this information.

Help to Buy: Equity Loan repayment statistics

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 2021 to 2022:

		Cumulative equity loans repaid 2021 to 2022			Cumulative equity loans repaid 2020 to 2021
Financial year	Number of equity loans issued	Number of loans repaid	Original cost of repaid loans (£ million)	Receipt from repaid loans (£ million)	Number of loans repaid	Original cost of repaid loans (£ million)	Receipt from repaid loans (£ million)
2021 to 2022	32,684	16	1.2	1.2	n/a	n/a	n/a
2020 to 2021	55,682	570	34.7	37.4	15	0.9	0.9
2019 to 2020	51,449	3,316	204.2	215.5	551	32.8	33.2
2018 to 2019	52,467	7,017	410.5	427.3	2,783	156.6	157.4
2017 to 2018	47,587	13,210	766.3	797.2	6,355	357.8	360.9
2016 to 2017	39,807	21,174	1,149.3	1,223.2	11,096	582.9	605.9
2015 to 2016	33,873	21,797	1020.7	1,127.9	18,221	851.0	931.4
2014 to 2015	27,874	20,043	874.4	999.2	18,174	791.9	898.9
2013 to 2014	19,754	14,382	587.0	694.8	13,422	548.2	646.0
All years	361,177	101,525	5,048.3	5,523.7	70,617	3,322.1	3,634.6

The repayment statistics show that between April 2013 and March 2022 a total of 361,177 households bought homes with a Help to Buy: Equity Loan. By March 2022 a total of 101,525 households (28%) had repaid their loan. The repayment statistics also show that Homes England received £5,524 million from these 101,525 households, when the original cost of the loans was £5,048 million. The realised gain on disposal of £475 million is due to the increase in the value of homes between the time the loan was issued and repaid.

Sustainability report

We have a key role in delivering the Government’s ambitions for sustainability, including delivering on the UK’s net zero carbon commitments.

One of Homes England’s 4 statutory objectives set out in the Housing and Regeneration Act 2008 is “to contribute to the achievement of sustainable development and good design in England”. Sustainability lies at the heart of what we do. We are committed to creating sustainable and well-designed vibrant places and reducing the environmental impacts associated with our day-to-day operations.

The role of our Board is to provide strategic leadership and to promote our long-term, sustainable success. Board members are passionate about, and experienced in, sustainability matters. We have a dedicated champion for sustainability and design, Sadie Morgan, who has advocated exemplary design and architecture over her career and is also a Commissioner and Design, Group Chair of the National Infrastructure Commission and the London Mayor’s Design Advocate.

Our board has established a number of committees including the cross cutting committee which will lead on fulfilling responsibilities for a greater focus on the cross cutting objectives detailed in its strategic plan. These include a focus on safety, good design and construction; including MMC, and sustainability.

Our Executive Leadership Team are committed to taking forward our Sustainability and Design ambitions, focusing on deepening sustainability in our operations, activities and decision making and playing our full part in the Government’s climate change agenda.

Although sustainability was not an explicit objective in the Agency’s 2018 Strategic Plan, government housing and planning policy has evolved to increasingly emphasise the importance of mitigating climate change, addressing biodiversity decline, improving health and wellbeing and ensuring high standards of sustainability and design quality are delivered in homes and places. This shift in emphasis is reflected in the inclusion of sustainability/net zero and design quality as new draft cross cutting objectives in the Agency’s next strategic plan, which is due to be published later this year.

The Government is using a range of policy and legislative mechanisms to deliver on these objectives. In 2019 the UK became the first major economy to legislate a binding target of net zero emissions by 2050. The Government’s Net Zero Strategy, the upcoming Future Homes Standard, the Environment Act, the Levelling Up White Paper, the National Design Guide and Model Design Code, and the forthcoming Levelling Up and Regeneration Bill will all influence the Agency’s interventions in housing, regeneration and placemaking.

In recognition of these evolving policy objectives, Homes England has been working in partnership with its sponsor department, DLUHC, to understand how wider government objectives for sustainability, net zero and design quality can be better integrated into housing programmes and agency strategy. Considering sustainability and design quality together allows the Agency, working in partnership with DLUHC, to address both issues in an integrated, cross-functional way that promotes economic, environmental and social value.

Homes England’s Sustainability and Design Framework

Over the last 18 months, Homes England, with input from DLUHC, has undertaken a programme of work to establish an outline vision and set of principles to ground the Agency’s approach to sustainability and design quality.

In July 2020, Homes England’s Board directed the Agency to take a more ambitious approach on sustainability and design quality. Building Research Establishment and Design Council were appointed in November 2020 to support development of a vision and set of principles to guide action. These were developed with input from DLUHC and industry experts and agreed by Homes England Board in March 2021.

The 6 principles of Homes England’s sustainability and design framework articulate in more detail the outcomes the Agency is seeking to achieve and the way in which Homes England will work to achieve them. They are:

1. Planet: Homes, places and actions that protect the planet.
2. Places: Homes and places that will last for the long-term.
3. People: Homes that promote wellbeing and quality of life.
4. Value: Define value broadly.
5. Innovation: Be bold, support innovation and push boundaries.
6. Transparency: Share information, be transparent and foster collaboration.

In addition to Homes England’s 6 principles, we recognise that the UK government, along with 192 other United Nations members, committed to achieving the Sustainable Development goals in 2015. These goals form part of a global development framework, the UN’s Agenda 2030 for Sustainable Development, and are made up of 17 goals and 169 indicators covering issues such as poverty, economic opportunity for all, access to education and healthcare, equality and environmental action.

Our activities can be mapped against 6 of the 17 Sustainable Development Goals

1: No poverty: End poverty in all its forms everywhere.

7: Affordable and clean energy: Ensure access to affordable reliable, sustainable and modern energy.

9: Industry, innovation and infrastructure: Build resilient infrastructure, promote sustainable industrialisation and foster innovation.

11: Sustainable cities and communities: Make cities and human settlements inclusive, safe, resilient and sustainable.

13: Climate action: Climate change and resilience.

15: Life on land: Protect, restore and promote sustainable use of terrestrial ecosystems and halt biodiversity loss.

In last year’s Annual Report, we set out some of our ambitions for the coming year.

These included:

• to work with investment partners who can demonstrate a shared purpose with Homes England to support the market who have plans regarding decarbonisation and to deliver a positive impact for the wider community
• to support the green economy and those who seek to achieve environmental, social and governance outcomes
• to secure new institutional capital to increase the delivery of new affordable homes
• to take forward a group of actions as part of the Early Adopters Group for the Building Safety Charter
• to work across government to share learning around embodied carbon targets and reporting and to share examples of sustainable construction practices

This section of our Annual Report will update on these ambitions, detailing where we are working with the market on sustainability issues, where we are delivering sustainability and how we are behaving sustainably including against our Greening Government Commitments.

Working with the Market

The construction sector has an important role to play in helping to realise the Government’s ambition of tackling climate change and becoming carbon neutral by 2050. Homes England is providing leadership and supporting the sector to transition to more sustainable approaches.

Future Homes Standard Research Commission

1: No poverty

7: Affordable and clean energy

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

The FHS Research Commission has been designed to investigate the impact of building homes to the notional FHS across all phases of the construction lifecycle. Six agency sites are included in this study which will deliver in excess of 400 homes. These sites are spread around the country and developers will be using different approaches to deliver homes according to the notional FHS which will enhance the learning from this research.

Supporting the housing sector in their understanding of any additional costs related to delivering FHS, supply chain and skills challenges and phasing challenges and opportunities, amongst other areas, will support the sector in their preparation for FHS.

Modern Methods of Construction (MMC) Research Commission

9: Industry, innovation and infrastructure

11: Sustainable cities and communities

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. A total of 8 sites are included within the study which will deliver over 1,500 homes, using a range of technologies.

The aim of the study is to provide impartial 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.

Ultimately, the study will help to inform the final customer for the housing created (whether a house purchaser, private tenant, or occupier of affordable housing) of the full credentials of the MMC product. In this respect, the study work is intended to help build confidence in the wider take-up of MMC in the housing sector which will help to create self-sustaining growth (and the benefits of improved economies of scale) amongst MMC suppliers.

Using Building for Life

11: Sustainable cities and communities

13: Climate action

In April 2019, Homes England agreed to use Building for Life 12 (BfL12) as a basis for design quality assessment to support our land disposals process. In July 2020, an updated iteration of Building for Life, entitled Building for a Healthy Life (BHL), was launched to reflect the Government’s increased emphasis on the design of places that can support sustainable and healthy living. The 12 considerations of BHL were similar to those of BfL12, but with a stronger health tenet.

The Agency adopted BHL as a basis for its design quality assessment in August 2020. Whilst the Agency scores the schemes as part of our land disposal process, BHL needs to be used to guide schemes from their inception, and as such, measures to embed BHL through our existing end to end processes, and to provide more training and support, are underway and continue. There is of course a time lag, as schemes developed with BHL as a golden thread are only now starting to go through the disposal process and are yet to be built out. However, the Agency has also been able to promote and support good practice through its alliance with the Housing Design Awards, and have sponsored a new master planning category, as well as achieving success at the Awards. The Agency is working with the Design Network, the umbrella organisation for design review panels across England, to ensure our transition to using BHL as our primary assessment tool is as smooth and effective as possible.

NextGeneration Initiative

9: Industry, innovation and infrastructure

13: Climate action

NextGeneration is an annual sustainability benchmark of the 25 largest homebuilders in the UK. The benchmark enables homebuilders, government, investors and the public to understand the sustainability of the homebuilders’ operations and the new homes they build. Homes England continue to support NextGeneration through our role on the Executive committee along with Lloyds Bank and the UK Green Building Council. The Committee’s role is to ensure the integrity and transparency of the initiative’s governance.

Homes England’s influence and leadership has continued to attract new members to participate in the scheme. Additionally, working with other members of the Executive Committee we are looking to extend the membership to create a benchmark aimed at a more diverse range of SME developers. The Executive Committee are working to deliver an Innovation Forum for members in 2022. This will include a special award for best sustainability initiative as judged by the Executive Committee. Additionally, work is proceeding at pace in the calculation of the scores to derive the annual sustainability benchmark for 2022. The results of this will be formally issued during the formal annual report launch planned for November 2022.

Local Government Capacity Centre

11: Sustainable cities and communities

15: Life on land

In June 2021 the Homes England Local Government Capacity Centre delivered a 2 week Summer Learning Programme for local government. This involved responding to local government skills and knowledge requirements through 11 online sessions with 2,073 attendees, on topics including ‘An Introduction to Brownfield’ with nearly 200 attendees.

Building on the success of the first series of learning sessions, in January and February 2022 the Homes England Local Government Capacity Centre (LGCC) delivered a further 2 week Winter Learning Programme. This was comprised of 12 online sessions shaped through consultation with the sector and co-designed with agency partners, reaching 5,576 attendees, on topics including ‘Delivering Biodiversity Net Gain’, ‘Unlocking Rural Housing’ and ‘Stewardship’.

The ‘Delivering Biodiversity Net Gain’ attracted 542 attendees and the feedback was particularly positive with an average 4.4 out of 5 rating for the learning experience. The session was co-designed by Homes England and sector experts as an introduction for local government partners to the Environment Bill and principles of Biodiversity Net Gain (BNG), particularly in relation to housing delivery and associated infrastructure. Experts from Homes England and leading sector partner, Arcadis, took the attendees through how Homes England is responding to BNG as a developer, key delivery issues including the importance of building links to local authority departments beyond planning to increase understanding of BNG requirements, balancing BNG alongside other local government priorities and practical advice on delivery of BNG with the use of the Coypool, Plymouth case study.

The LGCC team intends to build on the success these sessions to curate a Summer Learning Programme 2022 which will pick up on other practical topics and learning opportunities under the theme of sustainability. The Summer Learning Programme 2021 and the Winter Learning Programme 2022 sessions can be viewed on the Homes England YouTube playlist.

Delivering sustainability

The impacts of our activities from across the Agency can be seen on the ground in schemes which have delivered, and are delivering on, our sustainability ambitions. We will continue to ensure that sustainability (and design) is integral to our future activity for housing and regeneration. On the land in our ownership, we are committed to preventing pollution and where possible, avoiding adverse impacts on soil, water, air and biodiversity, in line with our public safety, health and environmental policy statement. Homes England aims for biodiversity net gain on its housing sites, and are planning and delivering significant ecological improvements.

West Carclaze Zero Carbon Garden Village

11: Sustainable cities and communities

13: Climate action

West Carclaze Zero Carbon Garden Village is one of the first of the Garden Settlements programme to start delivering homes on site. West Carclaze will deliver 1,500 homes, all EPC ‘A’ rated, built on an old clay pit of a former mining, brownfield site.

A number of technologies are being used to ensure the energy efficiency of homes in this all-electric village, including air source heat pumps and photovoltaic panels, whilst homes will have strong MMC credentials. We are working with a number of partners including Cornwall Council, MMC developers Ecoboss and the Department for Education, who are supporting the delivery of a carbon zero school and the visualisation of the Garden village which will support the design agenda for Phase 2. Homes England has funded via the Garden Village capacity funding and the Agency has provided funding support for additional road infrastructure through the Housing Infrastructure Fund.

Ingleby Arncliffe, Hambleton, North Yorkshire

1: No poverty

11: Sustainable cities and communities

The existing homes in rural Ingleby Arncliffe, Hambleton, North Yorkshire, are typically large and unaffordable for local residents. The parish council alongside registered providers have been working together to ensure a mix of tenures and smaller house types are being delivered to meet local need.

Beyond Homes proposed an 18-home development on a former school site which previously had outline planning consent for 4 executive style homes. The new proposal included a mix of affordable rent, shared ownership, rent to buy and discounted market sale. The scheme’s landscaping was designed to fit into the rural setting including retaining trees, boundary hedges and vegetation and a dry sustainable drainage system basin to support the development. The architecture of the proposed houses was such to add a contemporary character area to ensure continuity with the existing village. Furthermore, an £885,600 grant from Homes England was used to ensure the delivery of the affordable elements of the scheme.

Lea Castle, Worcestershire

11: Sustainable cities and communities

15: Life on land

Lea Castle Village in Worcestershire became the first Homes England site to gain Building with Nature accreditation. Building with Nature is a voluntary scheme which sets standards for high-quality green infrastructure at each stage of the development process, from planning and design to long-term management and maintenance.

Since the start on site to create 600 new homes in October 2020, developer Vistry Partnerships have worked with us, local councils, Worcestershire Green Infrastructure Partnership and a number of specialist consultants to ensure the new Lea Castle Village development meets the Building with Nature standards. In June 2021, Vistry were awarded a Building with Nature Design Award as Lea Castle demonstrated that its design had gone beyond statutory requirements to deliver a high standard of green infrastructure for people and wildlife.

Lea Castle is the first of the Agency’s sites to be recognised in this way, and we will be seeking to identify further means by which we can improve green space in the next phase. Lea Castle has allocation for a further 800 homes, as well as employment land, a new primary school, sports pitch, orchards and allotments. With the support of the Worcestershire Green Infrastructure Partnership, we’re looking at how we can improve green infrastructure on the site by ensuring woodland is protected and opportunities for wider biodiversity and recreational links are created. Access to woodland will be opened up with footpaths and a significant area of acid grassland habitat, a priority habitat in Worcestershire, is proposed, as well as sustainable drainage features.

Around 40% of the wider Lea Castle site will consist of green infrastructure with the aim of delivering a minimum of 10% biodiversity net gain and to seek Building with Nature accreditation.

Spencer’s Park, Northamptonshire

9: Industry, innovation and infrastructure

15: Life on land

In total, the project will deliver 600 new homes and the developer, Countryside, is using it as an opportunity to test and learn from different MMC approaches in order to roll these out further within their business.

With their architects, HTA Design, Countryside have taken a landscape led approach to design, taking advantage of the site’s setting and basing the scheme design around a central green spine which will incorporate playful rain gardens and bridges, sustainable drainage and walking/cycling routes for the residents.

Looking after the project’s landscape for the long-term is crucial and the plan has been developed alongside the Land Trust who will manage the landscape. The scheme is expected to achieve a 22% biodiversity net gain on a green field site which is a significant uplift for such a site, also including the planting of 346 new trees.

Spencer’s Park is the largest of the 8 sites included in the Agency’s MMC Research Commission.

New Greener Homes Alliance with Octopus Real Estate

7: Affordable and clean energy

11: Sustainable cities and communities

Homes England has entered into a partnership with Octopus Real Estate, the property lending arm of the Octopus Group. The new Greener Homes Alliance will provide both loan finance and expert advisory support to SME housebuilders, enabling them to build more high quality, energy efficient homes throughout England.

The Alliance will provide loans of between £1 million and £20 million to finance new SME development projects. Homes funded must achieve a minimum EPC rating of B and will benefit from increasing interest rate margin discounts as the energy efficiency of the homes increases above this (as measured using the Standard Assessment Procedure). Homes achieving an EPC rating of A will benefit from interest rate margin discounts of 2%.

Before starting their developments, SMEs will also benefit from free of charge, expert advice from sustainability consultants, McBains and Octopus Energy – the UK’s leading renewable energy supplier.

Man Group’s Community Housing Fund

1: No poverty

13: Climate action

Homes England made a recoverable £20 million investment in Man Group’s Community Housing Fund, highlighting our commitment to supporting institutional investment in the affordable housing sector. The fund aims to deliver over 3,000 new homes and has already committed to delivering hundreds of homes across a number of sites.

One such development is at Coombe Farm, Saltdean which is being developed by local SME housebuilder Gold Property Developments Ltd (“Gold”), and comprises 71 single-family homes and substantial provision of new green spaces and play areas that reflects the site’s location next to the South Downs. A total of 59 homes (83%) will be offered as affordable housing through a combination of key worker rent, affordable rent, and shared ownership.

Early involvement in this project has enabled Man GPM to work closely with Gold to shape the development to deliver substantial social and environmental standards that go above and beyond planning requirements. By combining building fabric improvements with air source heat pumps and photovoltaics, the carbon emissions of the homes are expected to be at least 46% lower than required by UK Building Regulations. The site will also have electrical car charging points to support this important shift in transport.

On this development, the Fund has delivered its social and environmental targets without any grant funding from local or central government. Construction at Coombe Farm is expected to begin immediately, with first occupations in May 2023.

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 to 2025 were published with new targets and a revised baseline (2017 to 2018) against which to compare performance.

During 2021 to 2022 across England, there were periods of time where COVID-19 restrictions were in place, then lifted and for several months, reintroduced. These unusual circumstances directly impacted our performance data.

In Quarter 3, Homes England introduced a new working policy that sought to embed the most valuable aspects of hybrid working patterns that came about at scale during the pandemic. The return of staff back to offices and greater freedoms to travel resulted in, for example, a higher consumption of paper, water and business travel.

Progress against the GGC targets over the past 12 months compared to the (revised) 2017 to 2018 baseline is set out adjacent.

We also highlight our broader activities including those relevant to our wider estate, in line with current public sector sustainability reporting guidance from HM Treasury.

Notes

Utilities and waste data are presented for the operational offices we directly control in each year. Utilities and waste volumes apportioned to non-government tenants are excluded. Travel and paper use data is for the whole organisation.

Data Omissions Notes

Electricity, water and waste generated from our Crawley office is not available for the period of April 2021 to 31 March 2022. This office became part of our estate in 2020 and is managed by a third party. Following a period of delays in receiving the data due to COVID-19 and supplementary audits of the data, we are not confident in the accuracy and completeness. Homes England will be vacating this office during 2022.

Greenhouse Gas Emissions		2017 to 2018 (Baseline)	2018 to 2019	2019 to 2020	2020 to 2021	2021 to 2022	Comparison to 2017 to 2018 Baseline	Comparison to prior year	Target and Status
Non-financial indicators (tonnes CO2e)	Total Scope 1 (direct) emissions	386.8	349.1	232.0	84.7	37.8	90% reduction	decrease	25% reduction - Target met
	Total Scope 2 (indirect) emissions from unknown average on GGC template	303.3	222.1	223.9	176.4	0.1	decrease	decrease
	Total Scope 3 (official business travel) emissions	352.7	439.7	231.0	33.6	52.8	decrease	increase
	Total Emissions (Scope 1, 2 and 3)	1,042.8	1,010.9	686.9	294.7	90.7	decrease	decrease	47% reduction - Target met
Related Energy Consumption kWh	Gas consumption	550,000	516,000	729,000	383,000	214,000	decrease	decrease
	Electricity consumption	789,000	723,000	703,000	393,000	218,000	decrease	decrease
Related Energy Consumption (000s of km)	Business Travel	6,572.0	8,157.0	831.0	561.0	202.6	decrease	decrease
	Distance per full time equivalent (FTE) staff	8.0	8.0	8.0	0.4	1.4	decrease	increase
Related Energy Consumption (number)	Domestic Flights	95	130	246	0	60	decrease	increase
	International Flights					42			New GGC metric
Financial Indicators (£000’s)	Energy Consumption	132	134	130	105	85	decrease	decrease
	Expenditure of accredited CRC	74	3	0	0	0	decrease	same
	Allowances	0	0	0	0	0	same	same
	Official Business Travel	1,772	2,433	3,164	437	1,052	decrease	increase

Resources Waste and Recycling		2017 to 2018 (Baseline)	2018 to 2019	2019 to 2020	2020 to 2021	2021 to 2022	Comparison to 2017 to 2018 Baseline	Comparison to prior year	Target and Status
Non-financial indicators (tonnes)	Total Waste Arising	26.07	37.39	43.00	62.60	19.96	decrease	decrease	15% reduction Target met
	Total Waste Recycled	16.49	32.90	40.00	50.00	16.08	decrease	decrease
	Total ICT Waste Recycled	6.34	1.03	0.00	0.00	0.00	decrease	same
	Total waste: incineration with energy recovery	2.74	2.53	2.00	3.90	4.00	increase	increase
	Total Waste without energy recovery					0			New metric
	Total Waste to Landfill	1.14	0.93	1.0	3.7	0.0	decrease	decrease
Non financial indicators (%)	Recycling Rate %	85	91	98	94	82	decrease	decrease
	Landfill Rate %	4	2	2	6	0	decrease	decrease
Non financial indicators (number)	Number of A4 reams consumed	5,542	5,287	8,755	234	1,384	decrease	increase	50% reduction against baseline - Target met
	Number of A4 reams per FTE	7.1	6.1	9.5	0.2	0.9	decrease	increase
Financial Indicators (£000’s)	Landfill Incineration	15.0	11.0	1.4	4.2	2.4	decrease	decrease
	Recycling	9.0	18.0	29.0	19.8	19.0	increase	decrease
	Paper Procurement	19.00	21.00	26.00	0.96	1.00	decrease	increase
Water Consumption
Non-financial indicators (m3)	Water consumption - supplied (none abstracted)	1,555	1,689	3,439	3,131	1,592	increase	decrease	8% reduction against baseline - Target not met
	Consumption per FTE staff (Homes England owned offices)	4.2	4.3	3.4	2.2	1.1	decrease	decrease
Financial Indicators (£000’s)	Water Supply and Sewage Costs	19.0	20.0	24.0	20.6	8.4	decrease	decrease

Greenhouse Gas Emissions

As a result of the ongoing pandemic, we were able to see almost 70% reduction in total greenhouse gas emissions compared to last year. This year’s emissions are 91% less than the 2017 to 2018 baseline.

Gas and electricity usage in the Agency’s office space was also reduced in comparison to the previous year and baseline year by 44% and 61% respectively.

Waste Management

We have reduced the overall waste by 25% against 2017 to 2018 target. 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 82%.

Finite resource consumption: water

We have not been able to meet the commitment to reduce overall water consumption by 8% against the 2017 to 2018 baseline; there has been an increase of 2.5%. This can be directly attributed to an increase in agency FTE since 2017 to 2018.

Water consumption per FTE has reduced due to COVID-19 restrictions being in place for periods during the year, though this will increase as staff now return to the office.

Finite resources consumption: paper

Against the 2017 to 2018 baseline we have reduced paper consumption by 75% 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. In comparison with last year our paper consumption increased by 83% as staff returned to offices.

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

Performance against Greening Government environmental targets 2017 to 2018

Greenhouse gas emissions: Target - 60% reduction. We achieved a 91% reduction.

Water consumption: Target - 8% reduction. There has been a 2.5% increase.

Waste management:

Target - Overall 15% waste reduction. We achieved a 25% reduction.

Target - Reduce paper use by 50% We achieved a 75% 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.

Sustainable Construction

The Agency does not build homes directly; rather it provides resources, either in the form of de-risked 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.

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

We continue to work closely with Department for Environment, Food and Rural Affairs (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 2023, preparing and refreshing guidance, briefing staff and raising awareness.

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 improvement works in more detail is now under way for the most promising sites, so that the potential future use of each site can be confirmed.

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.

As many of us have been enabled to operate remotely during the pandemic, we have witnessed huge reductions in carbon and air pollution 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. 56% 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 being 100% ULEV by 2024, which is in advance of the government commitment to be fully electric by 31 December 2027.

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 they are procuring from during the pre-order stage. This allows them to make informed procurement choices in order to buy 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 reduced significantly in the latter quarter of the year. The beginning of the year saw minimal Single-Use Plastic items being procured and utilised due to very low occupancy rates in the offices as a result of the COVID-19 pandemic lockdown restrictions, but as restrictions eased and colleagues began to return to offices, procurement of overall Single-Use Plastic items did see an increase. Homes England, as an employer, continues to have general duties under Health & Safety legislation to reduce the risk of transmission in relation to COVID-19, therefore condiments of coffee, tea and sugar products were provided throughout the office environment in sachet format. The remaining stock of these items continues to be utilised but will no longer be procured going forward and single drums of loose coffee and sugar will be provided once again. 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.

There was an increase in the procurement of plastic stationery items, i.e. pens, highlighter pens etc. in line with the return to the offices as much of this stationery had become obsolete over the COVID-19 period therefore needing replacement. To increase our efforts in making a move to more sustainable 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. We are also planning ahead better and buying in bulk to reduce dispatch outer packaging waste and set delivery dates to once per week/month rather than irregular ad hoc deliveries that contribute to increased vehicle emissions.

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 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.

Forward look

Climate Change Adaption

In creating a more resilient market, we work with our delivery partners to ensure that climate resilient designs are incorporated into relevant developments. The Planning White Paper (2020) highlighted the role of the planning system in mitigating and adapting to climate change. In addition to this, the revised National Planning Policy Framework places climate change mitigation and adaption at the centre of plan-making, noting that ‘plans should mitigate climate change (including by making effective use of land in urban areas) and adapt to its effects’.

Environmental risks to our activities are captured in several areas, such as compliance with regulations and individual issues arriving from site specific problems. In managing our estate, we review our sites and any potential receptors that may be adversely affected by a changing climate. We get notified of risk events and near misses such as flooding and wildlife issues and take action to mitigate where appropriate.

Continued Ambition

The Agency is rapidly pivoting to deliver on government priorities. The development of Homes England’s new Strategic Plan is a key part of this, providing an exciting opportunity to define how the Agency will deliver on the Government’s ambitions around levelling up, regeneration and the creation of high quality, sustainable and beautiful homes and communities.

Defining the Agency’s role in delivering on government priorities for sustainability and design quality will be an important component of the changes that will be implemented across the Agency.

Over the coming year, the Agency will carry out further work to define the outcomes we aim to deliver on sustainability and design and embed activities and processes that will achieve them.

Our Executive Leadership Team has approved further work to take this forward, which will be founded on 3 broad areas:

1. Clearly define the Agency’s ambitions on sustainability and design quality, including the outcomes we will seek to achieve, that can be applied across all of Homes England’s interventions.
2. Develop processes that will effectively deliver these objectives, building sustainability and design quality into key systems and decision-making processes at every point in the pipeline.
3. Ensure Homes England has the capabilities and capacity to deliver on its ambitions.

To complement the Agency’s new role in delivering the Government’s priorities, we intend to launch an external communications programme to explain the Agency’s role in achieving improved outcomes for sustainability and design, and how we will work with partners to achieve them.

In addition to this broad programme of work, over the coming year we aim to continue delivering improved outcomes on sustainability and design quality through focussed activity, including:

• continuing to work with investment partners who can demonstrate a shared purpose with Homes England to support decarbonisation and deliver positive impacts for communities
• Exploring opportunities to build upon the Greener Homes Alliance to develop new lending partnerships that will incentivise the provision of more high quality, energy efficient homes
• continue to work across government to share learning around embodied carbon targets and reporting and to share examples of sustainable construction practices
• developing and publishing a Homes England Place Pledge, that will define place standards the Agency expects to achieve and the processes we will use to deliver them
• contributing to the adoption of improved building safety practices across the sector by collaborating with external bodies to promote positive culture and behaviour change
• work with DLUHC, housebuilders, Local Authorities, professional institutions and partners to ensure that there is a coherent approach to sustainability that delivers benefits for people, place and the planet

The Performance report is signed on 13 July 2022.

Peter Denton, Chief Executive and Accounting Officer