Corporate report

Annual report 2020/21: Performance report, accessible version

Updated 3 February 2022

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.

Interim Chief Executive’s statement

The success of Homes England is built on the efforts of our colleagues and partners. Over the course of a year disrupted by COVID-19, we have enjoyed many successes and that is down to the resilience of each and every one of the people that we work with.

Gordon More, Interim Chief Executive

We have all had to adapt quickly and work flexibly, both individually and as a sector, and we have continued to rise to the challenges of delivery against the backdrop of a global pandemic.

Those efforts have seen us continue to perform strongly in the face of the challenges we’ve all faced. There has been a huge effort to deliver our ambitious targets this year, which has seen us support the market through tough economic conditions, help 56,000 households to buy their own home, enable 35,000 new homes to be built and unlock land that will support the delivery of 170,000 homes.

The impact of the pandemic on the housing market and our partners in 2020/21 was extensive and diverse. Performance was disrupted in the first quarter of the financial year, with a partial shutdown of the construction sector and the closure of the housing market resulting in over 100,000 fewer property transactions and 55% fewer housing completions compared to the previous year. But in spite of this, Homes England’s annual performance remained sturdy in comparison to the year on year falls in starts and completions seen in the market. This was, in part, due to our capability of acting counter-cyclically and providing a safety net, which gave our partners the confidence to advance with their development pipelines.

Everyone across our organisation has played a role in supporting partner confidence and delivering on our objectives. From Legal, Finance and Government Relations to colleagues in Investment, Development and our Markets, Partners and Places directorate, every team at Homes England plays a part in making homes happen. Huge recognition is needed for our Digital team, whose sterling efforts have equipped every member of staff with the technology, training and platforms that make delivery possible from our own homes. We successfully onboarded 327 new colleagues over 2020/21, with improved virtual and agile working principles helping make us more effective in delivering on our mission.

This is something we are building on through our Future of Work programme. We’ve identified five related themes – wellbeing, delivery, inclusion, offices, and team-working – that we are exploring in detail to help us understand how Homes England needs to work in the future, taking the best of our learnings over the past year to strike a balance between short term ideas and longer-term changes that will help us to improve how we work, collaborate and support one another.

At the end of 2020, we virtually moved into our new office at The Lumen, in the heart of Newcastle City Centre. This new location allows us to work under one roof alongside our partners, the North of Tyne Combined Authority, and epitomises our ambition to foster more collaborative ways of working with each other and our partners, be that in person or virtual.

Homes England has come so far in our aim to strengthen our relationships in challenging circumstances, both internally and externally. Our partners face similar issues as we do, and the fact that Homes England colleagues were still doing deals right down to the wire at year end (and completing Help to Buy transactions!) is a credit to the whole Agency. Speaking of which, it’s with great pride I can say that at the end of March, Help to Buy broke through to achieve its largest annual spend ever - £4 billion. That means that we helped a record 56,000 households buy their own home in the last year, making a real impact on people’s lives.

Our Help to Buy team has well and truly worked their socks off this year and I’m pleased to report that the new Help to Buy: Equity Loan (2021- 2023) scheme was delivered on time, with no drop in the quality of service. Described by our partners as a seamless transition from old to new and to put this into context, more than 1,600 homebuilders were fully in contract and 12,000 homebuyers had approved equity loans for the new scheme within days of the launch, an outstanding result.

Our mission has never been more important or clear – this year has highlighted even further the sheer impact our work has on people’s lives, with real, tangible social impact. It is vital that we continue to push not just for more homes, but for better ones too. Our new Sustainability and Design Framework is a particular highlight for me: grounded in evidence, the principles that the framework sets out will provide us with a solid platform from which we will be able to put quality at the heart of the Agency’s work, helping ensure the sector is delivering new homes that set the standard in terms of design and sustainability.

The past year also saw us make significant strides towards our own transformation. Following the approval of our transformation business case at the start of the financial year, we’ve made real inroads into building better customer and partner journeys. We’re restructuring the Agency’s ‘front door’ on gov.uk, improving our core customer facing services and supporting processes. We are transforming the service and internal process of Help to Buy whilst reviewing and improving access to home buying. And we have also redesigned our affordable housing service to align with Affordable Homes Programme 2021/26. All of these transformation efforts are helping make Homes England a more robust, effective and easier to work with organisation and are helping us deliver on our priorities more efficiently.

Our response to the pandemic was one that understood the impact on partners, and we developed and continue to develop plans to mitigate these impacts. We focused on collating and sharing market intelligence and communications with colleagues across the Agency, allowing us to get to grips with problems faced across the market, leading to a much more collaborative working approach. We were keen to support our partners. So, we did two things; delayed the repayment of loans and moved contractual milestones to allow partners more time to deliver. Recycling funds was also permitted, which helped to provide the liquidity and cash flow needed, reducing administrative demand.

The word unprecedented has now been overused but it’s fair to say that the events this year took everyone by surprise. Development support is especially important during a time where people can feel like they’re wandering through a desert and we want to continue to help builders bounce back stronger. We’ve been seeking new ways to build on this available support and this year we’ve had several big additions, including our new 7 year partnership and a £25m revolving fund to allow non-bank lending platform, Invest & Fund, to support small builders with construction loans of between £400k and £2.5m and let’s not forget our 5-year £250m lending alliance with United Trust Bank, which will support small and mediumsized developers to deliver thousands of new homes at pace in areas of greatest need.

We also understand that in many cases, knowledge and capacity are the power tools needed to scale and build efficiently and effectively which is why I’m appreciative of the effort our Markets, Partners and Places (MPP) team have put into getting the Local Government Capacity Centre of Excellence up and running. We now have that clear vision for how we balance the need to support everyone against the need to support some people in a much more intense way. We have also added this capacity to market partners at a sub regional level with ongoing support of the Thames Estuary Growth Board and the Homes England commissioned pan Estuary Spatial study that will help drive a new pipeline of opportunities for us and our work in Manchester and Essex to form a new support model at a sub-regional functional market area level is also well underway.

Another highlight was within Affordable Housing. Homes England extended the deadlines on expenditure and works completed, reducing the burden on Local Authorities and Registered Providers. In turn, this allowed them to focus resources on responding to the direct consequences of the pandemic. Our Strategic Partnerships model offered partners the necessary assurance and flexibility, allowing them to move funding to different schemes if there were issues with Local Authority capacity, for example. All of these efforts have helped our partners keep delivering throughout a challenging year like no other.

Looking ahead, the industry still needs to undertake significant research and development to be able to meet the huge challenge we face of delivering the Future Homes Standard and 300k homes per year. The groundbreaking action research project AIMCH (Advanced Industrialised Methods for the Construction of Homes) into MMC recently passed the two-year mark in its threeyear lifespan and is reporting significant and encouraging progress. The project is looking not just at MMC, but what and how we build to achieve higher standards. We are involved both as a member of the Stakeholder Panel and one of the key sites is our Pewterspear site in Warrington. We have also aligned our own MMC Pilot research data collection with this so that we are able to build a more consistent body of evidence.

Our desire to adapt and innovate has not dwindled. To achieve our ambitions and transform the housing market, we must continue to evaluate, reflect, and streamline. Our mission to intervene, where the market will not, was stronger than ever in 2020/21. In challenging circumstances, faced with the exceptional economic and operational obstacles arising from the pandemic, we have continued to support both the market and our partners. I’d like to thank everyone we’ve worked with for the commitment you have shown towards our mission of making homes happen.

Homes England are acting as master developer to create the new town Northstowe on a former airfield close to Cambridge. Delivery includes 8,500 new homes, with forward funded infrastructure accelerating delivery on public sector, brownfield land. Urban Splash House are on site delivering their first phase of 406 homes that will comprise high levels of MMC including fully volumetric off site construction.

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 Ministry of Housing, Communities and Local Government. Our statutory objects are contained in the Housing and Regeneration Act 2008 (‘the Act’).

We’re governed by a Board, appointed by the Secretary of State for Housing, Communities and Local Government, and led by chair Peter Freeman. Our interim Chief Executive and Accounting Officer, Gordon More, 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 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 October 2018, in addition to our statutory objects, we launched a new Mission and Strategic Objectives, aligning Homes England to the Government’s housing priorities.

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

Our strategic objectives are:

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

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.

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.

Supporting local areas: we’ll offer expert support for priority locations, helping to create and deliver more ambitious plans to get more homes built.

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

In light of the evolution of Government policy priorities since the Strategic Plan was written, the Agency is supporting Government’s new and emerging ambitions. There are a number of areas where we will plan to go beyond the strategic objectives in pursuit of these ambitions. These actions include further support to the Small to Medium size Enterprise (SME) sector, an ambitious agenda to drive improvements in the sustainability and design quality of the homes we enable, supporting additional placebased interventions, working with partners to develop a pipeline for new settlements, supporting building safety and exploring options to support the levelling-up agenda through regeneration.

We will be reviewing the Strategic Objectives in 2021 to further support the Government’s ‘Build Back Better’ ambitions for the country. We aim to become an even stronger institution that can galvanise a housingled recovery, connecting other ambitious organisations and using our resources to work strategically across the country to create homes, economic growth and long-term partnerships in places, to drive the sector to deliver more homes.

Market disruption and managing risks

As an organisation, Homes England has an ethos of delivering for the public good in the long term. Our organisation is required to be active in areas of the residential market which are considered unattractive by commercial organisations.

A substantial portion of activity in delivering our Strategic Delivery Plan carries an inherently higher risk than commercial organisations in the broader market. The nature of our approach to the market is underpinned by our risk management strategy. This means we should adopt best practice in managing risk, even if we are taking risk to fulfil public policy objectives over superior private sector returns.

In financial year 2019/20 Homes England underwent significant organisational design change to support a new operating model and ensure we are an efficient and effective team. This design change has continued to be implemented throughout 2020/21.

To mitigate identified operational risks which fall outside of the organisation’s appetite, the Service Transformation Plan is a key mitigation strategy, and we are conducting internal ‘deep dive’ reviews and independent assessments into operational risks. Sections later in the report set out where work is ongoing to identify, assess, own and manage risks.

Our governance structure provides points of escalation for risks and issues from the operational layers of the business and duly empowered forums 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 and Risk Committee. The Risk and Assurance Corporate Group provide risk oversight for the Executive team.

See our Governance Report to understand how we manage risk and a description of our key risks.

Impact of COVID-19 in 2020/21

COVID-19 has continued to have an impact on the Agency throughout financial year 2020/21.

The housing market has performed resiliently thanks to additional Government intervention and both the property and construction sector remaining open despite recurring lockdowns. However, there remains ongoing uncertainty about the future and longer-term impact of COVID-19 in the coming months and years.

Values for many of the Agency’s assets are estimated with reference to key market indicators, such as house price growth, economic growth and unemployment; namely financial assets measured at fair value and land assets. Furthermore, expected credit loss forward looking models for assets held at amortised cost are calculated with reference to these same economic metrics.

The value of our Help to Buy Portfolio is particularly susceptible to market risk from house prices. Analysis showing the sensitivity of the valuation of these assets to changes in market prices is shown in Note 17a.

The Office for Budget Responsibility (OBR) develop scenarios to reflect potential economic outcomes. In the OBR’s worst-case scenario for 2021/22, the value of our Help to Buy portfolio would fall by £1.7bn should this outcome occur. See note 2 for further detail.

Average growth in houses prices has been 2.4% per annum over the past 15 years. Overall growth in house prices in the year to January 2021 was 7.5% ( per Office for National Statistics). While this percentage is higher than the recent average, this does not apply equally across all property types in all locations, with the pandemic causing many house buyers to reassess their preferences. As a result, over the past year, the pandemic has acted as a brake on increases in values for some elements of the portfolio.

This highlights the importance of the Help to Buy intervention in the market in assisting prospective homeowners to get on, and stay on, the property ladder by enabling them to obtain a mortgage, or obtain a lower Loan to Value product than would have otherwise been available to them. The latter, reducing and sharing the potential risk of negative equity.

We will continue to closely monitor the impact of housing market movements and the House Price Index on our Help to Buy portfolio along with the continued potential impact of COVID-19.

Details of the measurement of the Agency’s assets are:

Assets valued with reference to observed evidence of conditions and prices which existed at 31 March 2021:

• home equity loans, including Help to Buy
• loans measured at amortised cost: Write-offs

Assets valued with reference to expectations of future performance:

• loans measured at amortised cost: Expected Credit Losses
• value of land and property assets
• other Financial assets measured at fair value

The assumptions used, and judgements made, feed into the preparation of our annual accounts. See Note 2 for details of the accounting judgements made for each significant asset type.

The majority of the Agency’s assets are valued with reference to market values as at 31 March 2021. For the Agency’s commercial lending, where the impact of alternative future scenarios is considered in determining Expected Credit Losses, please see Note 14h and the sensitivity analysis performed in Note 17b.

Future impact of COVID-19

COVID-19 has the potential to have a longlasting effect on the sector in 2021/22 and beyond as lockdown eases and various support initiatives are withdrawn. With HPI forecast to fall, and unemployment to increase modestly to 5.5%, ongoing macroeconomic issues will impact on our ability to deliver against our mission and strategic objectives.

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

We continue to work closely with MHCLG and other stakeholders to gather and share market intelligence to understand the emerging challenges the sector faces and respond appropriately.

Looking forward to 2021/22 year-end, changes in the economy as a result of the pandemic could have a significant impact on the value of assets managed by the Agency. This possible future impact is considered in Note 2 of the Financial Statements and disclosed below. Here, alternative future scenarios are considered to determine the financial impact we might reasonably expect to see if they occurred. The most significant observation to note from this analysis is the range surrounding the trajectory of the economic recovery, with a £2.3bn range in estimated asset values across the three scenarios modelled (the majority of which relates to Help to Buy, where the main driver of asset values is house prices). This has reduced from £4.3bn range in the prior year, reflecting a lower uncertainty within the market.

£m	2020/21: March 2021	Upside: March 2022	Upside: Low	Central : March 2022 = Low point	Downside: March 2022	Downside: Low
Home equity loans	17,285	17,450	17,450	16,989	15,979	15,372
Loans at amortised cost	1,498	1,522	1,522	1,497	1,480	1,480
Loans at FVTPL	434	438	438	429	413	413
Land	1,111	1,117	1,111	1,100	1,064	1,029
Other financial assets at fair value	184	186	186	181	173	173
Total value of assets analysed	20,512	20,713	20,707	20,196	19,109	18,467
Change in asset values	-	201	195	(316)	(1,403)	(2,045)

Going concern

Our net assets reflect the inclusion of liabilities falling due in future years. If they are not met from alternative sources of income, we may only be able to meet these liabilities from future grants or Grant-inAid from our sponsoring department, the Ministry of Housing, Communities and Local Government. Grants may not be issued in advance of need and Grant-in-Aid for the year ending 31 March 2022, taking into account the amounts required by our liabilities falling due in that year, has already been approved by Parliament.

Homes England and MHCLG have a formally agreed a rolling five-year business plan and delegated authority limits for the period. The Board considers it appropriate to adopt a going concern basis for the preparation of the financial statements of Homes England.

Performance summary

Leading the sector by building our capacity and living our values

New chair announced

We announced Peter Freeman as our new Chair. Co-founder of the property developer Argent, Peter has a track record of planning and delivering the regeneration of local areas and creating places that are both socially and economically vibrant.

Research Commission into MMC

We published the research design of our 6 year, 1,800 home Research Commission into MMC, in partnership with Atkins, Faithful+Gould, BRE and UCL. Through data, we aim to improve construction productivity and encourage greater uptake of MMC.

Published The Homebuyers’ Guide, showing customers how the new Help to Buy scheme works, how to apply, and how to repay their equity loan.

Since the launch of the Help to Buy Equity Loan Scheme in 2013, 328,493 households have been helped into home ownership.

We signed up to the Tech Talent Charter

A non-profit organisation leading a movement to address inequality in the UK tech sector and drive inclusion and diversity in a practical and uniquely measurable way. By fulfilling commitments within the Tech Talent Charter, collaborating across the sector and continuing to work with our Digital Shadow Leadership team we will work to ensure our recruitment processes and day to day procedures are inclusive.

Launched our Key Account Managers programme

Delivering a more coordinated and joined up approach to the Agency’s engagement with just over 100 of our Key Industry Partners across a range of sectors including housing associations, developers, housebuilders financial institutions, landowners, consultants and innovators.

Launched our new look Land Hub, an interactive tool to advertise sites Homes England is bringing to market. Incorporating new features and functionality, the tool is now easier for our partners to navigate and find sites suited to them.

Unlocking development across the country

New 7-year partnership with Invest & Fund

Announced a new 7-year partnership with Non-Bank lending platform Invest & Fund to increase the amount of finance available to small builders, to help them grow and deliver more homes at pace. The partnership has created a £25m revolving fund to allow Invest & Fund to support small builders with construction loans of between £400k and £2.5m, funding schemes of 2 homes and upwards, at up to 80% of development costs.

The Festival Gardens site in Liverpool, stalled for over 30 years, is now being brought forward as the first co-funded project between Homes England and with Liverpool City Region, creating 1,500 new homes.

Over 70 transactions closed across the Home Building Fund Short and Long Term Funds, which will deliver 6,458 new homes.

We agreed £309m of funding from the Home Building Fund to accelerate construction of 20,000 homes at three major London housing developments in Brent Cross, Silvertown Quays and Barking Riverside.

Agreed a £83m package of funding to accelerate the delivery of 3,000 homes at Fairham, a 606-acre mixed use development on the edge of Nottingham. The funding will support the delivery of the infrastructure needed to bring Fairham forward, accelerating the creation of new homes and jobs for the area.

We acquired two stalled development sites in Harrogate, unlocking land for over 800 new family homes at West Lane in Ripon and Bluecoat Park in Harrogate.

We agreed a £61m Home Building Fund loan with Urban&Civic to accelerate the delivery of 6,500 new homes at Waterbeach in Cambridgeshire. The loan will fund key strategic infrastructure for the site, including road, drainage and utility works and the first primary school and health centre.

New 5-year £250m lending alliance with United Trust Bank

Launched a new 5-year £250m lending alliance with United Trust Bank to support small and medium sized developers to deliver thousands of new homes at pace in areas of greatest need. We are contributing £17.5m towards the £250m fund, which will provide construction loans between £1m and £10m and up to 87.5% Loan-To-Cost and 70% Loan-To-Value.

Launched the new £7.5bn Affordable Homes Fund.

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.

A resilient performance in unique circumstances. Our performance during 2020/21 maintained the trend of effective delivery in recent years.

Despite the pandemic and recession, we supported the market in challenging economic conditions, helping 56,000 households buy their own home, enabling 35,000 new homes to be built, and unlocking land that will support the delivery of 170,000 homes. Whilst performance lagged the initial business plan targets in some areas, in comparison to the year-on-year falls in starts and completions seen across the market, our performance was resilient. This was in part due to our ability to act countercyclically and provide a safety net, which gave partners the confidence to continue to develop their development pipelines.

We helped 56,000 households buy their own home.

We enabled 35,000 new homes to be built.

We unlocked land that will support the delivery of 170,000 homes.

Northern Arc, Burgess Hill, is Homes England’s biggest ever land investment. Homes England acquired land from multiple landowners, unlocking stalled land and enabling the delivery of over 3,500 homes with 30% affordable and significant environmental works to deliver net biodiversity gains across the entire 494-acre site. To speed up delivery, a £62 million forward funded investment is accelerating the key infrastructure needed.

Performance review

A ‘lost’ quarter

Initial performance targets We set stretching performance targets for 2020/21. This included increasing completions by over 30%, with affordable housing completions expecting an increase of circa 13,000 units from 2019/20. Unlocked housing capacity was set to double, driven by the plans to contract 117 schemes announced by the Secretary of State in 2017.

Completions supported by Homes England (KPI 1):

• 2016/17 = 31,094
• 2017/18 = 33,759
• 2018/19 = 40,289
• 2019/20 = 40,560, an increase of 32%
• 2020/21 target = 53,540

Housing capacity unlocked (PIs 10 & 11):

• 2016/17 = 8,444
• 2017/18 = 39,322
• 2018/19 = 35,926
• 2019/20 = 114,404, an incease of 112%
• 2020/21 target = 242,060

The impact of the pandemic

In the first quarter of the financial year, performance was disrupted by the onset of the pandemic and an unprecedented lockdown. During this period, there was a partial shutdown of the construction sector, and the housing market was closed.

As a result, there were over 100,000 fewer property transactions ^{[footnote 1]} and 55% fewer housing completions in this quarter compared to the previous year. ^{[footnote 2]} Starts on site also experienced a 24% reduction in 2020 compared to 2019, as housebuilders sought to conserve cash. ^{[footnote 3]}

The ‘Number of housing completions in England 2019/2020 Energy Performance Certificate (EPC)’ and ‘Number of starts in England 2019/2020 National House Building Council (NHBC)’ graphs have been removed becuase they could not be made accessible. Please contact [email protected] citing the name of the document if you need this information.

At the height of the pandemic, our partners faced multiple challenges. Common themes amongst housebuilders included concerns over cashflow, limited access to materials, reduced capacity, increased costs, and extended delivery timescales. Lower levels of sales and rental income created a challenge for several developers and difficulties in the mortgage market created a challenging sales environment. There were also concerns about ‘pent up’ demand waning. A significant number of developers cited challenges posed by social distancing on site, and the resulting impact on capacity. This was noted as a particular challenge for urban high-rise sites. The capacity of the labour market was also affected by the pandemic, particularly towards the end of the year, as increased infection rates led to localised outbreaks on site and lost productivity as construction workers had to self-isolate.

Lead times for materials lengthened, and supply chain restrictions required developers to amend build programmes and delivery timescales, particularly LMVBs (Low and Medium Volume builders). The economic uncertainties brought about by the pandemic led many traditional lenders to place a moratorium on new business lending whilst trying to fully understand the impact on their portfolios. Banks retrenched and focused on core lending, leading to concerns by non-bank lenders and larger developers that schemes would stall without access to liquidity. The major banks also withdrew almost all high LTV (Loan-to-value) mortgages due to economic uncertainty, meaning prospective buyers with little or no deposit were effectively no longer able to access the housing market.

In a number of cases, Local Authority resources were re-prioritised in order to deal with COVID-19 and maintain critical services including adult social care and homelessness provision. Delays occurred to housing provision due to this loss of resource, which led to the deferment or cancellation of cabinet/planning meetings, public consultation, and traffic and environment surveys.

For Housing Associations, supporting tenants, especially those who were shielding, took on a new urgency. They were also impacted by surveyors being unable to attend sites for valuations and difficulties in acquiring supplies, with concerns about future supply chain and potential future price increases. There was also a lack of certainty around the future of grant funding impacting future pipeline.

Resetting expectations

As a result, at the end of the first quarter, our performance expectations were reset to reflect the impact of the pandemic and performance targets were revised downward by 18%-32%. This reflected the construction progress that had been ‘lost’ during the first lockdown, along with the latest market and partner intelligence on the ongoing impact of the pandemic.

Government response

The Government introduced several fiscal measures to support the economy and in particular the housing market. The introduction of furlough helped stave off redundancies and an increase in the rate of unemployment, which have both historically led to a downturn in housing transactions and stalled housing development. Following the complete closure of the housing market in the first quarter, demand rebounded quickly, in part supported by the introduction of the stamp duty holiday. This boosted demand with monthly transaction volumes exceeding 2019/20 volumes in the latter part of the year and incentivised developers to complete homes.

Revised performance targets

Completions supported by Homes England (KPI1)

53,540 Initial 2020/21 target

37,771 Quarter 1 reset

Difference = -29%

Affordable completions supported by Homes England (KPI6)

40,760 Initial 2020/21 target

27,692 Quarter 1 reset

Difference = -32%

Households supported into homeownership (KPI7)

66,180 Initial 2020/21 target

45,137 Quarter 1 reset

Difference = -32%

Starts on site (PI1)

34,510 Initial 2020/21 target

27,668 Quarter 1 reset

Difference = -20%

Housing capacity unlocked (PIs10 & 11)

242,060 Initial 2020/21 target

199,430 Quarter 1 reset

Difference = -18%

Our response

Our response to the pandemic was to understand the impact on partners and develop plans to mitigate these impacts. We focused on collating and sharing market intelligence and communications with colleagues across the Agency. This allowed us to get to grip with the problems facing the market.

In reaction to the pandemic, many partners requested deferrals and extensions. We maintained a consistent position across the business and carefully considered requests for contract variations and payment flexibility. Through our actions, we were able to keep every site in production, keep every developer on board, secure planning consents in a challenging context, deliver all our own infrastructure contracts, contract land disposals when others had paused and secure, via acquisitions, partnering, options, funding and promotion, land for future delivery.

The uncertainty within the market meant that many banks and private equity firms pulled back from schemes they had originally funded. As a result, we took on a role as ‘lender of last resort’, supporting the market in places where traditional methods of funding had disappeared. We supported customers who would not normally work with us, for example non-bank lenders and more established developers. We also allowed partners to recycle funds, which helped to provide liquidity and supported cash flow.

Within Affordable Housing, we extended the deadlines on expenditure and works completed. This reduced the pressure on Registered Providers, allowing them to focus resources to respond to the pandemic. The announcement of the Affordable Homes Programme 2021/26 further mitigated risks and provided reassurance to providers to stabilise their delivery pipeline, and work on building up a new pipeline. This will encourage a continued supply of Affordable Housing stock in future years, as can be seen by the 28,181 Affordable Housing starts, 34% over target. However, the time lag between the confirmation of funding and the launch did fuel some uncertainty.

Payment holidays on monthly interest fees were offered to Help to Buy customers and whilst this was not a new policy it was made available more openly than previously. Despite this, only 564 customers took this option, which is approximately only 1% of live fee-paying accounts.

Our employees were equipped to meet the challenge of working from home due to the Agency’s digital systems and equipment roll out in 2019. This allowed colleagues to continue working at pace, although challenges remained related to childcare and other caring responsibilities. The strong emphasis and consistent messaging on prioritising wellbeing and flexible working was welcomed across the Agency, enabling colleagues to better manage their mental health, workload, and other commitments.

The impact of Brexit

The impact of Brexit has been difficult to separate from the consequences of COVID-19. The BCIS (The Building Cost Information Service) Materials Cost Index has risen significantly since the UK exited the EU, with a provisional forecast of 6% year-on-year rises in March.^{[footnote 4]} Firms have noted further pressure on supply chains as demand for products and materials has continued to exceed supply, particularly since the turn of the year. There have been reports of developers placing ghost orders and stockpiling, to try to safeguard against future shortages.

A £35.5 million Home Building Fund loan from Homes England is accelerating the delivery of 6,200 homes on this brownfield, surplus public land by enabling a new road into Rugby. Funding infrastructure to the site has unlocked the land, opening it up as an opportunity for both large and SME housebuilders.

Larger developers prepared for supply chain pressures, however LMVBs were less able, as they lack the capital and space to store excess.

There is anecdotal evidence that some construction workers without British citizenship left the country before Christmas and have not returned. However, there has not been a significant increase in construction labour costs.^{[footnote 5]}

The ‘BCIS materials cost index Jan 19-Apr 21 % change year on year’ and ‘BCIS labour cost index Jan 19-Apr 21 % change year on year’ graphs have been removed as they could not be made accessible. Please contact [email protected] citing the name of the document if you need this information.

Resilient performance

When set in the broader context, and the performance of the wider sector, we demonstrated resilient performance. Across the construction sector, outputs are expected to decline by approximately 25% this year, with the largest house builders experiencing a c.27% drop in completions on average.

In comparison Homes England ended 2020/21 with starts and households supported into homeownership close to the initial target. The number of completions and units of housing capacity unlocked fell short of the target. The shortfall in completions was principally for affordable housing, with other completions only slightly behind target.

Key performance indicators

For the 2020/21 reporting cycle, four key performance measures were agreed with our sponsoring department and we include analysis below which reflects our progress against them.

In addition, the Agency has been reporting data against four further metrics:

• The number of new homes completed that have been built because of Homes England’s intervention at an earlier stage of the development lifecycle (KPI3).
• The share of funding from several of our financial transaction programmes that was invested in the top 50% of Local Authorities by the price: earnings ratio (KPI4).
• The economic benefit attributed to Homes England’s intervention in the housing market (KPI5).
• The average Building for Life 12 score for programmes where this was a criteria for support (KPI10).

Following the publication of the MMC definition framework and definition of Low Medium Volume Builders, we have been working with partners to embed the framework and will be reporting a further two key performance indicators in 2021/22:

• Share of transactions with low/medium volume housebuilders (KPI8).
• Share of supported completions using MMC (KPI9).

	Actuals	Original targets	Variance (%)	Q1 revised target	Variance (%)
Total completed new homes directly supported by Homes England (KPI1)	35,183	53,540	(34%)	37,771	(7%)
Total completed new homes directly supported by Homes England, which are additional to the market (KPI2)	23,047	36,500	(37%)	25,514	(10%)
Total completed homes supported indirectly (KPI3)	2,495	-	-	-	-
Share of funding to top 50% Local Authorities by the median house price to median workplace-based income ratio (KPI4) [footnote 6]	73%	-	-	-	-
Total economic benefit of Homes England programmes (KPI5)	£3.97Bn [*]	-	-	-	-
Total affordable completed homes supported by Homes England (KPI6)	24,245	40,760	(41%)	27,692	(12%)
Total households supported into home ownership (KPI7)	64,793	66,180	(2%)	45,137	44%
Average Building for Life 12 score for supported completions (KPI10)	9	-	-	-	-

[*] This relates to the economic benefit delivered through investments made in 2019/20

In addition to the official targets for completions set by MHCLG, we also assess performance using two key forward-looking performance indicators:

	Actuals	Original targets	Variance (%)	Q1 revised targets	Variance (%)
Starts (PI1)	37,224	34,510	8%	27,668	35%
Unlocked housing capacity (PIs10 & 11)	170,276	242,060	(30%)	199,430	(15%)

Completions

COVID-19 had a significant impact on completions with the initial lockdown leading to a 3-month hiatus in construction. The introduction of social distancing requirements also slowed down the pace of completion, as multiple trades were unable to work side by side. Supply chain issues impacted completion timeframes, although these have eased.

At the start of 2020/21, the target anticipated growth in completions because of our investment at the earlier stages of the development cycle e.g. starts on site and unlocking land for housing development, in prior years. The ambition was to achieve a 32% year on year increase in completions, primarily driven by the Affordable Homes Programme. Although completions finished 34% down on target (and 7% below expectations), our performance tracked market trends with a 13% year on year decline, even as completions delivered through the private sector responded to a buoyant market, with housebuilders accelerating completions to generate cash flow.

Whilst housing transactions have bounced back, a significant proportion of our completions are delivered through the Affordable Homes Programme, which is less influenced by consumer demand and has seen a significant drop in housing completions, impacting overall results There are several other drivers. Many Housing Association Boards took a cautious approach to development plans in response to the pandemic, re-prioritising resources towards building safety and supporting existing tenants.

Starts

With the Shared Ownership Affordable Homes Programme 2016-2021 coming to a natural end, the profile of starts on site was expected to drop in 2020/21 from circa 48,000 in 2019/20 to circa 34,500, with the new Affordable Homes Programme announced in Budget 2020 not expected to be up and running until April 2021.

With respect to starts and the number of households supported into home ownership, we were able to act counter-cyclically. A positive performance in starts (with actuals 8% greater than the target, and 35% higher than expectations) was principally due to affordable housing, which benefited from the in-year extension to the Affordable Homes Programme and financial incentives to claim starts.

In response to market and partner intelligence, we introduced specific measures to support and give confidence to the sector, such as a cash injection to enable us to invest in viable schemes that cannot access sufficient commercial finance. Funding was also deployed to support borrower liquidity where sales receipts were no longer expected to come forward as quickly as planned to enable delivery of new schemes. We were also approached by many clients beyond our usual base, such as non-bank lenders and larger developers.

Homes England have forward funded infrastructure works to unlock over 1,000 homes, up to 20% will take advantage of MMC. The Gedling development will include services for new residents and the wider community, with green corridors linking to existing residential areas within this part of Nottinghamshire.

Within Affordable Housing, we extended deadlines on expenditure and works completed. This provided funding certainty to Registered Providers and maintained a pipeline of delivery. We also gave extensions to programme end dates to allow us to operate within a wider time horizon and grant extensions to partners where such an action is the most effective route to secure supply.

Although not all the actions and funding packages such as Follow on Funding were utilised, the safety net they provided and the certainty of future funding bred confidence within the market, particularly the Affordable Housing sector, which contributed to targets being exceeded.

Unlocked housing capacity

The 2020/21 target for unlocked housing capacity doubled, driven primarily by plans to contract 117 schemes announced by the Secretary of State in 2017. The number of housing units unlocked through infrastructure and land finished 50% ahead of last year’s performance, although 30% below target. Whilst the initial lockdown brought construction activity to a halt, many of these projects, which are outside of urban conurbations and primarily relate to civils work, were less impacted by the subsequent introduction of stringent social distancing measures introduced by the Government. The projects were also less impacted by the difficulties in accessing materials, such as timber products and plasterboard.

Housing Infrastructure Fund projects, the main contributor to the target, were significantly impacted by Local Authority capacity. Local Authority housing development resources were re-prioritised to focus on delivering front-line services. This was further complicated by deferment and/or cancellation of Cabinet/planning meetings (impacting infrastructure projects at Kings Lynn and Purfleet), delays to public consultations, and inability to complete basic traffic and environment surveys. In response many Local Authorities asked for greater flexibility around grant funding timescales in relation to the Housing Infrastructure Fund. Despite these challenges the team have been able to contract 26 of the 28 remaining Housing Infrastructure Fund schemes. We would like to thank the Local Authorities for continuing to work with us in this difficult period.

Our land programmes rely on income from disposals and deferred sales payments to fulfil existing commitments and fund new investment in land to unlock housing development. As a direct consequence of COVID-19 developers adapted business plans, focussing on progressing schemes with a strong buyer market and mothballing projects that required significant financial investment. This led to an initial drop in land receipts that have now recovered due to the buoyant market and the additional safety net of COVID-19 clauses provided by us.

Households supported into home ownership

The target for Help to Buy completions forecast was developed using the Office for Budget Responsibility’s March 2019 release of private enterprise completions. This resulted in circa 5,000 more legal completions anticipated in 2020/21 compared to the previous year. Despite the 3-month closure of the housing market, we saw a 6% yearon-year increase in households supported into home ownership enabled by the rapid recovery in transactions which followed the first lockdown.

Cumulative Help to Buy spend 2020/21

The ‘Cumulative Help to Buy spend 2020/21’ graph 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.

This was along with the increasing attractiveness of the product in the market, as market lenders responded to economic uncertainty by reducing mortgage choice and raising interest rates. 56,000 households were supported via Help to Buy, nearly 10% higher than initially targeted. The proportion of these homes delivered by Low Medium Volume Builders was 16%, the largest proportion in the programme’s history.

As well as the furlough scheme and stamp duty holiday noted above, this indicator was also supported by the Government’s forbearance announcement. Existing reservations have been given until 31 May 2021 for legal completion. This, coupled with the extension of the stamp duty holiday, led to circa 2,000 completions slipping into 2021/22.

The final year of the original Help to Buy scheme has had great success, and although Help to Buy 2 will be available to fewer customers, it is expected to see continued high levels of demand. Overall, the importance of Help to Buy as acting countercyclically to the market has been demonstrated throughout 2020/21. Where high LTV mortgages disappeared from the market, we were able to step in and support customers in their goal of buying their own property, even with a small deposit.

Other achievements

We also facilitated the Next Steps Accommodation Programme, supporting Local Authorities and Registered Providers in their provision of accommodation for rough sleepers in response to the pandemic. We were able to share our expertise to help provide value for money and deliverability assessments, allocating £43.1m to 93 Local Authorities and Registered Providers to support 949 starts and 496 units of accommodation for rough sleepers.

Following the successful remediation of high-rise buildings in the social and student accommodation sector, the launch of the Building Remediation Fund, in partnership with MHCLG, also secured the next phase of the Government’s building safety programme.

Further notable achievements include progress on our MMC pilot sites, work on biodiversity and the introduction of new requirements on design.

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

We are committed to the effective management and application of public funds in accordance with Managing Public Money. This is carried out legally and in the public interest, with high ethical standards while achieving value for money. We also endorse the seven Principles of Public Life - the Nolan Principles - of Selflessness, Integrity, Objectivity, Accountability, Openness, Honesty and Leadership.

We support the Government’s key objectives to mitigate against the risks of financial crime, including fraud, bribery and corruption. We report progress in meeting the Government’s counter-fraud functional standards to the HMG Cabinet Office; and our fraud action plan underpins our activities.

To support these objectives, we have revised and published a five-year counter-fraud and anti-bribery and corruption strategy, which is delivered by our Financial Crime Compliance Team (FCC).

Our activity is supported by our policies and procedures, which are reviewed annually and updated accordingly. All reported cases of fraud are triage actioned accordingly and progress monitored. Additionally, and as part of our reporting function, all cases of confirmed fraud or loss are escalated and reported periodically to MHCLG.

Following a series of counter fraud workshops, we have developed an internal fraud risk register. This will assist us understand and monitor the landscape in relation to internal and external fraud events and the effectiveness and adequacy of our fraud prevention controls. These assessments form part of a rolling programme of improvements, including mandatory fraud awareness training for all staff and the procurement of a new e-learning supplier to measure training effectiveness.

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 as necessary investigated.

We fully support the Government’s objectives to eradicate modern slavery and human trafficking. Annually we publish our Modern Slavery Statement setting out the steps taken to assess the risk and mitigate modern slavery across our activities and supply chains.

In the financial year 2020/21 we have again 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 continues, which aids benchmarking and endorses our risk approach. We now enjoy the status of being one of their approved employers.

Together with construction industry partners, we signed the Gangmasters and Labour Abuse Authority (GLAA) intelligence sharing protocol and we maintain relationships with UK law enforcement bodies. We have continued to deliver external training to our panel firms and framework partners to ensure that our compliance requirements are met.

We require partners to identify and report suspicious activity and welfare concerns.

We have continued 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. Finally, the responsibility and governance programme, overseen by our Executive management team and Board, continues to create a hostile environment for modern slavery and ambiguous supply chains.

Following demolition and de-risking, Homes England has enabled the redevelopment of the former Runwell hospital site in Essex. Unlocking opportunities to create affordable homes and increase biodiversity, as well as overseeing works to the Grade II listed St Luke’s Chapel.

Financial summary

For the financial year 2020/21, Homes England’s performance is summarised below, highlighting that the Agency’s activity remains within the programme financial control totals set by MHCLG:

Financial programme performance £m	Target 2020/21	Outturn 2020/21	Variance 2020/21	Target 2019/20	Outturn 2019/20	Variance 2019/20
Capital Financial Transactions	4,346	4,201	(145)	3,826	3,762	(64)
of which: Expenditure	4,685	4,587	(98)	4,309	4,219	(90)
Receipts	(339)	(386)	(47)	(483)	(457)	26
Capital Grant	1,756	1,615	(141)	1,805	1,723	(82)
of which: Expenditure	1,977	1,818	(159)	2,076	1,951	(125)
Receipts	(221)	(203)	18	(271)	(228)	43
Resource [1]	66	(147)	(213)	42	(47)	(89)
of which: Expenditure	300	79	(221)	281	138	(143)
Receipts	(234)	(226)	8	(239)	(185)	54
Total Programme	6,168	5,669	(499)	5,673	5,438	(235)
of which: Expenditure	6,962	6,484	(478)	6,666	6,308	(358)
Receipts	(794)	(815)	(21)	(993)	(870)	123

[1] 2020/21 Resource results have been adjusted. Expenditure has been increased by Expected Credit Losses 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.

The Agency’s net programme results at £5,669m were c8% less than the net programme target of £6,168m. However, the results show a continued increase in delivery of 4% compared to 2019/20. Homes England manages its budgets independently across Capital Financial Transactions, Capital Grant and Resource, and to a net budget position.

Financial performance in 2020/21

At the beginning of the year, programme delivery slowed significantly in the light of the first lockdown, but there was a strong recovery towards the end of the year as the housing market rebounded strongly.

In particular:

• The Help to Buy programme advanced in excess of £4bn equity loans in the year, the highest level of investment made in a single year since the programme began.
• The pandemic caused a number of delays to the rate of construction of new homes, with some sites shutting down in response to virus outbreaks, and the slower pace of construction required to ensure workers could maintain safe social distancing. As a consequence, investment loans made in the year reduced by c£99m compared to 2019/20, and loans repaid reduced by c£72m compared to 2019/20.

Growth of assets in 2020/21

In 2020/21 the Agency’s balance sheet continued to grow significantly, driven mainly:

• A slow down of construction across Affordable Homes schemes reduced expenditure by £228m compared to 2019/20. Despite the difficulties faced by our Local Authority partners to respond locally to the pandemic, while also honouring their commitment to manage and contract major Housing Infrastructure schemes, significant progress has made in the year with expenditure increasing by £127m compared to 2019/20.
• Land Development income forecasts fell sharply early in the year as private sector partners looked to preserve cash reserves by adopting a more cautious approach to the purchase of our sites. The sale of our sites has recovered well as the year progressed, and income generated is broadly in line with prior year results.

The chart ‘Change in net assets during 2020/21 (£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 five years, based on programme expenditure 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 £23.8bn in 22/23.

The 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.

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 almost half the level observed in 2015/16 and are expected to remain at below 0.8% of net assets through until 2025/26. The running costs (pay and non-pay costs) of the Agency are not expected to significantly increase over this timeframe, with the gradual increase in percentage terms over the next five years driven largely by two factors: 1) an increase in depreciation charges due to past and current activity; 2) the Help to Buy equity-loan programme ending, with ongoing redemptions driving a reduction in net assets from a peak of almost £24bn in 2022/23.

The 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 of £2,154m in 2020/21 is an increase of £276m (15%) from £1,878m incurred last year. The key drivers for this are impairment of financial asset investments which has increased by £298m since last year, and the impairment of land and property which has increased by £21m since last year. The increase in the impairment of financial asset investments is largely driven by the Help to Buy portfolio, by impairments arising in relation to the valuation of some elements within the Help to Buy portfolio, particularly in the London region. The increase in the Land and Property impairment charge relates to a variety of complex factors across the portfolio but generally where the valuation of land has decreased from previous years - including where the scheme introduces greater planning requirements including affordable housing, additional abnormal costs, or the re-basing of the valuation approach, to name a few - or where new capital expenditure has not yet resulted in increased value. Grant spend decreased in the year by £65m as a result of the impact of COVID-19 on the Affordable Homes Grant programme. The current programmes have been extended to allow for this however, and the spend has been reforecast into future years.

Admin expenditure has reduced by £4m since last year, from £35m to £31m. The biggest single reason for the decrease is the reduction in the administration expenditure associated with the Homes England Development Programme. This programme was set up to ensure the Agency had the capability to become a more dynamic and agile organisation, able to respond to the changing priorities of the sector and ultimately to disrupt the housing market. The feasibility administration phase of the programme was completed in 2019/20 with a series of strategic options identified. From 2020/21, the Agency has begun to implement these options and all costs are now captured as Programme costs.

Within programme costs, Housing Infrastructure Fund spend decreased by £8m from 2019/20 as a reflection of future uncertainty, however this has been counteracted by an increase in spend across Development, Help to Buy, Transformation, Financial Investment programmes and the introduction of Markets, Partners and Places - leading to an overall increase in programme costs of £17m since 2019/20.

The 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 2020/21 is £807m which is an increase of £241m (43%) from 2019/20. This has been driven mainly by valuation gains on financial assets held at fair value which have increased from £208m in 2019/20 to £444m in the current year. This mainly reflects increases in house prices which have been observed across most regions in England resulting in valuation increases for the Agency’s Help to Buy and other Home Equity portfolios.

The 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 2020/21:

Financial year	Number of equity loans issued	Cumulative equity loans repaid 2020/21: Number of loans repaid	Cumulative equity loans repaid 2020/21: Original cost of repaid loans (£m)	Cumulative equity loans repaid 2020/21: Receipt from repaid loans (£m)	Cumulative equity loans repaid 2019/20: Number of loans repaid	Cumulative equity loans repaid 2019/20: Original cost of repaid loans (£m)	Cumulative equity loans repaid 2019/20: Receipt from repaid loans (£m)
2020/21	55,682	15	0.9	0.9	n/a	n/a	n/a
2019/20	51,449	551	32.8	33.2	28	1.4	1.4
2018/19	52,467	2,783	156.6	157.4	516	28.4	28.1
2017/18	47,587	6,355	357.8	360.9	3,147	175.6	175.4
2016/17	39,807	11,096	582.9	605.9	6,262	326.4	337.8
2015/16	33,873	18,221	851.0	931.4	11,127	522.9	569.9
2014/15	27,874	18,174	791.9	898.9	15,747	690.4	780.4
2013/14	19,754	13,422	548.2	646.0	12,193	504	588
All years	328,493	70,617	3,322.1	3634.6	49,020	2,249.1	2,481.0

The repayment statistics show that between April 2013 and March 2021 a total of 328,493 households bought homes with a Help to Buy: Equity Loan. By March 2021 a total of 70,617 households (21%) had repaid their loan. The repayment statistics also show that Homes England received £3,634.6m from these 70,617 households, when the original cost of the loans was £3,322.1m. The realised gain on disposal of £312.5m is due to the increase in the value of homes between the time the loan was issued and repaid.

Located close to the M18 motorway, 94 hectare Carr Lodge site is part of Doncaster Council’s development plan. Homes England helped to unlock this brownfield land through forward funding infrastructure, including drainage and link road to create capacity for up to 1600 homes, local centre and community facilities on this multi-phase site.

Sustainability report

Sustainability lies at the heart of what we do. We are committed to creating sustainable and well designed places and reducing the environmental impacts associated with our day to day operations.

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

Strategic approach

In 2020, we committed to adopt a broad definition of sustainability that incorporates environmental, social and governance responsibilities, and to clearly articulate how it would support the housing sector to deliver more sustainable homes and places.

We commissioned Design Council and BRE (Building Research Establishment) to support us to develop a Sustainability and Design Framework. Incorporating research and input from Agency colleagues, Government and across the housing sector the Framework aims to further embed Sustainability and Design considerations across the Agency’s activities to help create the homes and places the country needs.

We recognise the commitments of an increasing number of our delivery partners who are showing ambition to create more sustainable and well-designed homes and places. We will work with them across all of our activities - master development, investments and market shaping - to achieve these aims and deliver the net zero targets of society, business and Government.

Sustainability leadership and governance

At Homes England Board level we have a dedicated champion for Sustainability and Design, Sadie Morgan.

The Agency’s Safety, Health and Environment (SHE) Committee, chaired by Board Member Duncan Sutherland, regularly reviews our sustainable operations performance and compliance with our environmental policies.

Our Executive 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.

Sustainability activities

Within Homes England, our activities can be considered through three perspectives:

• Contributing to achieving the UN Sustainable Development Goals (SDGs).
• Government Greening Commitments, including sustainable procurement.
• Delivering sustainable homes and communities in line with the Government’s ambition for net zero carbon by 2050 and environmental policies.

Contributing to UN Sustainability Development Goals

In 2015, the UK Government, along with 192 other United Nations members, committed to achieving the Sustainable Development Goals. These form part of a global development framework, the UN’s Agenda 2030 for Sustainable Development. The 17 goals and 169 indicators cover issues such as poverty, economic opportunity for all, provision of education, access to healthcare, gender equality and environmental problems such as biodiversity loss and climate change. Countries are committed to achieving the goals by 2030.

The UK Government is firmly committed to delivering the goals both at home and around the world. Our activities can be mapped against 6 of the 17 goals.

1 No poverty: end poverty in all its forms, everywhere, our contribution

Through greater access to affordable housing and programmes aimed at reducing homelessness we contribute to increasing purchasing power for all and creating shelter, particularly for the poor and vulnerable. Specifically, we:

• ensure that a range of investment products are made available to support housebuilding and infrastructure to create more affordable housing;
• supported the Government’s initiative to reduce homelessness through the Next Steps Accommodation Programme;
• support the building of homes in areas of greatest need; and
• deliver home ownership products, providing an industry standard service to consumers.

7 Affordable and clean energy: ensure access to affordable, reliable, sustainable and modern energy, our contribution

We are committed to working alongside our partners and the housing industry to support a low carbon economy that is reliable and effective. We embrace MMC and ensure that it is compatible with Smart Technology and energy efficient systems. Our investment is helping our partners to deliver these innovations.

9 Industry, innovation and infrastructure: build resilient infrastructure, promote sustainable industrialisation and foster innovation, our contribution

Our mission is to increase the supply of housing. Through financial investment and the provision of expert support we:

• invest in local infrastructure to unlock new homes through the delivery of the Housing Infrastructure Fund;
• continue to drive housing and economic growth in the Oxford-Milton KeynesCambridge corridor to support sustainable economic development in emerging industry locations and innovation hubs; and
• work with local councils and Enterprise Partnerships.

11 Sustainable cities and communities: make cities and human settlements, inclusive, safe, resilient and sustainable, our contribution

We contribute to developing communities that are safe, resilient and sustainable. We make places happen by:

• increasing homes in the places that need them the most;
• disposing of land on terms that accelerate development, economic growth and environmental protection;
• as a master developer, influencing the way sustainability is incorporated into design to deliver decarbonisation, biodiversity net gain, sustainable transport, building community resilience, and digital infrastructure;
• aligning the delivery of housing with major transport infrastructure projects such as HS2 and Northern Powerhouse rail where possible;
• supporting Local Authorities’ ambitions for growth by providing additional professional skills and capacity;
• connecting people with the environment to improve health and wellbeing through place making design; and
• supporting the Government in the delivery of new garden communities.

13 Climate action: Climate change and resilience, our contribution

One of our objectives is to create a more resilient market. In response to SDG 13 we work with our delivery partners to ensure that our activities and developments are resilient to climate change through:

• future proofing the design and planning of developments to ensure that the water infrastructure and water environments can cope with extreme events; and
• ensuring new homes are low-carbon and energy efficient with sustainable transport links.

In addition to working with our delivery partners on developments, we are committed to ensuring our operations are aligned with UK Government commitments. 54% of our fleet is made up of Ultra Low Emissions Vehicles, (ULEV). Our goal is to convert our entire fleet to ULEV by 2024.

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

In our role as master developer and landowner, we protect, restore and enhance terrestrial habitats. Specifically, we:

• act as responsible stewards of protected sites within our ownership;
• progress developments towards delivering biodiversity net gain, at a level of 10% where appropriate;
• engage with local wildlife and community groups; and
• encourage the use of Building with Nature and other recognised nature conservation schemes when engaging developers, as we have done at Lea Castle.

This multi-phase scheme on the site of a derelict former WW2 military hospital St Leonard’s in Dorset includes 210 new homes on otherwise surplus public land with over 40% being affordable. With the aim to improve biodiversity net gain, the site includes 40-hectares of restored heathland and a wildlife habitat to protect threatened species.

Greening Government Commitments (GGC)

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. Progress against the GGC targets over the past 12 months compared to 2019/20 and the 2009/10 baseline is set out below. 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.

As part of the GGC targets, we’ve committed to:

• reducing greenhouse gas emissions by 60% from the 2009/10 baseline;
• sending less than 10% of waste to landfill and reducing the overall amount of waste we produce; and
• reducing water consumption.

We’re also committed to:

• buying more sustainable and efficient products and services with the aim of achieving the best long-term, overall value for money for society; and
• reporting transparently on key sustainability issues.

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.

Environmental sustainability performance data 2020/2021

Data Omissions Note:

Electricity, water and waste generated from our Crawley office is not available for the period of April 2020 to 31 March 2021. 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 working closely with our supply chain building manager to ensure that accurate and regular reporting is readily available from this part of our estate.

Greenhouse gas emissions	Greenhouse gas emissions	2017/18	2018/19	2019/20	2020/21
Non-financial indicators (tonnes CO2e)	Total Scope 1 (direct) emissions	386.8	349	232	84.7
Non-financial indicators (tonnes CO2e)	Total Scope 2 (indirect) emissions	303.3	222.1	223.9	176.4
Non-financial indicators (tonnes CO2e)	Total Scope 3 (official business travel) Greenhouse gas emissions	352.7	439.7	231	33.6
Non-financial indicators (tonnes CO2e)	Total emissions: Scopes 1, 2 and 3	1,043	1,011	813	297.7
Related energy consumption (KWh)	Gas consumption	550,000	516,000	729,000	383,000
Related energy consumption (KWh)	Electricity consumption	789,000	723,000	703,000	393,000
Related energy consumption (‘000s km)	Business travel distance total	6,572	8,157	8,313	561
Related energy consumption (‘000s km)	Distance per full time equivalent (FTE) staff	8	8	9	0.4
Related energy consumption (number)	Domestic Business Flights	95	130	246	0
Financial indicators (£’000)	Energy consumption	132	134	130	105
Financial indicators (£’000)	Expenditure on accredited offsets CRC	74	3	0	0
Financial indicators (£’000)	Allowances	0	0	0	0
Financial indicators (£’000)	Official Business Travel	1,772	2,433	3,164	437

Resources, waste and recycling	Resources, waste and recycling	2017/18	2018/19	2019/20	2020/21
Non-financial indicators (tonnes)	Total waste generated	26.07	37.39	43.0	62.6
Non-financial indicators (tonnes)	Hazardous waste: landfill	0.03	0.02	0	0
Non-financial indicators (tonnes)	Non-hazardous waste: landfill	1.11	0.91	1.0	3.7
Non-financial indicators (tonnes)	Non-hazardous waste: incineration with energy recovery	2.74	2.53	2.0	3.9
Non-financial indicators (tonnes)	Non-hazardous waste: recycled	16.49	32,90	40.0	55.0
Non-financial indicators (tonnes)	Non-hazardous waste: ICT reused / recycled	6.34	1.03	0	0.0
Non-financial indicators (%)	Recycling rate (%)	85	91	98	94
Non-financial indicators (%)	Landfill Rate %	4	2	2	6
Non-financial indicators (No.)	No of A4 reams consumed	5,542	5,287	8,755	234
Non-financial indicators (No.)	No. of reams per FTE staff	7.1	6.1	9.5	0.2
Financial indicators (£’000)	Landfill/ Incineration	15	11	1.4	0.42
Financial indicators (£’000)	Recycling	9	18	29	19.8
Financial indicators (£’000)	Paper Procurement	19	21	26	0.96

Water consumption	Water consumption	2017/18	2018/19	2019/20	2020/21
Non-financial indicators (m3 )	Water consumption - supplied (none abstracted)	1,553	1,689	3,439	3,131
Non-financial indicators (m3 )	Consumption per FTE staff (Homes England owned offices)	4.2	4.3	3.4	2.2
Financial indicators (£’000)	Water supply and sewerage costs	19	20	24	20.6

Greenhouse gas emissions

• In responding to COVID-19 ‘Stay at Home’ messaging we have seen a 63% reduction in our greenhouse gas emissions compared to last year.
• Since the baseline year, (2009/10) we’ve reduced our emissions by 89%. This is a direct result of the response to the pandemic.
• The use of our office estate has been restricted throughout 2020/21 reducing gas consumption by 47% and electricity consumption by 44% in comparison to last year.
• In response to COVID-19 business travel has significantly reduced throughout 2020/21. There have been no domestic flights taken this year.
• We recognise that this is a temporary reduction that will reverse when our offices re-open. Through our Future of Work initiative we are redefining office working, building on the flexibility and learning we have gained throughout the pandemic. As we re-invent our ways of working, we anticipate that over time this will have a positive effect on limiting the reverse in GHG emissions.

Waste management

• We’ve produced 45% more waste from our offices this year compared to last year. However, we continue to meet the GGC target of less than 10% of waste going to landfill. This year our recycling rate is 94%.
• The increase in waste was primarily due to the closure of our offices generating surplus furniture.

Finite resource consumption: paper

• We have reduced paper consumption by 96% compared to 2009/10, exceeding the GGC target of 50%.
• During 2020/21 paper use has decreased by 97% in comparison to 2019/20. This is a direct result of the periodic office closures and restrictions that have been in place throughout the pandemic.

Finite resource consumption: water

• The commitment to continue to reduce total estate water consumption beyond 49% has been met with an overall reduction of 76% from the 2009/2010 baseline year.
• Throughout 2020/21 water consumption across our estate has decreased by 9%. This reflects the increase in home working in response to COVID-19.

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.

Delivering sustainable homes and communities

We have a statutory objective of ‘contributing to the achievement of sustainability and good design in England’ and will take this forward through our levers, powers and funding support. We have taken a holistic approach to sustainability and design and over the past year have brought the technical expertise from across the Agency into a single business unit which will support our delivery teams to embed our sustainability (and design) standards into day to day work. Below we set out our material achievements and our expectations for the year ahead.

Biodiversity and the natural environment

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 (SHE) policy statement.

Homes England aims for biodiversity net gain on its housing sites, and are planning, and delivering significant ecological improvements illustrated by the examples below:

The Victory Oak scheme at the former St Leonard’s Hospital in Dorset has brought forward new homes on a former NHS site, part of which included rare habitats in poor condition. The site was home to five species of reptile including small populations of sand lizards, as well as rare birds such as nightjars. Through close working with environmental partners, 18ha of priority habitat has been restored, including heathland and acid grassland. We also created a new bespoke bat maternity roost created from an existing brick building and a substantial number of new bat boxes.

The Northern Arc scheme at Burgess Hill in West Sussex where planned new woodland buffer planting, an extension to the adjoining nature reserve and the creation of new parks will contribute to a 23% biodiversity net gain. The scheme will also deliver 3,500 new homes, employment space, schools and community facilities.

In situations where it is not possible to deliver all biodiversity improvements on the housing site, the Agency is exploring use of its existing land portfolio to identify opportunities for offsite ecological improvements to contribute to biodiversity net gain.

We are promoting biodiversity good practice externally through involvement in industry and Government working groups, such as:

• The British Standards Institute’s Biodiversity Committee BDY / 1 which is responsible for the development of national standards in the area of biodiversity management.
• The Land Trust’s Biodiversity, Ecology and Environment Advisory Group. The Trust is a Charity that undertakes long term sustainable management of open space for community benefit, including some Homes England schemes. The Advisory Group supports the Trust’s aims by advising on best practice and providing thought leadership.
• The National Framework of Green Infrastructure Standards Steering Group convened by Natural England to oversee the development of these Standards, in line with Government commitments set out in the 25 Year Environment Plan.

District Level Licensing (DLL) at Burtree Garden village

This year we have proactively engaged with other Government agencies to explore opportunities to obtain greater planning certainty and accelerate housing delivery using the Natural England District Level Licencing (DLL) scheme for Great Crested Newts (GCN).

Working with Natural England to accelerate the introduction of the Durham and Northumberland DLL scheme we were able to bring forward the delivery of an important strategic development, Burtree Garden village, Darlington which will deliver 800 new homes. DLL provides an opportunity for Homes England to support a strategic, landscapescale approach that affords greater protection for GCN. Fourteen GCN ponds will be created and restored for Burtree Garden village through District Level Licensing.

Embedding and delivering sustainability

As the Government’s housing delivery Agency enabling the housing sector to deliver new homes, we recognise that there is more we can do to ensure sustainability is embedded in our work and reflected in the homes delivered by our partners.

Delivering on our Sustainability and Design ambitions will be a priority for us and in the coming period we shall be identifying and implementing a range of interventions such as exemplar sites to demonstrate low/net zero carbon technologies and high levels of design quality and placemaking with access to green spaces.

Alconbury Weald is an emerging new town in Cambridgeshire, being developed by Urban and Civic. Features such as sustainable urban drainage ponds with dipping platforms and outdoor table tennis provide valuable amenity space for residents.

A key component of our efforts will be promoting sustainability practices and the adoption of sustainable building materials. We expect this becoming more prominent with the expected changes to Building Regulations – changes to Parts F and L later this year, and the upcoming Future Homes Standard expected in 2025. During this past year we have been part of the Future Homes Taskforce, established by the House Builders Federation (HBF). We have identified and will be exploring in greater detail multiple opportunities to work collaboratively with the housing sector to deliver on the Government’s sustainability and net zero carbon agenda.

Biodiversity net gain is expected to become a legal requirement and in advance of this we are continuing to develop resources to increase our understanding and operational practices. This year we have produced and issued detailed guidance and accompanying set of good practice case studies of Agency schemes in order to increase awareness of biodiversity net gain and to integrate this within our processes and decision-making. We have established dedicated forums for colleagues to share experience and learning within the Agency, and with other organisations, including Natural England.

We aim to build upon and take forward several existing initiatives and housing delivery programmes.

Homes England is, alongside UK Green Building Council and recent joiner Lloyds Bank, an Executive Committee member of the NextGeneration Initiative. NextGeneration enables homebuilders, Government, registered providers (RPs), investors, employees and the public to understand the sustainability of homebuilders’ operations and the new homes they build.

Homes England was also involved in the Home of 2030 competition that aimed to drive innovation in the provision of affordable, efficient and healthy green homes for all.

Supporting the sector to develop widely applicable commercial solutions that make our homes better, and help develop low carbon technology so our homes can play their part in combating climate change.

Homes England is committed to working in rural areas to deliver growth and create thriving, sustainable rural communities. Since 2011 Homes England’s affordable homes programme has delivered around 25,000 affordable homes in rural areas. The new affordable homes programme has an expectation that at least 10% of homes delivered will be in rural areas.

Homes England provided £1.3m to Aster Housing Association to take forward in partnership with Eastington Community Land Trust 23 affordable homes on a rural exception site. Funds came from the Agency’s Community Housing Fund Infrastructure Fund and the Affordable Homes Programme.

100% of the homes were rented to people with a strong local connection to Eastington village.

We have worked with partners to ensure that in the delivery of these affordable homes we have taken into account rural proofing policies, and we have also set up a cross Agency internal rural group to ensure we are maximising our efforts in rural areas.

Our newly-formed Markets, Partners & Places directorate encompasses development of thematic responses to failures within different markets, including rural markets.

We will continue to harness the power of the planning system, including through reforms and our use of the Building for Healthy Living Design Principles to deliver the right infrastructure and housing for rural areas while protecting and enhancing our countryside.

Homes England’s work to promote MMC positions the Agency well to champion innovative lower carbon approaches to housing development, exploring opportunities to not only reduce the emissions from homes once they have been built but also reduce embodied carbon in the construction phase.

During this year we took delivery of the first Urban Splash modular homes on the Agency’s Northstowe site, marking the start of one of the largest modular neighbourhoods in the UK. These 406 Town House homes use approximately 67% less energy to build than an equivalent traditional built project. They will contain energy-saving features, including high-quality insulation, super energy-efficient windows and LED lighting, a hot water cylinder with an integrated air source heat pump and clean, emission-free electric heating.

Over the coming year, we will be seeking further opportunities to work with investment partners who can demonstrate a shared purpose with Homes England to support the market for the long term. We expect them to share their plans regarding decarbonization and to increasingly deliver a positive impact for the good of the wider community.

We support the green economy and those who seek to achieve environmental, social and governance outcomes alongside financial ones. We are working together with banks to provide funding to support the building activities of small and medium-sized developers on residential projects in England through our range of lending products.

Securing new institutional capital to increase the delivery of new affordable homes is a priority for Homes England. Over the last year, we invested to support the growth and evolution of housing in pension fund investment portfolios. This provides institutional investors with greater confidence in affordable housing, encouraging sustainable long-term investment to meet the needs of communities across the country.

Our funding provides developers, including SMEs and Housing Associations, with the capital to grow their development ambitions and build additional homes in the areas they serve.

To us, sustainability also encompasses homes that have longevity and are safe. Homes England signed up to the Building Safety Charter in December 2020 and will be taking forward a series of actions as part of the Early Adopters Group.

We shall also work across Government, notably the Infrastructure and Projects Authority to share learning around embodied carbon targets and reporting and continue to share examples of sustainable construction practices.

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.

The Performance report is signed on 14 July 2021 by Gordon More, Interim Chief Executive and Accounting Officer.

Once one of the most polluted sites in Western Europe, the former coking works at The Avenue in Derbyshire has been transformed. With the help of Homes England, significant historic pollution has been removed and new roads provided by forward funding multi-million-pound infrastructure for the site.

1. 1 HMRC data - Monthly property transactions completed in the UK with value of £40,000 or above - GOV.UK ↩

2. EPC data - Live tables on Energy Performance of Buildings Certificates - GOV.UK ↩

3. NHBC data (membership access required) ↩

4. BCIS data (membership access required) ↩

5. BCIS data (membership access required) ↩

6. 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 ↩