The Labour government’s hopes of delivering the 1.5 million new homes promised for this parliament are largely reliant on the performance of its flagship housing and regeneration agency. But, as Keith Cooper investigates, whether Homes England is up to the job remains to be seen after some embarrassing recent failures.
Homes England is expected to play a pivotal role in tackling the country’s housing crisis. It’s mandated to spend £27bn of funding funnelled through the Ministry of Housing, Communities and Local Government (MHCLG) on affordable housing, find and free up land to help hit the government’s 1.5m homes target, and act as a key adviser on Labour’s plans to build a dozen new towns. All of this is happening as the local authorities it must work with undergo radical reorganisation and mayors are given new powers over housing, planning and transport across swathes of England.
It’s a big and challenging job for MHCLG’s largest agency, as it undergoes its own major upheaval after some patchy past performance and the embarrassing failure of its last modernisation project.
So, how well set up is Homes England to deliver on the government’s housing ambitions amid the major on-going shake-up of local government? To find out, HQM has looked into its past, present and future, and spoken to experts familiar with its operations.
Housing targets
The latest figures on Homes England’s performance appear to spell a positive future for the agency. For the past two years, it’s exceeded most of its major housing targets on the number of homes it helped start, complete and “unlocked”, the latter referring to a key role of getting land ready for housing development. But closer examination of these key performance markers point to a challenging future for an agency expected to seriously accelerate affordable housing development.
In 2024/25, it topped its key 36,484 target for completions but by just 366 homes, a margin of just 1%. The previous year, the agency performed against a ‘target range’, beating its ‘central target’ by a larger margin of 9% but falling an unspecified number short of this range’s upper end, its accounts show.
In the preceding three years – from 2020/21 to 2022/23 – Homes England missed most of its main housing targets. The Public Bodies Review into Homes England last year found the agency “very materially under-delivered” during this three-year period, largely because of “external economic factors”, such as Covid-19, increased interest rates and inflation, and the Truss mini-budget.
The review, however, pinpointed Homes England’s “forecasting and communication of projected underperformance” as a “secondary factor” in its failure to hit its housing targets. This major government agency managed its housing programme data on Excel spreadsheets, a “very labour intensive” process which made it “difficult to aggregate portfolio data to inform a strategic view and manage expectations on delivery, or respond quickly when required,” the review found. This agency, through which 40% of its sponsor department’s revenue budget is channelled, relied on “manual and paper-based processes” to manage its programmes, the review added.
Evolve
This reliance on error-prone manual systems and multiple spreadsheets to manage multi-billion programmes was being addressed, the review said, with a £96m “large transformation programme”, known as Evolve. Evolve aimed to improve the agency’s systems and avoid them becoming an obstacle to hitting its housing targets again. Its success appeared crucial to Home England’s ability to keep track of and manage its programmes.
“A response to an FoI (freedom of information) request, seen by HQM, has shown that this crucial modernisation project ended in failure after burning through more than £117m. The project is described in a letter from Homes England in July as a ‘deep source of regret’”
The problems with the agency’s systems which Evolve was supposed to sort out are spelled out in more detail in a Homes England tender document linked to Evolve from 2022. It says the agency “lacks basic digital capabilities”. “Data isn’t recognised as the significant asset in the way it should be, data accuracy is not sufficiently valued, and consequently it isn’t governed or managed effectively.” The manual effort to bring together data from “multiple sources of data in Excel” created “multiple failure points in process where errors can creep”. As a result, reports on its work “take significant time to pull together – the reports are often out of date”.
Failure
A response to an FoI (freedom of information) request, seen by HQM, has shown that this crucial modernisation project ended in failure after burning through more than £117m. The project is described in a letter from Homes England in July as a “deep source of regret” that “fell significantly short of achieving the ambition to fully modernise agency systems”.
A review of Evolve by consultancy KPMG obtained under an FoI request said they uncovered “very significant issues”. Its report described the project as “impossible to deliver” in March and “very challenging” in a further review following months of Home England attempting to turn the project around.
Homes England staff felt the scheme was “closed and secretive”, the KPMG report found. “Colleagues didn’t believe that the programme scope was achievable and there were significant differences of opinion as to what that scope was,” it said. The review also describes a “lack of coherent commercial and supplier management” and that the “finance and risk perspective of the programme is detached” from decision-making.
The consultancy was also damning about the governance of the Evolve programme. “There has been limited, if any, formal governance meetings taking place outside of the change committee.” This committee had six members, including the agency’s current chair Pat Ritchie, and three other members of its current board, including two senior MHCLG officials. But the consultant said this committee was “too high level to grapple with the challenges and to explore and discuss the risks, issues, dependencies and assumptions appropriately”.
Evolve was finally closed in May by which time the agency had spent £117.6m. More than a quarter of this money – £34.4m – was spent in 2024/25. Homes England’s latest accounts, published in July, shows this spending included a £1.4m “irregular payment” to management consultants in January 2024 “without an approved commercial contract being in place”.
The MHCLG’s accounts for 2024/25 also reveal £6.6m of spending by Homes England, described as “fruitless” or “constructive losses”.
The fruitless loss was a £324,000 spend on an “agreement to acquire software licenses” for Evolve which the agency “wasn’t able to make use of in 2024/25”. The constructive losses include £4.8m on the development of a loans system which “was not in use, with no current plans to complete”; £1.1m on a document management system which “due to technological developments in this area, mean a more cost effective solution is now required”, and £360,000 on a “land disposal service” which is now “unable to deliver”.
NAO report
And a National Audit Office analysis of the MHCLG’s accounts reveal that Evolve hadn’t ended the agency’s reliance on spreadsheets to manage its multi-billion programmes. In a section in the accounts called ‘key audit matters’, the NAO flags concerns with the £15.9bn portfolio of Help to Buy equity loans, which it says “dominates” the department’s “financial position”. The agency’s use of a “spreadsheet application” to model the value of this portfolio is “split over multiple workbooks due to its size”, the NAO says. This meant “a high degree of manual intervention” was required to produce the final valuation “bringing additional inherent risk”. The NAO didn’t identify any “material misstatements” in Homes England’s accounts, the agency said.
Homes England originally set out to save £268m through the efficiencies Evolve was supposed to create. Today, it “estimates” that the IT products it did produce will eventually deliver “up to £95 million in productivity benefits over 10 years”.
“The MHCLG’s accounts for 2024/25 reveal £6.6m of spending by Homes England, described as ‘fruitless’ or ‘constructive losses’”
A Homes England spokesperson said: “Evolve assets are now part of a single integrated programme for the agency as a whole with responsibility for data, digital and the business target operating model. Important lessons learned from Evolve, including actions around governance, management and business-led collaboration, are reflected in new ways of working.
“Since 2018 we’ve provided more than £10.1bn in grant funding for affordable housing. In addition, we’ve supported the sector to start construction of more than 278,000 homes, complete more than 256,0000 homes, and have unlocked land capable of providing nearly 498,000 homes,” she added.
In the wake of Evolve, and under its new chief executive, Amy Rees, Homes England has launched a new internal transformation programme, entitled ‘Integrated Change’, to deliver on the announcements in the spending review, it confirmed to HQM.
Integrated Change aims to help it establish a housing bank, a new social affordable housing programme, and a national housing delivery fund. It’ll also help move the agency towards a regional operating model.
“Exciting new phase”
“Homes England is entering an exciting new phase, working through a regional and national operating model that will deliver homes, unlock regeneration and create places that thrive,” a spokesperson told HQM.
Terry Fuller, a former Homes England director, says this move to a new regional model had saved the agency from being absorbed into MHCLG. “The department was absolutely certain they were going to take Homes England in house,” he added. “They [MHCLG] realised that going regional would have implications for the department. It might force the department to go regional too and nobody from the centre would want to go and work in the outer provinces.”
Mr Fuller, a former regional director for the east of England, says the new regions will have to work with the combined authorities and mayors. “You need to keep affordable housing in the centre. The regions and the regional executives will have to work closely together,” he adds. “If the government dished out money to six different mayors you would have all sorts of weird and wonderful ways of getting it spent.”
“We think Homes England has done a pretty good job under quite difficult conditions. But the devolution revolution opens up the possibility to broaden the scope and scale of where its powers are wielded”
Simon Kaye, director of policy, Re:State think tank
Urgent thinking
Professor Janice Morphet, an academic who researches Homes England’s relationship with local authorities, says some urgent thinking is needed about how it will work with mayors and combined authorities. Without money or land, the mayors’ new housing powers could be “hollow”, Prof Morphet says.
“It seems mayors might be given powers to borrow. But how are they going to do it without specific government grants?” Prof Morphet asks. “If they want to buy land, they might be able to raise a loan but how will they guarantee that it’ll be paid back? If they were given Homes England money or parts of it were devolved that would allow them to borrow more. But it’s all a bit up in the air.”
Simon Kaye, director of policy at the thinktank Re:State, which recently called for the agency to be abolished in its report, New House Rules, says England is out of step with other comparable countries where housing delivery is co-ordinated at the local or regional level.
“We think Homes England has done a pretty good job under quite difficult conditions,” he says. “But the devolution revolution opens up the possibility to broaden the scope and scale of where its powers are wielded,” Dr Kaye adds.
“Abolishing Homes England would be a big challenge now. But the case we make in our report is that once there are strategic authorities across the country, you can go for it and devolve the majority of its functions and responsibilities.”
For now, it appears that Homes England’s future is secure in the short term. But it’ll no doubt be under significant pressure to do a better job on transforming itself than under Evolve – and to deliver the affordable housing the government wants and England needs.
