CIH Cymru response to final Welsh Budget 2025/26

The Welsh government has published its final budget for 2025/26. CIH Cymru welcomes the level of investment for the development of social homes in Wales, with just over £437 million capital investment being allocated for the development of new homes. This includes a £81 million uplift in funding across the social housing grant and transitional accommodation capital programme.

While the increase in funding shows a commitment to developing much needed new homes in Wales and helps mitigate some of the inflationary pressures of the past now baked into the Welsh economy, CIH Cymru remains concerned that this level of investment does not meet Welsh government’s development ambitions as the committed level of investment is below the £580 million to £740 million that Audit Wales identified as being necessary to meet the 2026 target of 20,000 additional low carbon homes at social rent.

We remain concerned that the monies allocated to decarbonise our homes falls short of the amount that is likely to be needed. The draft budget allocated an additional £3 million for decarbonisation taking the total level of investment to £95 million. The final budget has maintained this level of investment. The housing sector is committed to meeting net zero targets but is having to do this against the backdrop of significant financial pressures and the difficult balancing act of delivering the new homes we need while ensuring our existing homes are brought up to Welsh Housing Quality Standard (WHQS) 2023.

There has been a welcome increase to the local government settlement. The final budget has allocated an additional £8.4 million to the settlement. This will ensure that every local authority will have at least a 3.8 per cent increase in their funding. Despite this, there are concerns that even though the housing support grant received a £21 million uplift taking its total level of funding to £204 million, other homelessness prevention grants have received a cash flat settlement at a time of rising homelessness and temporary accommodation use.

Responding to the budget, Matt Dicks, national director of CIH Cymru said:

“We welcome the £437 million allocated to the social housing grant to help develop the homes we need in Wales. This ongoing commitment to delivering new homes is vital so that we can tackle the ongoing housing emergency. Yet despite this welcomed increase, it falls well short of the additional £580-£740 million that a recent report by Audit Wales said would be needed to reach the 20,000 target by March 2026.

“The additional £3 million allocated to decarbonising our homes is unlikely to meet the shared ambitions of social landlords in Wales and Welsh government around building new affordable homes and decarbonising our existing homes. These twin ambitions have already placed great pressure on existing business models of housing organisations, and whilst there is a significant allocation of capital investment for development in the final budget, this is not mirrored in the capital investment for decarbonisation. As such the capital investment allocations are unlikely to shift the dial enough to deliver on those ambitions at the pace and scale needed to end our housing emergency, whilst also making our existing homes more sustainable.

Whilst we welcome the £21 million uplift in for the housing support grant, we are concerned about the cash flat settlement for homelessness prevention at a time when homelessness is at a record high. If we really want to end our housing and homelessness crisis, we need to make providing everyone in Wales with a safe, suitable and affordable home a foundation mission of government. The starting point of that journey is the full incorporation of the Right to Adequate Housing into Welsh law. Our own #BacktheBill research has shown that providing everyone in Wales with a safe, sustainable and affordable place to call home will save the public purse £11.5 billion with an upfront investment of £5 billion. Monies that can be reinvested to ensure that future budgets reflect the scale of the housing emergency we face.”