The government has confirmed that it cancelled £538.8m of funding for infrastructure projects that were intended to unlock over 42,000 homes.
The DLUHC and Thurrock Council agreed to cancel funding of £75.1m for the abandoned Purfleet regeneration scheme (picture: Purfleet Centre Regeneration Limited)
Following viability concerns, funding was withdrawn from a total of 16 projects that had been assigned cash via the Housing Infrastructure Fund (HIF), according to the Department for Levelling Up, Housing and Communities (DLUHC).
The £4.2bn HIF was set up in 2017 to offer local authorities grant funding for key infrastructure, such as transport and utilities connections, that would support new housing developments. To date, just £1.3bn (31%) of the fund has been spent.
The cancelled funds were listed in a letter from DLUHC official Sarah Healey to Clive Betts MP, chair of the levelling-up scrutiny committee in the House of Commons, on 12 February.
Ms Healey said that after funding contracts were agreed with local authorities, five of the larger forward-funding projects and 11 smaller marginal-viability projects were withdrawn from the scheme, because “they proved not to be deliverable within the parameters” of the programme or were withdrawn by the local authority.
The biggest allocations withdrawn were £170m that had been given to Medway Council for a project in Hoo St Werburgh that would have unlocked 10,600 homes, and £140m to Lancashire Council for its South Lancaster Growth Catalyst that would have unlocked 9,185 homes.
Other forward-funding deals that were cancelled included £75.1m each to Wiltshire and Thurrock Councils for their respective Chippenham Urban Expansion and Purfleet Centre Regeneration projects.
Smaller marginal-viability allocations were also withdrawn, including £14.1m to Breckland Council for its Thetford Northern Sustainable Urban Extension and £10m to Tyne and Wear Council for its Killingworth Moor Key Strategic Site.
Ms Healey said that, in some cases, “local authorities are finding that their projects can be delivered without public money”. In cases where there are cost overruns the councils cannot meet, the DLUHC was “working with them” to ensure projects can be delivered with an amended scope or increase in funding using “programme headroom released from withdrawn projects”.
Where a project cannot be delivered without the fund, “it is withdrawn”, Ms Healey said, but Homes England will explore other options. For example, following the withdrawal of the Purfleet project, Homes England is working “closely with the council and potential developers to develop realistic proposals that will lead to regeneration”.
Last month, Thurrock Council terminated its development agreement with housing association Sanctuary and developer Urban Catalyst for the Purfleet scheme, which would have delivered 2,850 homes. Just 61 homes will now be completed.
The HIF came under scrutiny in January after a Freedom of Information request revealed that just a third of the fund had been allocated in six years. In addition, the government confirmed that work had begun on fewer than one in 10 of the promised homes and that it had downgraded the fund’s delivery target from 340,000 to 270,000 homes.
In her letter, Ms Healey said the Infrastructure and Projects Authority had upgraded its assessment of the delivery of the fund from red to amber in October 2023.
A spokesperson for Lancashire Council pointed to its announcement that it would suspend further work on the South Lancaster to M6 project in June 2023. The decision was taken because of rising costs driven by construction inflation, the council said at the time. The £140m awarded from the HIF was returned to the government.
The DLUHC and Medway, Wiltshire and Thurrock Councils were contacted for comment.
Any council that has been affected by this decision that would like to comment can contact james.riding@oceanmedia.co.uk.
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