The government’s Help to Buy scheme, which will have cost around £29bn in cash terms by 2023, has pushed up house prices in England and failed to provide “value for money”, according to a report published by the House of Lords.

The findings concluded that the funding could have been “better spent on increasing housing supply”.

Published by the Built Environment Committee, the report notes the government has set a target for 300,000 new homes per year, and one million new homes by 2024. However, the Committee has warned that “too many people are living in expensive, unsuitable, poor-quality homes”, and that to address the challenges in the long-term, it is “necessary to increase housing supply now”.

The House has called on the government to act and remove the administrative and other blockers which are making increasing the number of homes built more difficult, and in particular highlighted the Help to Buy scheme, which it suggested inflates prices by more than its subsidy value in areas where it is needed the most.

“The government’s home ownership schemes come with an opportunity cost and evidence suggests that, particularly in areas where help is most needed, these schemes inflate prices by more than their subsidy value,” the report stated.

“In the long-term, funding for home ownership schemes do not provide good value for money, which would be better spent on increasing housing supply.”

The report, titled Meeting housing demand, also suggested that the role of SMEs in the housebuilding industry has “collapsed”, and stated that SMEs should be supported by reducing planning risk, making more small sites available, and increasing access to finance.

Commenting, Chair of the Committee, Baroness Neville-Rolfe, said: “The government’s ambitious target of 300,000 new homes per year will only be met if government takes action to remove the barriers for housebuilders, particularly for SMEs who 35 years ago built 39% of new homes but now build just 10%.

“The planning system needs urgent reform. Currently, less than half of local authorities have an up-to-date local plan: more councils need simple, clear and transparent local plans. Any new planning system will only work if local planning authorities have the resources and staff to implement it.

“Uncertainty and the absence of a clear policy direction has only exacerbated housing problems. Our report provides a package of proposals to help deliver much needed housing and address the critical undersupply of new homes.”

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