Almost £2 billion meant to help tackle Britain’s housing crisis is being handed back to the Treasury because it cannot be spent.

Figures released under the Freedom of Information Act show the Department for Levelling Up, Housing and Communities (DLUHC) was unable to find projects for the £1.9 billion of funding budgeted for 2022-23.

This includes £255 million meant to fund new affordable homes and £245 million intended to support improvements to building safety following the Grenfell Tower fire, according to the figures first published by the Guardian.

The total sum amounts to around a third of DLUHC’s housing budget, while just less than half of the extra £537 million given to the Building Safety Fund last year has been handed back to the Treasury.

Almost £2 billion meant to help tackle Britain’s housing crisis is being handed back by Michael Gove's department to the Treasury because it cannot be spent.

The failure to spend the money is likely due in part to rising interest rates and uncertainty in the housing market making it difficult to find projects to fund, while lower-than-expected demand meant £1.2 billion earmarked for Help to Buy was handed back in the last year of the scheme’s operation.

Local government expert Jack Shaw, who uncovered the figures, said: “It’s clear that the Government is experiencing significant challenges investing in housing because of a perfect storm in market conditions.

“The Government’s decision to delay housing investment or withdraw it altogether as a result of lower than anticipated spending will, however, mean fewer homes are built.”

Government failed to spend £2 billion set aside to tackle housing crisis