Newham Council's Affordable Homes for Newham (AHfN) programme is facing a £16.6 million cost increase across nine projects, according to a delegated Officer Key Decision. The decision, made by Paul Kitson, Corporate Director of Inclusive Economy & Housing, follows a Cabinet meeting on 16 September 2025, where authority was delegated to vary budgets for JCT Design & Build contracts. This decision is subject to call-in.
The cost increases stem from a variety of issues, including build cost inflation, market volatility, and delivery complexity, according to a report considered at the meeting. The report noted that no additional funds were being requested, and that the total value of the realigned contingency is £22.9m across six schemes, remaining within the approved budget of £416.7m. However, the report also noted that 97 homes with planning permission were not constructed, resulting in fewer homes being delivered than initially intended when the programme was agreed in 2019.
The £16.6 million cost increase is broken down across the following projects:
- Army and Navy Public House: £4.6m
- Anne and David Street: £1.7m
- Burgoyne Depot: £2.1m
- New City Road: £2.4m
- Vandome Close: £2.99m
- Morse Close: £1.2m
- Custom House: £0.76m
- Leyes Road: £0.83m
The affected projects include:
- Army and Navy Public House (32 homes) - Completion scheduled for September 2025
- Anne and David Street (19 homes)
- Burgoyne Depot (48 homes) - Completion scheduled for October 2025
- New City Road (28 homes) - Completion scheduled for October 2025
- Vandome Close (55 homes) - Completion scheduled for September 2026
- Morse Close (18 homes)
- Custom House (95 Homes) - Completion scheduled for November 2025
- Leyes Road (116 Homes)
The report detailed the achievements of the programme, noting that Newham Council had the third highest number of construction starts in London in 2022/23. As of August 2025, the programme status regarding the 2016-2022 political cycle was:
| 2016-2022 programme status (1000 starts) | Number of new homes |
|---|---|
| Schemes completed | 294 |
| On site pending completion | 425 |
| Delivered by Populo Living | 218 |
| Early housing sites | 15 |
| Paused with planning permission* | 97 |
| Total | 1,049 |
*The 97 homes 'paused with planning permission' consist of two sites: Hathaway Crescent (80 homes) and Forest View Road (17 homes). The Hathaway Crescent project was halted due to excessive costs, and the contract with Higgins Partnerships PLC was terminated. The site is being considered for wider community uses and may be included in future development pipelines. The Forest View Road project was halted because a high voltage cable running through the site could not be relocated. The Forest View Road site is in the process of being reviewed to ascertain if it can be used for a Community Land Trust development.
The report benchmarked costs, comparing Affordable Homes for Newham team and Populo Living schemes. The benchmarking looked at key development metrics and compared them to the BCIS standards at that time. The report provides a table comparing LBN (London Borough of Newham) metrics to BCIS standards for contractor prelims, contractors OH&P, design fees, and project cost allowance. The report notes that the Council's development metrics are broadly in line with the wider market.
The report also detailed the complexity and challenges to delivery, noting that the council has had to navigate a series of significant issues, brought about by the implementation of the UK leaving the European Union, a global pandemic, and war in Europe. The underlying principle to any future development programme is that the council plans slowly and builds fast. The report also notes that some of the key failings have been identified when construction contracts were awarded before on-site risks had been resolved due to the time constraints on grant funding.
The report listed the main issues impacting the programme as:
- Build cost inflation
- Market volatility
- Delivery complexity
The report considered the alternative of the Council choosing not to proceed with approving budget variations, but noted that this is likely to result in legal action from contractors resulting in additional legal fees and/or suspension of the schemes. The Affordable Homes for Newham Updated Position report states that if the Council chooses not to proceed with approving budget variations, it is likely to result in legal action from contractors resulting in additional legal fees and/or suspension of the schemes.