Patrick Mooney, housing consultant and news editor of Housing Management & Maintenance magazine, interrogates Labour’s plan for growing the supply of new housing, and asks ‘how realistic is it?’
Since winning the general election Labour has embarked on an ambitious series of policy announcements designed to show how different they are from their predecessors. This eventually manifested itself in the King’s Speech which outlined the new Government’s legislation programme, packed full of Bills to deliver economic growth.
But on delivering new housing they appear to have a near identical target – so what are their chances of success?
Remember the Conservatives had a target of delivering 300,000 new homes a year by the middle of this decade. Labour has set itself a target of achieving 1.5 million homes over the course of five years, which even I can work out amounts to much the same overall figure.
As a country we haven’t gotten close to achieving anything like 300,000 new homes a year recently (the last time we did was in 1977) and the list of reasons for that is
quite lengthy.
The main problems were a disjointed planning framework, a fractured economy which drove mortgage rates out of the reach for many prospective buyers and drove a number of our biggest modular housebuilders out of business. In fact it is a wonder that we still managed to build 234,000 homes last year, albeit that figure includes conversions.
Not enough housing
Homelessness, evictions, disrepair and overcrowding have all risen sharply in recent years, the private rental market is showing signs of stress while affordability for all tenure types has gotten steadily worse. Perhaps most worrying of all though has been the sharp decline in the building of new homes for social rent, with rents set at roughly 50 to 60% of market rent.
In each of the last 10 years fewer than 10,000 social rent homes have been constructed. Of the 522,335 affordable homes built in the past decade, some 260,000 (49%) were for affordable rent and 127,214 were for shared ownership, while only 76,925 (14%) were for social rent.
The situation which Labour has inherited could hardly be any worse. But Labour has spent a long time in opposition in which to develop its plans and there is a huge appetite for change across the housing sector and it seems the whole country.
The speed of delivering these new homes will be hugely important, as we don’t want the programme back loaded to the end of a five year period. Reintroducing
mandatory local targets and recruiting hundreds more planning officers (but from where?) will undoubtedly help, but much more than this will be required if a quick step-change is to be delivered to the supply side.
Remember it was only a few months ago that the National Housing Federation and Shelter teamed up to submit a growth plan which it was claimed could deliver about 90,000 social (or affordable) homes a year and which more than pays for itself in just three years by providing a massive boost to the rest of the economy and in particular the construction sector.
The NHF/Shelter plan showed that within just three years, the 90,000 new social rent homes will have paid for themselves and returned £37.8bn back into the economy, largely by boosting construction. It would directly support nearly 140,000 jobs in the first year alone. In addition, the plan showed that new social homes
have the potential to generate huge savings for the taxpayer across multiple government departments, as follows:
- £4.5bn savings on housing benefit;
- £2.5bn income from construction taxes;
- £3.8bn income from employment taxes;
- £5.2bn savings to the NHS;
- £4.5bn savings from reduction in homelessness; and
- £3.3bn savings to Universal Credit.
Scaling up
The total economic and social benefits of building 90,000 social rent homes could generate £51.2bn net over 30 years (that’s £86.5bn gross), including a £12bn profit to the taxpayer. But can this be scaled up to deliver maybe 120,000 or 150,000 social rent homes a year – and do the scale of benefits still apply? What about the possibility of including or adding affordable rent and shared ownership homes to the model?
Speaking at the report’s launch earlier this year Polly Neate, chief executive of Shelter, commented: “Homelessness is a political choice…investment is the best way to improve productivity. If we invest in building 90,000 social homes a year, we could end homelessness, save the taxpayer money, boost jobs, reduce the burden of poor housing on our NHS and improve children’s life chances.”
Neate added: “If this Government or the next is serious about wanting the economy to grow and people to thrive, investing in genuinely affordable housing is a no brainer. Building 90,000 social homes would pay for themselves and return an impressive £37.8bn back to the economy in just three years.”
When it’s put like that, what’s not to like?
Assuming this plan or a version of it is adopted by Labour, there is still the matter of how the other 200,000 new homes a year are to be delivered.
The Government has already signalled its willingness to build on the ‘grey belt’ – those parts of the green belt which are not really beautiful and have previously been used for car parks, petrol stations, retail or industrial parks and disused farm buildings. And then there is the huge untapped potential of Britain’s Brownfield sites which collectively could provide space for over one million new homes.
Collective support
The private housebuilders have warmly welcomed Labour’s plans and intentions, with their bosses lining up to voice their support after meeting the new Housing Secretary and Deputy Prime Minister Angela Rayner.
Neil Jefferson, chief executive of the Home Builders Federation, said: “Planning has been the biggest constraint on housebuilding in recent years and the measures proposed will address the main areas of concern by bringing more land forward for development more quickly.”
But the builders still need to deliver the new homes and Ministers will be keen to ensure there are no fresh instances of land banking for the future, in order to maximise profits and shareholder dividends.
A cautionary note has been struck by Construction Products Association director, Noble Francis, who warned “there just won’t be the people” to meet the housebuilding pledge.
Francis said a lack of skilled construction labour and product manufacturing capacity may defeat the homebuilding plan. “As housebuilding recovers over the next few years, these may emerge as the key constraints given that a significant rise in UK skilled labour and product manufacturing requires upfront investment (time and money) for a long-term return.”
Francis said the UK’s housebuilding workforce and product manufacturing capacity have fallen in recent years, so “new investment in skills and capacity will initially be needed just to get them back to where they were two to three years ago.” Francis pointed to figures showing there were 2.08 million people employed in construction in the first quarter of 2024, down 1.9% year-on-year.
This could of course be tackled by targeted recruitment from mainland Europe, where there is a huge pool of skilled construction workers. Remember the time a few years back when we relied very heavily on workers from Poland and other parts of Eastern Europe to provide a wide number of building services.
The other potential blockage (which might be more difficult to solve!) is that the main providers of new social housing (local authorities and housing associations) are already facing enormous pressures currently – primarily to upgrade their existing housing stock – so it is energy efficient, free from water leaks and mould – while also dealing with new consumer standards.
However, Kate Henderson, chief executive at the National Housing Federation, did not think this was an insurmountable problem for her members. Overall she said the King’s Speech outlined some “important and welcome first steps towards tackling the housing crisis and increasing the delivery of desperately needed affordable and
social homes.”
Henderson added that the NHF looks forward “to working closely with the Government to ensure that a revitalised planning system delivers the number and types of affordable homes the country needs. However, “this will not be possible through planning reform alone and will need to be met with the right funding.”
“Housing associations stand ready to support the Government on this to deliver the biggest increase in social and affordable housebuilding in a generation.” With this amount of collective agreement and support the prospects for delivering serious growth in housebuilding have never looked better since the late 1970s – all of which is making so many housing professionals optimistic that this time the Government’s plans could work.