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LoginPublished: 16/07/2024
Chancellor Rachel Reeves reaffirmed the new government’s commitment to build 1.5 million homes over the next five years, a cornerstone of Labour’s policy agenda, during her first speech. She also announced the end of the de facto ban on onshore wind projects and the establishment of a taskforce to accelerate stalled housing sites.
As the government gears up for the King’s Speech and official opening of Parliament, we consider the feasibility and potential effect of these initiatives and Labour’s other manifesto pledges for the built environment.
Deputy Prime Minister Angela Rayner has been made Secretary of State for Housing, Communities and Local Government, while Matthew Pennycook has been appointed Housing Minister, continuing the role he had in the shadow cabinet from 2021. As the 10th Housing Minister in five years, his tenure will hopefully last longer than those of his nine predecessors.
To achieve its ambitious 1.5 million new homes plan, the government will update the National Policy Planning Framework, restore mandatory housing targets and, while taking a ‘brownfield first’ approach, also release lower quality greenbelt, so-called ‘grey belt’, land. Funding for 300 new planning officers will come from a 1% increase in stamp duty on residential property purchases by non-UK residents. There is also set to be additional help for first-time buyers, including a mortgage guarantee scheme.
With the development of new towns, urban extensions and regeneration projects, Labour said planning authorities will need up-to-date Local Plans and there will be a strengthening of the presumption in favour of sustainable development. The new government has promised the biggest increase in social and affordable housebuilding in a generation, as well as ‘places that increase climate resilience and promote nature recovery’. It also says it can unlock the building of homes affected by nutrient neutrality without weakening environmental protections.
Since the vast majority of new homes are built by private property developers who control the supply to maximise their returns, it’s difficult to see how Labour will achieve its ambitious build figures.
Over the last few decades, many governments have tried to influence the number of new homes being built, but most have failed. They have no lever to control the supply since flooding the market with new homes would not be in the best interest of property developers, or existing homeowners, as carefully controlled supply maintains price levels. The only way the government could really influence supply would be to build themselves, which they used to do when local authorities employed direct labour to build social housing. This option seems unlikely given the current state of public finances. It also remains to be seen just how quickly 300 new planning officers can be recruited and trained.
Attracting private investment to support construction is crucial, and something which has been lacking through recent years of challenging economic conditions and instability. This is particularly so as public funds will remain tight through the course of the coming parliament.
The new government says it can give investors the certainty they need to fuel growth and pledged to strategically use public investment, where it can, to unlock additional private sector investment.
It will set up a National Wealth Fund, with a target of attracting £3 of private investment for every £1 of public investment.
The plan is then to allocate:
Private investment relies on a thriving wider economy, a favourable corporate tax regime and borrowing costs that are not prohibitive. None of these conditions currently exist in the UK so, while Labour may want to attract private investors, it seems unlikely that they would be able to realise the return on investment needed, especially when compared to other locations where the prospects may be more favourable.
The government will establish the National Infrastructure and Service Transformation Authority (NISTA), merging the Infrastructure Projects Authority (IPA) and National Infrastructure Commission (NIC), which it claims will tackle ‘inertia at the heart of government to get Britain building again’ and give the private sector certainty about the project pipeline. Its aim is to set strategic infrastructure priorities and oversee the design, scope, costing and delivery of projects as part of a 10-year infrastructure strategy.
Among the proposed schemes is the establishment of Great British Railways, bringing railways into public ownership. Labour also promises to make changes to the planning regime to ‘forge ahead with new roads, railways, reservoirs, and other nationally significant infrastructure’.
The intention of NISTA, to ensure that investments are not just a series of disconnected projects, but part of a cohesive national strategy, seems sensible given the series of project delays and cost overruns in major public projects over the recent past.
Improving the public client’s capacity, capability and accountability in major project delivery would be a positive move in attempting to ensure the best value for public funds.
One of the government’s early challenges will be to make a decision on the Lower Thames Crossing scheme – the UK’s biggest ever planning application, running close to 360,000 pages of documentation and 15 years’ work, so far. A decision had been due in June but, due to Sunak calling the general election at the end of May, this has been postponed to October.
Underpinning all of the new government’s campaign pledges about promoting growth is the lingering question of if and how it can come up with the appropriately-skilled workforce to deliver an increase in construction demand.
Labour’s focus is on upskilling workers already in the UK and improving working conditions, rather than relying on overseas workers, with workforce and training plans for sectors such as construction, though it does want to strengthen the Migration Advisory Committee and better match migration to skills shortages.
The government also has plans to ensure the minimum wage is a genuine living wage. It will change the remit of the independent Low Pay Commission to account for the cost of living and remove age bands, so all adults are entitled to the same minimum wage.
The new government’s plans to boost vocational courses will take time to produce workers and we’re short by hundreds of thousands. Construction has historically relied on migrant labour to satisfy peaks in demand, from the great Victorian civil engineering projects built with Irish and Chinese workers to the post-war reconstruction with labour from the Caribbean.
Labour’s policy of limiting migrant labour seems short-sighted because, while ideally you want to deliver projects from a pool of available local labour, that isn’t possible in the UK and hasn’t been for some time. Construction in the UK had, up until the recent past, been reliant on migrant labour from the EU. Perhaps Labour’s stated aim of improving the UK’s relationship with the European bloc could start by allowing free-movement for construction labour.
In lieu of relying on migrant workers to fill skills shortages, Labour said it will establish Skills England, to bring together businesses, training providers and unions with national and local government to ensure there is a workforce to deliver the Industrial Strategy. It wants to formally work with the Migration Advisory Committee to make sure training in England reflects the overall needs of the labour market.
The new government has also promised to transform Further Education colleges into specialist Technical Excellence Colleges, which will work with businesses, trade unions, and local government to provide better job opportunities.
On the Apprenticeships Levy, which Labour said was broken under the Conservatives, the new government said it will create a flexible Growth and Skills Levy, with Skills England consulting on eligible courses to ensure qualifications offer value for money.
Even a concerted effort to make construction a more attractive career path will take time to embed and boost the workforce in a meaningful way. There is unlikely to be enough qualified workers immediately available to meet current demands, particularly considering the breadth of proposals in Labour’s manifesto.
Just considering the extra 300 planning officers that the government is planning to put in place, if Labour wants to bring in experienced planners, it will have to pay more to entice them from the private sector. If it wants to train new planners, there’s a time lag and then, when they are fully trained, if the government doesn’t pay competitive salaries, it’s unlikely to be able to retain them.
A new Energy Independence Act will establish the framework for Labour’s energy and climate policies, and it has pledged to create 650,000 jobs by ‘investing in the industries of the future’. It wants to double onshore wind energy production – reversing a decade of Conservative policy – triple solar power, and quadruple offshore wind by 2030. The creation of Great British Energy will see investment worth £8.3 billion over the coming parliament.
For families, an extra £6.6 billion – doubling the existing planned government investment – has been pledged to upgrade 5 million homes as part of the Warm Homes Plan. Grants and low interest loans will be offered to support investment in insulation and other improvements such as solar panels, batteries and low carbon heating to cut bills.
Labour said it will also work with the private sector, including banks and building societies, to provide further private finance to accelerate home upgrades and low carbon heating. The government wants homes in the private rented sector to meet minimum energy efficiency standards by 2030.
The scale of investment and resources needed to bring the existing housing stock up to energy-efficiency targets is monumental, and what the government has pledged is really a drop in the ocean of what would actually be required.
The Conservatives implemented the Green Deal scheme in 2013 with the primary aim of improving household energy efficiency. By 2016, it had been described by the National Audit Office (NAO) as having ‘failed to deliver any meaningful benefit’, and had actually increased energy suppliers’ costs and bills, partly because householders were not persuaded that energy efficiency measures were worth paying for.
In terms of decarbonisation across the built environment, it’s clear that construction needs to take account of, and reduce, embodied carbon in projects. Hopefully as the government makes more announcements about net zero targets, it will seriously consider a mandate.
In its manifesto, Labour said too few prison places has led to overcrowding and, while not referencing the New Prisons Programme specifically, said it will ‘use all relevant powers to build the prisons so badly needed’. It has previously talked about speeding up the planning process by removing prison applications from local authorities to be dealt with by ministers.
The New Prisons Programme, which the Conservative government described as the largest prison building programme since the Victorian era, promised 20,000 more ‘modern places’ by the mid-2020s, though the total delivered was set to be closer to 10,000 by the end of 2025.
For the new government to deliver a cost-effective New Prisons Programme, it is crucial to utilise reliable construction data and implement rigorous benchmarking to inform future building costs. When building the business cases, it is imperative that projects are considered across the life of the building and not simply focus on the initial capital cost. First and foremost, we need our prisons to be secure to serve the intended use but we also want buildings that are energy-efficient, easy to maintain and ultimately built to last.
In a similar vein, Labour has committed to delivering the New Hospitals Programme, announced under the Conservative government in October 2020.
The progress of hospital projects was the subject of a fact check during the general election campaign after now Secretary of State for Health and Social Care, Wes Streeting claimed the Conservatives failed to build a single new hospital in the last five years, while his predecessor Victoria Atkins said they had built six. In fact, of the 40 schemes designated ‘new hospitals’ in the government’s plans, just one – the Dyson Cancer Centre in Bath – has been completed. It opened for patients in April 2024.
Efforts to improve the NHS building stock suffered a setback with the RAAC crisis, which extended to hospitals after the spotlight moved across from schools.
While Labour’s stance on RAAC in hospitals was one of urgency and prioritising safety, coupled with a broader commitment to investing in and modernising NHS infrastructure to prevent similar issues in the future, the maintenance backlog in the NHS estate is significant.
The latest Estates Returns Information Collection data, covering 2022/23, estimated the total cost to eradicate the backlog – not planned maintenance work, but work which should have already taken place – was £11.6 billion, which was a 13.6% increase on 2021/22.
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