Budget reaction: can Labour meet its housing targets?

BCIS Chief Economist Dr David Crosthwaite assesses the government’s budget pledges on housing and whether Labour has done enough to convince the industry its ambitious target of 1.5 million new homes is possible.

On top of existing announcements on housing – a National Planning Policy Framework consultation, New Homes Accelerator, New Towns Taskforce, and seeking views on ‘brownfield passport’, there were several confirmed funding commitments in the Autumn Budget:

• £500 million boost to the Affordable Homes Programme to build up to 5,000 additional affordable homes (details of future grant investment beyond this to be announced in spring).
• £3 billion of additional support for SMEs and the Build to Rent sector.
• £46 million additional funding for local authority planning officer recruitment and accelerating large sites stuck in the system.
• £47 million to support 28,000 houses stalled in nutrient neutrality catchment areas.
• Investment in remediation work on cladding to rise to over £1 billion in 2025/26.

Consultations on a long-term social housing rent settlement of CPI+1% for 5 years, possibly 10 years, and making the mortgage guarantee scheme permanently available, were also confirmed.

Despite these announcements, it remains wholly unclear how the government intends to meet its self-imposed target of building 1.5 million homes over the life of this Parliament. This ambitious target, while politically attractive, remains highly unrealistic given recent government records in homebuilding; no administration since the 1970s has achieved anything close to these numbers – equating to around 1,000 homes being completed a day.

The Affordable Homes Plan, though a positive gesture, likely won’t make a meaningful dent in this massive target. Even with additional units from this initiative, the government’s projections still fall short. The private development sector, which largely controls new housing supply, operates under market-driven motivations. It isn’t in the best interests of commercial developers to flood the market with homes, as they aim to keep supply tight to maintain and elevate property values.

Further, the government no longer has the direct mechanisms, like council housing initiatives previously managed by local authorities, that were once essential in delivering significant numbers of affordable homes. Without this local authority input, the government lacks any direct control over supply, meaning the target becomes even more implausible.

The time it will take to conclude the various consultations squeezes the timeframe even more. Hopefully, by spring, there will at least be greater clarity and more concrete policies, especially where immediate intervention is necessary.

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