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Britain’s housing minister has warned it will be “more difficult than expected” for the government to meet its target of building 1.5mn new homes because of the depth of the current supply downturn.
Matthew Pennycook on Wednesday blamed the “difficult inheritance” from the last Conservative government as he told MPs of “very serious challenges” to hitting the Labour government’s flagship goal of building 1.5mn homes over five years.
“Delivering 1.5mn new homes is going to be more difficult than we expected in opposition,” Pennycook told the House of Commons housing, communities and local government committee. “On assuming office, we discovered that the situation was even more acute than we had expected.”
Experts and industry figures have warned that Labour’s planning reforms and housebuilding agenda will not equate to 1.5mn new homes over five years.
Building 1.5mn new homes was a key promise made by Sir Keir Starmer during the general election campaign, although the UK has not built 300,000 homes a year since 1977, averaging closer to 200,000 a year over the period.
The National Housing Federation, which represents affordable housing providers, and the Home Builders Federation industry group have said the government is on track to miss the target by almost one-third.
In July, the building industry’s training body said a shortfall of more than 150,000 skilled construction workers risked stymieing the pledge.
A senior Whitehall official said there was growing pressure inside the Ministry of Housing, Communities and Local Government for ministers to accept that hitting the 1.5mn home target was unattainable in this parliament.
“Everyone can see that any serious line-by-line analysis of how you could reach that target would not stand up to outside scrutiny,” the person added.
Pennycook told the housing committee he was “absolutely confident” that the target was achievable and that anything less would be an “inadequate response to an intense . . . housing crisis in England”.
But he opened the door to the prospect of ministers falling short, noting that their ability to hit the target was “vulnerable to things outside the government’s control [such as] economic shocks”.
Pennycook blamed “anti supply” changes to national planning policies in the final year of the Conservative government for worsening the downturn in supply, mainly caused by high interest rates.
He also emphasised the barriers to meeting the target including construction capacity, an ageing workforce and planning authorities that have been “hollowed out [by] budget cuts”.
“I would just reiterate . . . what a dire situation we’re in, in terms of the collapse in supply and particularly affordable supply,” he said.
Some 221,452 new homes were built in the year to the end of September, according to Savills, far short of what would be needed to hit 1.5mn over five years. The real estate group forecast supply would fall further over the coming year.
The government has consulted on planning reforms that will reverse the Tory policy changes and boost the housing targets for local government.
It is also preparing further proposals to require all local authorities to co-operate with neighbouring authorities on where to build homes, probably on a model similar to the one used in London, Pennycook said on Wednesday.
He said some local authorities that had been “dragging their heels” on housing were “suddenly making very, very quick progress” to pass local plans that would lock in the old targets before the new policy came into force.
Later on Wednesday, the government set out reforms to Right to Buy, which allows council housing tenants in England to buy their property at a discount.
Introduced by Margaret Thatcher’s Conservative government, the policy has contributed to a net loss of social homes as new supply failed to keep up with sales, which housing secretary Angela Rayner said was like “trying to fill a bath when the plug’s not in”.
The proposed reforms include tightening eligibility criteria, and potentially shielding new properties from being sold for a certain period.
The government plans to make an announcement within weeks about its plans to implement further leasehold reforms, Pennycook added.