Labour House Building Policy In Danger of Failing

A year on from its massive electoral victory, the core Labour house building policy of delivering 1.5 million new homes by the end of the next parliament in 2029 is in danger of failing.

Labour came to power claiming they would ‘back the builders and not the blockers.’ However, a year on from their victory, this remains in danger of being rhetoric rather than becoming reality.

Figures show that Labour’s first six months in power didn’t see the number of houses built that the government needs to meet its target.

Construction of 59,680 new houses commenced from July to December 2024, with 72,960 houses completed during this period. Although these figures only represent the first six months of the government, they are still a long way short of where they need to be.

An estimated 300,000 houses need to be built each year to meet the target. If these figures were matched in the following six months, roughly 118,000 constructions would have been started. Nearly 200,000 short of where the government needs to be.

The OBR forecasts that 1.3 million new homes will need to be built between now and the next election for the government’s target to be met.

This is a tall order, as the last time over 300,000 homes a year were built was in 1970 during Harold Wilson’s Labour government. It shows the scale of the challenge the current Labour government faces, one it’s currently struggling to meet.

Here’s what our Managing Director, Pete Mugleston, had to say on Labour’s struggles:

Ramping up construction to 300,000 homes a year won’t be easy. Not only will it require more land to be earmarked for development, but more workers will be needed to build the houses. Something the country might be short of.

Industry leaders warned back in December that the UK “doesn’t have enough builders” to meet Labour’s target. The Home Builders Federation (HBF) stated that several factors contributed to this, including Brexit reducing the workforce size, skills shortages, and an ageing workforce.

The government set out plans to increase the workforce at the time, but it’s unclear whether these will come to fruition and whether they will make a difference. The HBF said that the industry had “the capacity to deliver current build levels, tens of thousands of new people will need to be recruited if we are to reach the targets set out”.

This could be one of the major issues that derail Labour’s plans. If they can’t find enough workers, it’s unlikely they will be able to meet their lofty goals. It’s estimated that a quarter of the workforce is 50 or older, so recruiting younger workers is a big challenge the government needs to tackle.

Recent analysis by West One Loans suggests the government will miss its target by a remarkable eight years. They stated that an average of 370,000 homes need to be built every year for the government to meet its target, which it’s far short of.

West One Loans Co-Head of Finance Thomas Cantor had this to say:

“The Labour Government was quick to hang its hat on an ambitious target with respect to housing delivery and, with previous government’s having consistently fallen short, this was understandably met with a great degree of scepticism.

Of course, it is still early days and Labour may well be in the process of laying the initial groundwork required to eventually pave the way for an explosion in new home delivery.

But whilst it’s possible that they need time to overhaul planning rules, cut red tape, and prepare and incentivise the nation’s housebuilders to increase output, it’s already looking as though the task of delivering what was promised is running away from them.”

The recent furore over the welfare bill, winter fuel payments and the autumn statement all play into a narrative that the government is failing to meet its targets.

This won’t inspire confidence that Labour can meet its flagship proposal from the last election, especially as this was arguably the most ambitious of the targets they set themselves.

One of our in-house advisors, Richard Davidson, has this to say on the government’s ambitions to build 1.5 million new homes:

As West One’s analysis shows, Labour has set itself an onerous task, one that could be beyond its best efforts.

One shred of comfort is that the analysis shows that the construction of 86,000 new homes was started in the first three quarters of the new government, up from 68,080 in the previous three quarters.

This is a long way short of where the government needs to be, but it’s a positive nonetheless and one Labour will hope it can build on. If they don’t, they may find voters less than forgiving at the next election.