Housing secretary Steve Reed ‘overly optimistic’ for betting jobs on housing targets
The government’s housing secretary, Steve Reed, continues to be optimistic about the chance of a pledge to build 1.5m new homes in England despite mounting concern about delays.
Earlier this week, Reed said that he would “absolutely” meet the goal and widespread scepticism would make “celebration all the sweeter”, he told BBC Panorama.
“My job should be on the line if I fail to meet my target,” Reed said. “I expect to be held to account.”
But experts have pointed to a variety of roadblocks on the path to 1.5m extra homes, not least a skills shortage and soaring building costs.
Tim Seddon, CEO of Retirement Villages Group, stated that although the government has made some “good progress”, it is not on track to meet its targets.
“The planning system remains slow and inefficient, and there are huge barriers to building that the current legislation does not address,” he added.
Housebuilding has been woefully low this year despite significant changes to the UK’s planning framework, with affordable starts even worse.
There was a 12 per cent drop in housebuilding projects started across the UK year on year in August, and a 44 per cent drop in London developments, according to data from Glenigan.
In the capital, ground has broken on just 3,248 new units out of a planned annual total of 88,000.
The latest Purchasing Managers Index (PMI) from S&P Global earlier this month revealed that construction output has been falling for nine months in a row, signalling a “solid rate of contraction”.
The report said business activity expectations were “subdued” at the second-lowest since December 2022, with some shred of optimism offset by “concerns about the UK economic outlook”.
“With very few exceptions, when it comes to construction, infrastructure and housing, everything’s on a downward spiral,” CPA boss Steve Mulholland told City PM.
“[The industry] is feeling it now… jobs are finishing and new ones are not starting. We’ve got a real problem,” he added.
‘Huge’ skills and investment shortage
While the government has invested £600m into solving the skills shortage, industry insiders say it is still not enough.
“There is a huge skill shortage across the whole construction and skilled trades industry, and we rapidly need to train more workers to hit the government’s house building targets and infrastructure initiatives,” construction consultant Andy Simms said.
“We continue to call on the government, schools, and colleges to push the industry as a great vocation for young adults.”
Mulholland, meanwhile, said that SMEs are unable to invest in equipment or training due to rising employer and energy costs, combined with a lack of investment incentives.
“I said a year ago they’d be lucky to reach a million… I would even go so far as to say it’d be lucky to reach six or 700,000,” he said.
Sedden said that the government “has no real solution” for soaring building costs and skilled workforce shortages in the near term.
Emergency measures in the capital
Reed is set to announce an emergency scheme as early as next week to get housebuilding – particularly in crisis-struck London. However, moving measures are unlikely to help affordable housing, the crucial element in the housing crisis.
The percentage of homes in a development required to be affordable is set to fall from 35 per cent to 20 per cent, while the skyrocketing cost of building will push up housing costs for the other 80 per cent.
Moreover, the main problem in London is in fact the Building Safety Regulator, which is keeping dozens of high-rise developments stuck in limbo as they wait for the green light.
Despite a target of twelve weeks per application, approvals have been taking up to a year.
Unite, which builds high-rise student accommodation, has also warned that the Building Safety Act has added “around six months” to development programmes, putting pressure on returns and further slowing new supply.
Around four-fifths of high-rises are residential, and half of the homes built in London since 2002 have been high-rise buildings – a trend which can be seen in increasingly dense cities like Manchester and Birmingham.
Seddon said: “I’m glad Steve Reed takes Labour’s pledge to build 1.5m new homes seriously enough to put his job on the line.” “But the housing secretary is overly optimistic,” he added.