Housing and Planning Minister Matthew Pennycook recently appeared before the Housing, Communities and Local Government Committee, where he admitted delivering Labour’s promised 1.5 million homes would be more difficult than expected.
“I should be clear at the outset that delivering 1.5 million homes is going to be more difficult than we expected in Opposition. I will be very candid about this,” Pennycook told the committee.
Let’s hope his comments aren’t the first sign Labour might already be backtracking on its pledge.
He went on to explain that upon taking office, the Government found the inherited housing situation to be even more “acute” than expected.
He cited figures from the Office for Budget Responsibility (OBR) which show total housing supply is set to fall below 200,000 this year.
He also highlighted the sharp drop in the number of homes expected to be delivered through the Affordable Homes Programme.
While it was originally expected to deliver up to 180,000 homes over five years, the estimate has now been revised down to between 110,000 and 130,000.
He acknowledged the current supply constraints make Labour’s goal of increasing housing supply by 500,000 homes over the next five years “even more challenging.”
Setting such an ambitious and specific target was always going to be challenging.
Nevertheless, he went on to assure the committee; “We are absolutely confident that it can be achieved.”
He also cautioned that meeting the target would require the full five years and warned progress could be jeopardised by external factors, such as “exogenous economic shocks.”
Despite these challenges, however, he highlighted steps the Government has already taken since coming to power, including consultations on planning reform, the launch of the New Homes Accelerator, the creation of the New Towns Taskforce, and policy changes to give councils and housing associations greater flexibility in boosting affordable housing supply.
We recently also heard about the Government’s plans to create 5,000 additional construction apprenticeships each year – following £140m of industry investment.
A total of 32 new Homebuilding Skills Hubs will deliver fast-track training in areas where housing demand is highest, it says.
The initiative is being developed in partnership with the Construction Industry Training Board (CITB) and the National House-Building Council (NHBC). Such schemes will take time to filter through, however.
Plans will take time
Pennycook did stress the 1.5 million homes target won’t be achieved instantly.
He told the committee hitting 300,000 homes every single year was never the plan. Instead, the aim is for an upward trajectory, with much of the housebuilding delivery expected in the latter years of the five-year timeframe.
“We are in a trough,” he said. “We have to pull ourselves out of that trough. That will take time. We are not going to hit a 300,000-type number in the first year,” he told the Committee.
Looking at the latest housebuilding statistics, the scale of the task ahead is clear, and it’s no surprise the Planning Minister may be showing some nerves at reaching the 1.5 million figure.
According to Office for National Statistics (ONS) figures, just 31,660 housing starts were recorded in Q2 of this year.
While this is a 6.4% increase from the previous quarter, it is a staggering 60.3% drop compared to the same period in 2023.
This sharp decline is partly down to housebuilders rushing to start projects before new regulations kicked in last year, but the numbers are still way down on previous years.
The figures come as Savills warned in The Daily Telegraph Labour would need to persuade retired planning officers to return to work if it is to succeed in building 1.5 million homes. Housing Secretary, Angela Rayner, has pledged to recruit 300 new officers, but Savills has said thousands are needed.
David Jackson, head of planning at Savills, told the newspaper retired planners should be brought back to work while thousands of additional planners are recruited and trained to help meet the targets.
While I’m sure the Government will face criticism if it doesn’t hit the magic 1.5 million total, it shouldn’t necessarily be seen as a failure if it doesn’t – especially if it comes close.
There seems to be genuine intent to get things moving, with positive decisions being made that could lay the groundwork for faster housebuilding in the future, which should be good news for both the mortgage and housing markets.
Simon Jackson is managing director at SDL Surveying
