A Government target too far for the construction industry?

Industry Viewpoint

The UK Government has set an ambitious target of delivering 1.5 million new homes by 2029, equating to an annual requirement of 370,000 homes. However, achieving this goal will be challenging due to a combination of economic, political and industry-specific constraints. So how realistic is this, or is it yet another government-backed target that is just totally unachievable?

The target of 300,000 new homes per year isn’t a new target, but the last time the UK met this goal was way back in 1969. So, Deputy Prime Minister Angela Rayner coming out and saying there are "no excuses" not to build the 1.5 million new homes Labour promised in its election manifesto, is quite the statement.

Current housing delivery and shortfalls

In recent years, the UK has consistently fallen short of its housing targets. The highest number of completions in recent times was more than 240,000 in 2019/20, but this figure has declined since the COVID-19 pandemic due to economic uncertainty, material shortages and labour constraints. Given the shortfall in previous years, the industry will need to accelerate significantly to meet the new 1.5 million target.

Key Challenges Facing the Industry

The issue the construction industry is facing is something of a perfect storm – we need to build more and we need to build it more quickly. However, we need to build to a better quality to meet higher performance standards and we are under intense scrutiny in terms of competence. Furthermore, we have fewer skilled trades to build these new homes, we have less money, and we have a planning process that is a major barrier. So plain sailing then!

Skills and Labour Shortages

The UK construction industry is experiencing a severe labour shortage, particularly in skilled trades such as bricklaying, carpentry, and site management.
A significant portion of the workforce is aging, and post-Brexit immigration policies have made it harder to recruit foreign workers.
Last year the Construction Industry Training Board (CITB) stated the UK construction industry needed to recruit an additional 251,500 workers by 2028 to meet housing demand and fill the projected skills gap. Without substantial investment in apprenticeships and training, the industry will struggle to deliver homes at the required pace.

Material Supply and Costs

The cost of construction materials has surged in recent years, driven by inflation (which has impacted raw materials costs, transportation, labour etc), supply chain disruptions, and geopolitical tensions. The UK imports a significant proportion of its construction materials, and price volatility in key materials like timber, steel, and concrete makes budgeting for large-scale projects difficult. If inflationary pressures continue, the financial feasibility of large-scale housebuilding could be undermined.

Planning System Delays

The UK planning system has been widely criticised for being slow and bureaucratic. Many housing developments face lengthy delays due to local opposition, environmental concerns and a lack of planning officers. The government has proposed planning reforms, but until these are implemented effectively, the planning process will remain a major bottleneck.

Land Availability and Affordability

Securing suitable land for development is another major challenge. While brownfield sites are being prioritised, these often require significant remediation before construction can begin. Green belt restrictions also limit expansion opportunities, particularly in high-demand areas like the South East of England.

Economic and Market Conditions

Higher interest rates and inflation have dampened housing demand and increased borrowing costs for developers. The mortgage market remains uncertain, affecting buyer confidence. If these economic pressures persist, developers may scale back housing projects, reducing the likelihood of meeting the target.

Potential Solutions and Optimism

Despite the challenges, there are several factors that could support housing delivery, with Modern Methods of Construction (MMC) being one. Off-site manufacturing and modular housing can speed up delivery and reduce reliance on traditional labour. However, it continues to face barriers - often its association with perception. All too often, off-site construction is overlooked in favour of traditional masonry construction, based on the old phrase of ‘we’ve always done it this way.’

In many ways this is understandable. Masonry construction offers something unique. The craftsmanship of brick construction can be seen all over the country, and it is something architects and housebuilders will revert back to time and time again for its warmth, character and buildability. But we need more bricklayers if brick is to be seen as our ‘go to’ material to build 370,000 homes a year.

There also needs to be intervention by the government if we are to hit the target. This needs to be two-fold – a vast simplification of the planning process and unlocking of land, investments and incentives.

Conclusion

Given current industry constraints, I personally feel the UK is unlikely to meet the 1.5 million homes target by 2029 without significant intervention – and 89% of our social media followers agree!

While modern construction techniques and policy reforms could help, ongoing labour shortages, planning delays and economic uncertainties pose substantial risks. The UK Government and construction industry must work collaboratively to address these challenges if there’s any hope of meeting the ambitious target.

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