Why the Labour Party's plans to build 1.5 million homes is not achievable.

If the polls are anything to go by, then the Labour Party should form government by next year, which is why it is ever more important to take note of their policy announcements during last week's party conference. Housing took centre stage at the conference with announcements on house-building targets, recruiting more planning officers, adding more affordable homes, taxing builders to fund more social housing and promising once-in-a-generation reforms. But we have all been here before with politicians overpromising and underdelivering. So, what did Labour promise, and is it achievable?

Building 1.5 million homes in five years:

In his conference speech, Sir Kier Starmer promised to "build a new Britain" by highlighting his plans to build 1.5 million homes in the first five years of his premiership. He highlighted the existing planning system as the biggest obstacle to not building more homes. He pledged to reform the system by giving the local mayors more power and control over housing investment.

The ambition of planning reform is well-placed and one that successive governments have tried to tackle with little to no meaningful reform. The challenge is that since 2010, local authority planning resources have halved. If Labour are serious about planning reforms, they need to invest in local authority planning resources and allocate housing targets at a local level to boost supply.

However, the biggest challenge the construction industry faces that will limit Labour's ambition to build 300,000 homes a year is the lack of a construction workforce. The graph below highlights that the construction workforce has fallen by over 250,000 since 2019. There are currently 45,000 vacancies in the construction sector. Industry experts predict that 266,000 more workers will be needed by 2026. The Home Builders Federation (HBF) predicts fewer than 120,000 properties will be built this year compared with a government target of 300,000—far fewer than Labour aims to achieve. Scaling from 120,000 dwellings a year to 300,000 will be a massive challenge and one frankly only achievable if the labour market improves, and that is not a quick fix.

Labours housing plans mentioned nothing that would address the labour shortages in the construction sector. This is why they were limited in their ambition to build more houses. Even that will only be achievable if they frame a policy around attracting more workers to join the construction sector.  

Labours "new towns" ambition:

Now let's face it: unless the labour shortage is sorted, the idea of new towns is unlikely to happen. But let's pretend that the labour shortage is not an issue, and even then, this idea is flawed. It is a familiar idea that has failed to take off. The investment and resources needed to build a "new town" is being underestimated.

Very few new towns have been developed specifically to house people, and the most recent example is Ebbsfleet along the Kent estuary called the Garden City, which failed to take off. Even after £300million of public money, only 3,000 of the 65,000 proposed new homes have been built thus far, and the project has been plagued with issues. Setting up new towns will require vast amounts of land being bought and levelled, new infrastructure such as railways, roads, schools, hospitals and public services will be required, and everything will have to be built afresh. If we are struggling to build the northern leg of the HS2, creating whole new towns will require a lot of government funding and one that is unlikely to take off.

 Some of the Labour Party's ambitions are well-placed, such as hiring more planning officers and being more realistic on home-building targets. Labour's trouble is the "B" word, i.e., Brexit. The challenges in the construction industry are linked to the UK needing to be part of the single market. We need help accessing a pool of construction workers trained and equipped to build in Britain. The ageing construction workforce, the lack of apprenticeships to train young people, and the lack of access to the EU construction workforce are making the labour crisis even worse in the sector. While the need to build more homes is welcomed, there needs to be a radical policy from the Labour Party on addressing the labour shortages in the construction sector and attracting young workers to the sector. If the Labour Party fails to form a successful strategy around this, it will miserably fail to meet its home-building targets.