Doubt cast on Rachel Reeves’ claim Labour will be in ‘touching distance’ of building 1.5 million homes

Rachel Reeves’ Spring Statement has dealt a blow to Labour’s pledge to build 1.5 million homes in England while in power, despite the chancellor’s claims that they will be in “touching distance” of hitting the milestone.

The Office for Budget Responsibility’s (OBR) projections said 1.3 million net additional dwellings will be delivered in the five years from 2025/26, suggesting around one million homes in England. By the end of the decade, 305,000 homes will be added to the UK’s housing stock each year, the chancellor said.

The government has long promised to build 1.5 million homes in England alone. That’s despite scepticism that labour shortages in the construction sector and housebuilding slumping to a 12-year low in 2025-26 would render that target impossible.

A Treasury spokesperson confirmed to Big Issue that the government’s 1.5 million homes target remains for England.

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In her Spring Statement speech, Reeves hailed the impact of the government’s national planning policy framework reforms for boosting economic growth with housebuilding at the heart of it.

She said: “Changes to the national planning policy framework will help build over 1.3 million homes in the UK over the next five years taking us within touching distance of delivering our manifesto promise to build 1.5 million homes in England in this parliament.”

Reeves announced £600 million to train up 60,000 construction workers at the budget as well as confirming £2 billion top-up funding for the affordable homes programme to deliver 18,000 affordable and social homes.

The Labour frontbench has been defiant in claiming that the 1.5 million homes target would be met.

Reeves said the government would deliver a “40-year high for housebuilding” while housing secretary Angela Rayner said in January that she believed the target would be achieved despite admitting that it would only “make a dent” in the housing crisis.

But the latest OBR projections suggest the government is set to miss the milestone by a significant margin.

Noble Francis, economics director at the Construction Products Association (CPA), told Big Issue “the government will fail to meet its target by around 50% and even that is assuming strong growth”.

He added that the CPA’s forecasts show Labour is facing a challenge to hit 1.1 million new homes before the next election with small and medium-sized enterprises (SMEs), housing associations and local authorities all facing barriers to building. 

Rachael Williamson, Chartered Institute for Housing interim director of policy, communications and public affairs, said the government is “continuing to take positive steps towards our shared ambitions on housing”.

But she said the government will have to invest in social housing to fill the gap if it hopes to meet its target of 1.5 million homes.

“The OBR’s analysis shows that the government will struggle to meet its target of building 1.5 million homes without significant investment in social and affordable homes,” said Williamson.

“As we look towards the spending review in June, it is vital that government continues its work to develop a long-term successor to the affordable homes programme that prioritises homes for social rent, and delivers the level of funding that is required to tackle soaring levels of homelessness.”

A failure to build enough social housing over successive decades is one of the reasons for the long-running housing crisis.

Housing charity Shelter has long called for 90,000 social rent homes to be built each year for the next decade.

Polly Neate, chief executive of Shelter, said the government will need to invest more than the £2bn it has promised this week when it sets out long-term funding in this summer’s spending review.

“Growth won’t mean anything to ordinary people unless it’s shared, and right now record numbers are homeless, billions are being sunk into temporary accommodation, and welfare cuts will push more people into homelessness,” said Neate.

“The £2bn announcement for social and affordable housing is a positive step, but to achieve the chancellor’s ‘serious plan for growth’, we need significantly more investment in social rent homes to give families a secure foundation. 

“There are no shortcuts out of the housing emergency – the government must invest in 90,000 social homes a year in the spending review in June. Not only is this the only way for the government to meet its target of 1.5 million homes, it would end homelessness and add over £50bn to the economy through boosting jobs and savings for the NHS and benefits bill.”

Andy Hulme, group chief executive of The Hyde Group, called for positivity despite the OBR’s forecast.

The housing association boss urged ministers to set out a 10-year, inflation-linked settlement for social rents to give social landlords the confidence and security to ramp up building.

“Whilst this is currently lower than the 1.5m homes by the end of this parliament that the government is aiming to achieve, it still shows that delivery of new homes will be over 300,000 per year,” said Hulme.

“This would represent a huge achievement and would see the government take housing starts from an historic low to housing completions reaching a 45-year high in less than five years.”

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