Labour is projected to fall half a million homes short of its target to build 1.5 million new homes over the next parliamentary term, according to figures released by the Office for Budget Responsibility (OBR). The party had pledged in its election-winning manifesto to significantly boost Britain’s housing stock, aiming to ‘get Britain building again’ and create jobs.
However, the independent OBR's latest assessment indicates that the number of new homes built under Labour is likely to rise more slowly than previously anticipated. This revised forecast is attributed to a sluggish economy, high interest rates, and burdensome regulations impacting the construction sector. The OBR has lowered its estimates for new housing starts, revising them downwards from 230,000 in 2026 to 220,000 for the following two years, with a projected increase to 260,000 by 2031. This results in an expected cumulative deficit of 190,000 fewer homes compared to the OBR's March forecast.
The OBR cited broader challenges within the construction industry, including weak demand, escalating material costs, and the impact of regulatory changes, as drivers for this downturn.
Shadow housing secretary Katie Lam criticized the government, stating that Labour's policies, specifically its taxes and red tape, have made building prohibitively expensive. Lam asserted that this situation leads to fewer individuals being able to enter the housing market and increased competition for available rental properties.
In response to the housing challenges, the Chancellor announced several measures intended to stimulate housebuilding. These include extending cheaper borrowing options for local councils, making land sold to social housing providers VAT-free, and removing biodiversity requirements for certain brownfield sites. An additional £1.5 billion has been allocated to Labour's social and affordable housing program, bringing the total government spending in this area to £40 billion. Furthermore, a new equity loan scheme, 'Your First Home,' has been introduced to support first-time buyers, backed by £4.7 billion in taxpayer funding.
The Chancellor also highlighted efforts to address rough sleeping, confirming an additional £430 million to provide pathways off the streets for all rough sleepers throughout the remainder of the parliamentary term. However, he indicated a stance against continuous changes to building regulations, except where essential for safety.
