'Labour’s failure on house building is turning into a national emergency'

There were plenty of good reasons why Angela Rayner had to resign as deputy prime minister earlier this month, but the most important was not her missteps over tax, but her record as housing secretary – she presided over a collapse in house building that is rapidly turning into a national emergency.

When she wasn’t expanding her own property empire, Rayner was meant to be driving a huge increase in new housing starts.

When it came into office, Labour committed to building 1.5 million new homes over the parliament. Without having to worry as much about backbenchers in leafy suburbs, it could overrule all the local objections to new development and get to work.

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That was badly needed. For over a decade, the UK has not built anything like enough new homes.

The number completed has averaged 230,000 annually for the last 10 years while net immigration has in some years run as high as 900,000 and has yet to fall below 400,000.

Add in the numbers of homes that are needed to replace the existing stock and to accommodate an ageing population and smaller family units, and one point is clear: we are running out of places to live.

That is the major reason house prices are so high, rents have been soaring and why it has become so hard for young people to get their first foot on the housing ladder.

If we could build more, homes would become more affordable, rents would come down and it would boost growth.

The trouble is, Labour’s plans are not working out. Figures published earlier in September show that in the first quarter of this year only 32,000 new houses were started, less than half the level needed to hit the target.

Planning approvals have collapsed to a 10-year low, with just 53,000 new homes approved in the three months to June, 3% down on the quarter and 10% down on the same period in 2023.

Without planning permission, no new homes are going to be started, so there is little prospect of the figures recovering any time soon.

Meanwhile, cement production in the UK has fallen to a level not seen since 1950 and is now running at half the level in 1990.

The average new home consumes five tonnes of the stuff. The result? Housebuilding is now in full-scale collapse. We may only build 200,000 new homes in the coming year and the final tally could be as low as 150,000. That is half the (not very ambitious) target the government set itself.

'Intentions and targets won’t solve the housing crisis'

It is not hard to work out what has gone wrong. As in so many other areas, Labour came into power apparently believing that all that was required were good intentions and setting some demanding targets, and everything would be fixed immediately.

It doesn’t seem to have occurred to Rayner that she actually had to change anything. Instead, the system has been left mostly the same and the small reforms have been for the worse.

The government has imposed a landfill tax, to help meet its net-zero targets, but didn’t realise that the biggest users of refuse dumps were builders. That levy alone is estimated to put an extra £20,000 on the cost of building a new home.

It has imposed strict affordable housing targets for new developments, which mean there is less incentive for developers to build anything.

And it has allowed its ambitious plans to transition to green energy to drive up industrial electricity prices to twice those of France, and four times the US.

It is hardly surprising that cement production has collapsed, given that energy can account for up to 50% of the cost of producing it.

If you push up all the costs, then fewer houses will get built. We are hardly building enough homes for all the asylum seekers coming across the English Channel every day, never mind for everyone else. The UK already faced a catastrophic housing shortage.

But since taking office, Labour has made it far worse. Very soon, we won’t have enough homes to accommodate everyone, prices will go up, and it will be even harder for people to get started on the housing ladder, or even to find somewhere to rent.

It is turning into a national emergency – and yet right now all the government can do is impose extra taxes on the sector, and set even more targets that don’t have a chance of being met.

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