The national housing target is dead. Let’s bring in a new one

Chris Hayward, CEO, NMBS looks at the issue of housing

 

This week the news has broken that both Conservative leadership contenders have ditched the party’s manifesto promise to build 300,000 homes a year in England by the mid-2020s.

 

Cue a certain amount of eye rolling among independent builders merchants and others in the homebuilding supply chain, who always thought that national housing targets were a bit of a fantasy anyway.

 

According to government figures, we built 243,000 new homes in 2019/20. That then dropped to 216,000 the following year. We haven’t built 300,000 new homes a year in this country since the 1960s, and no one is very sure why this number was even chosen in the first place.

 

As any builders merchant will tell you, it was never a realistic target. The quiet abandonment of proposed planning reforms took away a major driver for increased housing development. But the target had already been seriously jeopardised by labour shortages after Brexit, then Covid, economic disruption and HGV driver problems, and then the crisis in securing reliable supplies of key building materials. All these things merchants saw and felt first-hand – they could have told you years ago that 300,000 new homes was a pipedream.

 

So it is certainly not a surprise to the merchants sector that this political pledge has been dropped by Rishi Sunak and Liz Truss. We won’t miss it.

 

However, there is something that could usefully go into its place, if a new Prime Minister felt so inclined. Let’s have a national target for housing refurbishment and retrofit instead.

 

New home starts and standards are pretty stable, and no one will force housebuilders to build more than they want to. But the real housing crisis we face today is in the existing housing stock: 28 million existing homes, most of which need significant and urgent improvements in energy and water efficiency.

 

This is the national infrastructure project that, done right, could be a real vote winner for a new PM. It could generate much-needed social and environmental dividends, helping the country to tackle carbon emissions, water shortages and the increasingly alarming spread of fuel poverty.

 

It makes financial sense too, providing the boost to the economy that both leadership contenders are so desperate to prove they can deliver. Modelling in the Construction Leadership Council’s national retrofit strategy shows that if the government invested just over £5 billion by the end of this Parliament, then this would unlock 100,000 jobs, generate government revenues of more than £12 billion, and provide additional GDP of up to £21 billion.

 

Are there the same capacity constraints in the retrofit market as there are in newbuild housing? Yes, in places. But the public’s willingness to improve and upgrade our homes is there, and the merchants, suppliers and builders are willing to gear up for it if the political support is there. We need a national target and commitment to kick start the process, sensible long-term policies and stability in the market to generate confidence, and then leave the rest to us.