Building the targeted 300,000 homes a year ‘may not be enough to end housing crisis’

The Westminster government’s target of building 300,000 new homes per year might not be enough to end the housing crisis and meet future demand, peers have warned.

Ministers have targeted building one million new homes before the next general election in 2024. But skills shortages, planning problems and funding failures are impacting building and leaving too many people trapped in unsuitable homes, a report from the House of Lords Built Environment Committee has warned.

The report also called on the government to change its approach to funding by reforming Right to Buy and diverting funding from Help to Buy towards increasing supply.

The current Help to Buy scheme will have cost taxpayers £29bn in cash terms by 2023 but peers believe the money would be better spent on building more affordable homes and homes for social rent.

Committee chair Baroness Neville-Rolfe, said: “The government’s ambitious target of 300,000 new homes per year will only be met if government takes action to remove the barriers for housebuilders, particularly for SMEs (small and mid-size enterprises) who 35 years ago built 39 per cent of new homes but now build just 10 per cent.

“Uncertainty and the absence of a clear policy direction has only exacerbated housing problems. Our report provides a package of proposals to help deliver much needed housing and address the critical undersupply of new homes.”

The report itself adds: “We heard that even this target may not be enough to address future trends”.

The government has yet to hit its 300,000 homes a year and delivered 216,000 homes in 2021. But ministers face a number of challenges to tackle the housing crisis.

There are significant skills shortages in the construction sector, the committee warned, which must be addressed through upskilling and reskilling, including a focus on skills needed to address climate change.

The government’s own figures show that skills shortages accounted for more than a third of all construction vacancies and almost half of all manufacturing and skilled trades vacancies.

A shortage of social housing is pushing tenants into the expensive private rented sector and that is costing the Exchequer £23.4bn a year in housing benefit.

Other measures in the package proposed by the committee targeted SMEs with a call for the  government to make more small sites available to small builders and increase firms’ access to finance.

As the post-Grenfell building safety crisis continues, peers have called for the New Homes Ombudsman to be given more robust powers to boost the quality and design of homes.

Peers also called for more resources to be handed to planning departments as well as more up-to-date local plans to create more certainty for housebuilders and planning departments.

“The planning system needs urgent reform. Currently, less than half of local authorities have an up-to-date local plan: more councils need simple, clear and transparent local plans. Any new planning system will only work if local planning authorities have the resources and staff to implement it,” said Baroness Neville-Rolfe.

“Skills shortages in the construction, design and planning sectors must be addressed to unlock the required development, including the green skills needed to address climate change.”

A spokesperson for the Department for Levelling Up, Housing and Communities told The Big Issue housing secretary Michael Gove is “considering the best way forward” for planning reforms in a bid to tackle the housing crisis.

“We welcome this report and share the ambition to reform the planning system to meet the demand for more high-quality homes and create a fairer housing market,” a government spokesperson said.

“Despite the huge challenges faced during the pandemic, we delivered more than 216,000 homes in England in 2020/21 – well above the 186,500 forecast for the whole of the UK – and are investing a further £12 billion in affordable housing over the next five years.”