Four problems Labour must solve to deliver the social housing Britain urgently needs

Keir Starmer promised Labour would build 1.5 million homes and prioritise social housing during his next five years as prime minister – but housebuilders and local authorities have already warned a broken council house financial model is putting that target at risk.

The party kicked off its first full week in charge by laying out plans to reform the planning system, the re-introduction of mandatory housebuilding targets and a review of green belt boundaries. But chancellor Rachel Reeves suggested after her speech on 8 July that she would be leaning on the private sector to hit the 300,000 homes-a-year mark the previous government failed to reach.

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Labour has pledged to prioritise social rent homes but has so far neglected to state just how many will be delivered. Shelter has called for 90,000 social rent homes a year to be built over the next decade to make up for years of failure to deliver enough homes.

Just days after Reeves’ announcement, 20 of England’s social housing landlords warned the future of council housing is in the balance.

Councillor Kieron Williams, Southwark Council leader, said: “We want to work with the new government from day one to deliver the more and better council homes that our communities need. With a growing number of council landlords on the brink, urgent action is needed to put our national council housing finances back on firm foundations.”

Here are the challenges that Labour will face to build the social housing needed to end a housing emergency that has seen rents soar to record-high levels and house prices become increasingly unaffordable.

1. More money is needed for council housing

The council housing system is broken with an unsustainable financial model – that’s the view of 20 of England’s biggest social housing landlords, including councils from London, Leeds, Birmingham, Bristol and other cities.

The group released an interim report from housing experts Toby Lloyd and Rose Grayston to convince the new government to prioritise councils’ housing plight.

It found erratic national policy changes have squeezed budgets and sent costs soaring. The National Housing Federation said rental income is 15% lower in real terms than in 2015, at the same time as housing associations need to invest up to £50k on average in every social home over the next three decades to ensure they are safe, high quality and decarbonised.

New analysis from Savills shows that councils’ housing budgets will face a £2.2bn ‘black hole’ by 2028.

The social housing landlords outlined a number of solutions including a £644m one-off “rescue” cash injection into the housing revenue accounts (HRA) model and the removal of red tape on existing funding. A new, long-term green and decent homes programme is also needed long-term, they said.

Councillor Williams said: “Our country’s largest council landlords have come together because we see every day how council homes transform lives for the better. For families across our country their council home is a foundation – giving them the security needed to put down roots, flourish in childhood, get on at work, stay healthy and age well.

“However, erratic policy choices from our last government have left council housing finances completely broken and the system’s future is in danger. Councils are being forced to cancel new build developments, and even sell off council homes, to focus on keeping their existing residents safe.”

A report from the Chartered Institute of Housing and Savills found the HRA debt settlement, introduced in 2012. needs to be reformed.

The pair said The impact of rent controls sustained higher-than-expected inflation, loss of stock through Right to Buy, and new regulatory burdens have all undermined the original settlement.

That has left councils with unsustainable debt levels a calculation that the sustainable level of debt for local authorities with HRAs to deliver against current and potential future quality and regulatory standards now estimated to be around £17bn less than the 2012 levels specified.

Gavin Smart, chief executive of the Chartered Institute of Housing, said: “We are living in a very different place than the one we were in 2012 when the government first outlined their plans for a debt settlement. It is vital that all government decisions are made with the most up-to-date information possible, especially when local councils are struggling so much against spiralling debts.

“Unlocking new funding to reduce council debt will enable councils to provide new homes and to bring the properties they currently have up to the standards people deserve.”

Labour has inherited the £11.5bn affordable homes programme from the previous government which runs up to 2026 and is intended to build 180,000 homes. It will likely be much more expensive than that to fix chronic social housing shortages.

With chancellor Reeves already warning that money is tight, Labour appears to be planning to convince the private sector to chip in.

2. Stop Right to Buy from eating into social housing stock

New government statistics show just why there is increasing pressure to scrap the Right to Buy scheme.

There have been 2,026,893 social homes sold off to tenants since 1980 when Margaret Thatcher introduced the policy.

Sales fell 43% annually to 6,275 in 2023-24 with councils collectively receiving £618m. However, the average receipt councils received fell 5% to £98,454 and only 3,046 replacement homes were funded – less than half the homes sold off.

It’s a familiar story that has seen social housing stock eroded in recent decades and waiting lists rise to almost 1.3 million households across London. That’s why England’s largest social housing landlords are calling for it to be scrapped.

Labour does not currently plan to axe Right to Buy. In the party’s 2024 manifesto, Starmer laid out plans to review increased discounts introduced in 2012 and bolster protections on newly-built social housing.

Greater Manchester mayor Andy Burnham, who welcomed housing secretary Angela Raynor to view a development in Manchester last week, has called for the policy to be suspended locally to protect the 20,000 social homes he has vowed to build in the region.

Deputy prime minister Rayner said: “Regional mayors like Andy Burnham are central to our pledge to build 1.5 million homes over this Parliament. We are working in lockstep with them to boost growth in every part of this country, giving them new powers, getting homes built and delivering the biggest increase in social and affordable housebuilding in a generation.

 “I’m completely behind Andy’s mission to build more affordable homes, and his support for renters.”

3. Finally reform the planning system

The planning system has been earmarked for reform for some time over criticism that it is too slow and too subject to YIMBY v NIMBY battles to build homes.

Analysis from think tank Centre for Cities said as many as 4.3 million homes are missing from the housing market because they were never built following the introduction of the discretionary Town and Country Planning Act 1947.

Different solutions to planning problems have been proposed by the previous government since 2019 but failed to solve the problem, leading to long-term uncertainty for housebuilders.

Chancellor Reeves said that the new government would change planning rules and build new towns to boost housebuilding.

Labour plans to review green belt boundaries and target disused areas of land in green belt areas – known as the grey belt – as well as increasing the number of planning officers by 300.

Bringing through stalled housebuilding projects and reviving mandatory targets are also central to the party’s plans to “get Britain building”.

4. Find the roofers, builders and surveyors to fill labour shortages

If Labour is to ramp up housebuilding, it will need the builders to do it.

Earlier this year, the Big Issue reported that as many as 300,000 construction workers had exited the sector in recent years, hampering efforts to build new homes and retrofit existing ones.

Last week the London Homes Coalition – a partnership of major housing associations, contractor and specialist suppliers in London – said an ageing, retiring workforce is threatening efforts to build more affordable housing in the English capital.

The coalition said 10,000 people are needed annually to meet asset management commitments, and up to 31,000 to deliver new build planned investments over the next five years. 

The group’s pipeline of new homes represents about 10% of the overall construction workforce in the capital. Without further action, the coalition alone faces a potential shortfall of around 2,600 skilled people to deliver homes.

The coalition said it would only have 85% of the roofers and 78% of the surveyors needed to provide and maintain affordable housing across the capital over the next five years.

Fiona Fletcher-Smith, chief executive officer at L&Q, said: “A quarter of London’s new homes are built by housing associations, and we are responsible for maintaining and investing in over 700,000 homes across the country. However, our workforce is ageing, retiring, and not being replaced by newly trained staff. This growing challenge threatens the provision of genuinely affordable, warm and safe housing in the capital.”

The group called for closer co-operation between the housebuilding sector, further education and training providers and local, regional and national government. 

The social housing sector must work closely with education providers to reach young people and under-represented groups, the coalition said, as well as calling for barriers to apprenticeships and skills development, such as entry requirements, to be removed.

Long-term certainty for building plans and training programmes is also needed to solve the shortage.

Elly Hoult, chief operating officer and deputy chief executive at Peabody, said: “We recognise there is no ‘quick fix’ to this issue. It needs a long-term plan, with organisations across the sector working together to bring about significant change.”

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