Housebuilders demand clarity on labour shortages and supply chain imbalance in Budget

17 October 2024

Ahead of the new government’s first Autumn Budget, Kelly Boorman, national head of construction at leading audit, tax and consulting firm RSM UK looks at: 

  • Industry’s reaction to government’s mandatory housing targets
  • The impact of unlocking disused brownfield sites to develop new homes 
  • Tax reliefs needed to boost housebuilding
  • Challenges deterring government from reaching its 1.5m target in the next five years

Kelly Boorman comments: “There has been a clear focus from the new government to tackle the UK housing shortage and provide clarity around new infrastructure projects, creating better connectivity between cities and improve healthcare and educational facilities. Although the 1.5m housing target is driving industry optimism, there remains uncertainty around whether this target is achievable over the next five years. With the National Planning Policy Framework under consultation, and a promise to remove the red tape for planning, industry is questioning how local authorities will cope with increased housing volumes. Housebuilders are gearing up for a ramp up in 2025, but clarity is needed to prevent hesitation and stockpiling of units. 

“However, with government promising a 'brownfield site first' approach and to release lower quality grey belt land for development, land banks remain a focus for developers. This week government announced £68m in funding for local councils to develop disused brownfield sites, which could create an opportunity for further land remediation relief claims. We therefore might see further restrictions of Agricultural Relief in the Budget which could see farmers looking to dispose of land suitable for development, increasing land banks and supporting housing targets. In addition, changes to land remediation relief could encourage the development of brown and grey field sites.”  

She added: “Following Keir Starmer’s pledge to get rid of anti-growth legislation at the International Investment Summit, government must accelerate the removal of complex processes and inconsistent regulation many constructions businesses face. Mobilisation of contracts needs to improve, often contracts are procured and delayed for many months, even years, based on fixed costs at the time of procurement resulting in eroded margins before the contract even starts. This has resulted in many legacy contracts pre-Covid seeing eyewatering losses and some businesses falling out of the supply chain. This is particularly true for many large infrastructure projects, held back by fixed contract pricing and planning constraints. 

“There is a strong message from government that there is a need to increase tax revenues, but there appears to be little tax incentives for the construction industry to aid them to 'Build Back Better' and to support the growth targets set for the industry. Removing planning red tape and simplifying regulation will help the industry move at a quicker pace but funding, labour shortages and instability in the supply chain remain a significant challenge.”

Kelly  Boorman
Partner, Head of Construction
Kelly  Boorman
Partner, Head of Construction