Labour constraints and planning cast doubt on housing targets despite £39bn investment

In today’s government spending review the Chancellor outlined plans to invest £39bn in affordable and social housing over the next 10 years, to help achieve the target of 1.5m new homes by 2030. 

Further commitments included £10bn for financial investments, to be delivered through Homes England, to help unlock hundreds of thousands more homes. In addition, the government has allocated £1.2bn a year by 2029 to support more than one million young people in training and apprenticeships.

Kelly Boorman, Partner and Head of Construction at RSM UK, comments: “Today’s announcement demonstrates the government’s ongoing commitment to housebuilding as a driver of economic growth, with £39bn outlined in affordable and social housing over the next 10 years. While this investment is intended to support government’s target of 1.5m homes by 2030, we know less than a third of real estate businesses feel this target is achievable, with workforce shortages cited as a key barrier.

“Although Skills England and the Plan for Change will go some way to address these labour gaps, bolstered by further investment of £1.2bn per year in training and apprenticeships by 2029, the industry still has concerns about delivery with an ageing workforce and no funding available to enhance technology and attract the next generation of workers. There’s no clear direction on investment in technology to improve efficiencies and accelerate housebuilding, or incentives for housebuilders to build. Housebuilders are grappling with rising labour costs, continued planning delays and an inability to forecast demand in the short to mid-term.

“The added risk of building more homes without the ability to forecast demand or incentives means that many housebuilders must decide whether to lock up cash, stockpiling units in anticipation of buyers increasing housing demand or to lose market if they are not ready for the upturn in volumes. While the additional funding for Homes England will be another welcome boost to social housing, there remains no steer on the direction of private residential housing, including support for first-time buyers and there is a pressure on housebuilders to take responsibility for delivering unattainable targets. Given that the share of high loan-to-value mortgages rose to the highest level since 2008 in Q1 2025, it’s integral the government introduces a scheme to replace Help to Buy.”

She added: “The £15bn in funding to connect towns and cities is a positive step, but six in ten local authorities aren’t confident in setting a balanced budget next year, which questions the viability of local infrastructure projects. If the government is serious about ramping up infrastructure and housing projects, the Infrastructure Strategy needs to outline which projects are a priority, delivering its planning reform promises, and ensure construction still has access to overseas talent to deliver housing targets.”