On the east side of Newquay – on the rugged Cornish coast – is Nansledan, a quaint new town currently in the midst of development. It is the second of two “environmentally friendly” new towns championed by King Charles III, albeit while he was Duke of Cornwall. (The first was Poundbury in Dorset.)
Last week Nansledan played host to an unusual royal visit; the King was accompanied on a tour of the town by Prime Minister Keir Starmer and his deputy, the Housing Secretary Angela Rayner. For the monarch to be joined by a politician on a joint visit is exceptionally rare. In fact, the last time it happened was more than 25 years ago when John Prescott visited Poundbury in 1998.
This excursion was used by the government to announce further details of its ambitious mission to build 1.5 million new homes and, in doing so, create a generation of new towns. These policies are a cornerstone of the government’s plans to fix the housing crisis, a likely a vote-winner among younger Britons for whom ideals of home ownership remain a distant dream. According to the Ministry of Housing, Communities and Local Government (MHCLG), more than 100 sites across England have come forward to be considered as new town contenders and, predictably, a taskforce has been set up to make a selection; it is hoped that each new town will include at least 10,000 new developments.
The government clearly takes this mission seriously. And it should. Britain is in dire need of new housing. According to the latest UK Housing Review, government spending on housing is at its highest ever recorded, with £30.5bn spent in 2021-22 compared to £22.3bn in 1975-76 in real terms. The main reason for this is a lack of affordable housing; where in the 70s, 95 per cent of this money went on housebuilding, in the 2020s 88 per cent of the government’s housing spend went on housing benefit (essentially subsidising private landlords).
But more than one million homes in five years is a bold target. To hit it, 370,000 homes would need to be built each year. But in recent years this number has been around 220,000, as the previous Conservative government consistently failed to hit its target of 300,000 new homes per year.
Under Labour’s plans, the government is putting its weight behind planning reform. Rayner and MHCLG have already begun to make progress on this; mandatory housing targets for councils have been reinstated (they had previously been cancelled by former Tory housing minister, Michael Gove). And plans to broker agreements between planning departments and expert bodies, such as the Environment Agency or Natural England, have already been unveiled.
But while it is often held up as a pernicious barrier, the UK’s complex planning system is not solely responsible for its housing crisis. Growth – that fuzzy concept which has become a byword for Labour’s programme of government – is also partly to blame for Britain’s lack of housing. The majority of UK housing is built by a selection of large private housebuilders – such as Barratt Homes – over whom the government has little, if any, control. Developers are, of course, private businesses.
If inflation and interest rates are low, housebuilders are more likely to get building because they can be pretty certain someone will buy them upon completion. But if the opposite is true, housebuilding can tend to slow down. On Wednesday it was announced that UK inflation jumped to 3 per cent in January – above the Bank of England’s 2 per cent target – which suggests interest rates are unlikely to be cut by very much in the coming months.
Another major factor in this target’s success is workforce. Warnings from the construction industry about a lack of skilled workers available to deliver Labour’s housing vision have been apparent for some time now. According to the Home Builders Federation, for every 10,000 homes built (the proposed size of one of Labour’s new towns) the sector would need around 30,000 new recruits. Though skills shortages have been a growing issue in the UK for a while, the workforce gap has become increasingly stark since Brexit, because workers from the European Union – upon whom the British construction industry had become overly-dependent – could no longer access freedom of movement.
As with all the challenges facing this new Labour government, things are not quite as simple as a one-line target or mission. Building 1.5 million new homes by 2029 is going to be far more complex than simply cutting the planning “red tape”.
This piece first appeared in the Morning Call newsletter; receive it every morning by subscribing on Substack here
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