In her inaugural speech as Chancellor, Rachel Reeves underscored Labour's commitment to maintaining strict fiscal rules and refraining from increasing National Insurance, basic, higher, or additional rates of Income Tax, or VAT. She also announced the creation of a new National Wealth Fund aimed at stimulating private sector investment in emerging industries.
Reeves emphasized the necessity of planning reforms, stating, “Planning reform has become a byword for political timidity in the face of vested interests and a graveyard of economic ambition. Our antiquated planning system leaves too many important projects getting tied up in years and years of red tape before shovels ever get into the ground.” The Chancellor pledged to reform the National Planning Policy Framework and introduce a growth-focused approach to planning by the end of July, including restoring mandatory housing targets.
The Labour manifesto promises to build 300,000 new homes annually, totaling 1.5 million over five years. This ambitious target is set against a backdrop where only 231,100 homes were built in 2023 and an estimated 176,460 were started. Historically, such high levels of construction have only been achieved between the 1950s and mid-1970s when local authorities led housebuilding efforts.
To address these challenges, Reeves stated that the Deputy Prime Minister would scrutinize applications with significant regional and national economic potential and review green belt boundaries while prioritizing brownfield and grey belt land development. Additionally, she reaffirmed Labour's commitment to building more social and affordable housing under guidelines that mandate 30% affordability in new constructions.
The Chancellor also promised to add 300 planning officers nationwide to facilitate these processes. Andrew Charnley from Assetz Capital highlighted the importance of not only new builds but also conversion opportunities from empty commercial properties. "It is estimated that there are 165,000 privately-owned commercial premises currently empty across the UK," he said.
Charnley noted that Assetz Capital is well-positioned to support both conversion projects and brownfield developments due to their appeal to smaller developers. With an approaching lending milestone of £2 billion, Assetz Capital remains committed to supporting this sector across the UK.
A critical issue identified by recent research is workforce shortages. To meet the target of building 300,000 homes per year by 2030, an additional 137,000 workers are needed—17,000 annually—nearly three times the current rate. In 2022 alone, only 11,000 construction apprenticeships were completed.
As her speech concluded on an optimistic note with “Be in no doubt – we are going to get Britain building again,” it remains to be seen how these plans will materialize under Labour’s administration. The UK SME housebuilding sector stands ready with support from various professionals eager to contribute towards achieving these goals.
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