Introduction

  1. Many planning commentators draw attention to the need to build 300,000 new homes a year.
  2. As regards political statements, in 2019 the Conservative Party manifesto commitment was to “continue our progress towards our target of 300,000 homes a year by the mid-2020s”. More recently in September 2023 the Liberal Democrats Party proposed a building target of 380,000 new homes per annum; in October 2023 former Prime Minister Liz Truss proposed 500,000 new homes per annum, and in April 2024, Sir Keir Starmer committed to building 1.5 million homes (i.e. an average of 300,000 per annum) over the course of the next Parliament.
  3. Whatever the current level of need is, few could sensibly question the desirability in principle of meeting that need: the much-needed delivery of both market and affordable housing, reflecting the findings of the relevant housing market assessment for a given area regarding tenure, household size and affordability requirements; homes (and their surroundings) which are well-designed as well as climate-change and biodiversity sensitive.
  4. There is understandable criticism of the delays by some local authorities in bringing forward local plans and in determining planning applications, whether that delay results from frequent changes in government policy and guidance, local political manoeuvring and/or the significant underfunding hitherto of local planning departments.

Does the housebuilding industry have sufficient workforce capacity to deliver 300,000 homes per annum?

  1. An important elephant in the room – which is rarely, if ever, acknowledged let alone addressed – is whether the housebuilding industry in fact has sufficient workforce capacity to deliver 300,000 homes per annum (and every annum)?
  2. Over the last 8 years, the official, published figures show1 that an average of 301,000 homes per annum2 were granted planning permission in England (a total therefore of over 2.4m homes). Over a similar period33, however, depending on the dataset, either: an average of only 130,911 new build homes per annum were completed by the private sector (plus an average of 28,682 completions per annum by housing associations and an average of 1,881 completions by local authorities – an average total therefore of 161,474 completions per annum); or 4: an average of 199,245 new build dwellings were completed (by all sectors) out of an average of 224,751 “net additional dwellings” achieved per annum5
  3. While it can of course take a number of years to build out a development, it is legitimate to question why permissions for an average of 301,000 homes per annum over 8 years have only translated, even by the end of year 86, into 212,570 new build completions? It is also legitimate to wonder whether the various political commitments to housebuilding targets hitherto resemble flying pigs.
  4. Does the relatively low number of completions reflect, whether in whole or in part, a lack of workforce capacity to build 300,000 homes per annum?
  5. Independent consultants, Cebr (Centre for Economics and Business Research Ltd), in a report produced for Arcadis Consulting in 2017, pointed out7 that, even before Brexit:

“When it comes to construction, the housing industry bemoans planning restrictions; the infrastructure sector cites indecision as stalling progress; and Brexit triggered a deluge of talk about material costs and currency effects. These factors are hugely significant but without the right people to do the
work none of them matter one bit.”

  1. The report, having considered the different employment roles in the housebuilding industry8 in each region of the UK, estimated that to eliminate the then housing gap by 2026 (then requiring an additional 110,000 homes per annum to achieve 270,000 homes per annum within the following 5 year period) would require some 370,000 additional people. This has not occurred.
  2. As another example, in 2018 the government-commissioned report “Independent Review of Build Out”9, prepared by a team led by Sir Oliver Letwin, drew particular attention to the insufficiency in the number of bricklayers:

“On the availability of skilled labour, my conclusion was that an insufficient supply of bricklayers would be a binding constraint in the immediate future if there was not either a substantial move away from brick-built homes, or a significant import of more skilled bricklayers from abroad, or an implausibly rapid move to modular construction techniques.

I concluded that the only realistic method of filling the gap in the number of bricklayers required to raise annual production of new homes from about 220,000 to about 300,000 in the near-term, was for the Government and major house builders to work together on a five year “flash” programme of
on-the-job training.

During the course of preparing this Final Report I have had the opportunity to discuss this further with various stakeholders, including the TUC, and have come to the conclusion that there is an opportunity here to convene tripartite discussions between (a) the relevant government departments (i.e.the Ministry of Housing, Communities and Local Government (MHCLG), the Department for Business, Energy and Industrial Strategy, the Department for Education and HM Treasury), (b) the major house builders as well as the Construction Industry Training Board, and (c) the trade unions, in order to construct both new models of employment and a new training programme for bricklayers. I recommend that the Secretary of State for Housing, Communities and Local Government should convene such tripartitediscussions.”

  1. Is there any evidence that there has, since Letwin, been a substantial move away from brick built homes, or a significant importation of more skilled bricklayers from abroad, or a rapid move to modular construction; or of a successful five year flash programme? No.
  2. According to the website for the House of Lords’ Built Environment Select Committee, following a recent review (January 2024): “The Government’s approach to MMC10 is in disarray”.
  3. Letwin also suggested that build out rates (and thus the number of completions)
    might be adversely affected by the difficulty of ‘market absorption’ – i.e.

“the rate at which newly constructed homes can be sold into (or are believed by the house builder to be able to be sold successfully into) the local market without materially disturbing the market price”

-resulting from a lack of diversity of housing product

  1. Is there any evidence that there has been a significant change in diversity of housing
    product since 2018?
  2. For completeness, Letwin found, as regards the issue of ‘landbanking’, that he was
    “inclined to believe that this is a serious issue for the planning system. But it is not
    one that is consistent with the business model of the major house builders.”
  3. Market absorption (above) is of course a separate issue from landbanking but may
    have similar effects.
  4. Arcadis and Letwin are not lone voices. More recent examples include:
    1. https://www.tradelinerecruitment.co.uk/blog/more-construction-workersneeded-for-housebuilding-targets (2023)

“The government will not meet its housebuilding targets of 300,000 new homes
per year by 2025, as the construction workforce is too small. … According to data
from the Office for National Statistics, the sector is continuing to lose workers.
There are currently 80,000 fewer labourers than in 2016, and numbers have not
been lower than 2013.”

ii. Construction Industry Training Board’s Construction Skills Network 2024-2028 (May 2024)

“251,500 Extra workers will be required to meet UK construction11 output by 2028 (50,300 per year, an increase on the 44,890 in the 2023-27 Outlook).”

Implications for planning policy?

  1. Before, therefore, any government or political party commits to achieving a particular housebuilding target, it would seem sensible for it to be demonstrated first that the target can be achieved by the housebuilding industry. At present, the figures set out above suggest that it seems most unlikely that any of the present commitments or proposals could be met.
  2. If that is correct, logically this may have a profound bearing on existing and future national planning policy, not only in terms of setting targets and/or imposing requirements for completions but also in terms of, for example:
    • the appropriateness of continuing to require each local planning authority to demonstrate that a 5 year housing supply exists, even if (now) only for the first 5 years of a local plan (following adoption)12;
    • the appropriateness of continuing to require a “tilted balance” to be applied where a 5 year housing supply cannot be demonstrated: planning permissions are often granted on the assumption and basis that the proposed development will urgently address a current shortfall in completions so that this tips the balance in favour of a grant of planning permission, notwithstanding any environmental or other harms caused.1313
  3. Before either the 5 year requirement or the tilted balance could continue sensibly to be part of policy, at any rate in their present form, there would appear to be a need for a very significant increase in the workforce. This would be likely to require many more apprenticeships to be created and/or immigration worker visas to be issued; and/or a very significant and immediate investment in MMC; or, more radically, the provision in the short term of a considerable number of pre-fabricated temporary homes?
  4. A different approach may instead be to modify planning policy: instead of simply applying a tilted balance where, factually, a 5 year supply cannot be demonstrated, a decision maker could be required first to explore the reasons for that state of affairs: have economic reasons (e.g. a cost of living crisis) undermined market confidence, resulting in delays in sites being brought forward and/or slow build-out rates?; are there local labour supply issues?; is there a dearth of viable small and medium-sized housebuilders locally to deliver smaller sites?; are there local market absorption issues?; has an insufficient number of planning permissions been granted?; are there unreasonable delays in achieving the approval of reserved matters or the discharge of planning conditions?; what capacity does the particular applicant have to bring forward the particular proposed development?; and what are the prospects of any or all of the above being addressed and by when? It may be concluded, on occasion, that the grant of a further planning permission would not in fact lead to more completions being achieved in the given time period and that the harms would outweigh the thus more limited benefits of the proposed development.
  5. Moreover, the bringing forward of sites and the timing of completions are, to a large extent, controlled by developers; yet the ability of a local planning authority to demonstrate a 5 year supply is heavily dependent on the actions of developers. An Inspector observed in one oft-cited decision letter14 that: “Developers are financially incentivised to reduce competition (supply) and this can be achieved by optimistically forecasting delivery of housing from their own site and consequentially
    remove the need for other sites to come forward.” Expressly giving the decisionmaker more flexibility to analyse the causes of the shortfall may therefore be an appropriate policy option and could be relatively uncontroversial.

Is it wise to rely so heavily on the private sector?

  1. Quite apart from the need to increase the size of the workforce, it appears important also to ask whether it is wise to rely so heavily on the private sector to deliver homes should local authorities be encouraged to build far more housing (for both rent andsale)? The last time that 300,000 dwellings were completed was in 1969/70 when 135,700 of the 306,860 homes completed that year were built by local authorities.
  2. It is notable that, even in that year, only 164,070 completions were achieved by the private sector; moreover that the highest number of completions achieved by the private sector in any year since 1946 was 200,670 in 1968/69; and since 1968/69 the highest number achieved by the private sector has only been 176,020 in 1988/89).
  3. Local authorities would be far less constrained by market pressures, as well as, for example, by the need to achieve a 15-20% developer’s profit (to reflect risk). Local authorities also now have the power compulsorily to acquire land at existing use15 (as opposed to hope) values. This, in turn, could help to deliver more infrastructure, as well as housing which is genuinely affordable for those who need it.

Conclusion

  1. To return to the beginning: there is undoubtedly a housing crisis – a shortfall in the number of homes built and especially the number of affordable homes built. Customary reactions are to assert that there is something wrong with the planning system; that it is the fault of NIMBYs and/or the dragging of feet by local planning authorities; that it is because Green Belt land has not been released. The political response is often to state that planning policy should be relaxed in favour of “builders not the blockers”, that decisions should be strongly tilted in favour of a grant of permission, etc; but the position seems far more complex. Added to which the UK is said to be one of the 10% least biodiverse countries in the world; and has an outdated sewerage system.
  2. Stark facts are that 300,000 homes have not been built by the private sector in any year since the Second World War, indeed the most was 200,670 in 1968/69.
  3. There are elephants in the room, along with flying pigs and perhaps politically
    inconvenient truths.
  1. DLUHC 15th March 2024 Planning applications in England Oct – Dec 2023 Statistical Release, Table 3 (England, up to the year ending December 2023) (“Source: Glenigan planning permission data:
    snapshot as at 19 February 2024.The figures are rounded to the nearest thousand.”) ↩︎
  2. In 5 of the 8 years permissions for more than 300,000 homes were permitted each year ↩︎
  3. Beginning 2015/16. ↩︎
  4. DLUHC Housing supply: net additional dwellings, England, Housing Statistical Release published in
    November each year. ↩︎
  5. New builds plus changes of use (including pursuant to permitted development rights), conversions,
    other gains (caravans, houseboats etc) minus demolitions. (Homes resulting from changes of use or
    conversions may be neither well-designed, nor cost of energy and climate-change sensitive.) ↩︎
  6. The preceding 7 years resulted in, respectively, 163,940, 183,570, 195,290, 213,860, 220,600,
    194,060, 210,070 completions. ↩︎
  7. “Talent Scale – The real extent of Britain’s construction labour crisis”. ↩︎
  8. And the construction industry as a whole ↩︎
  9. CM 9720 ↩︎
  10. Modern Methods of Construction. ↩︎
  11. Construction here appears to be referable to the construction industry as a whole. ↩︎
  12. See paragraph 76 of the Revised NPPF December 2023. ↩︎
  13. The tilted balance requires planning permission to be granted even though the harms would
    outweigh the benefits of the proposed development (unless the harms “significantly and
    demonstrably” outweigh the benefits): see NPPF paragraph 11. ↩︎
  14. Little Sparrows, Sonning Common (South Oxfordshire), PINS Reference: 3265861, paragraph 21. ↩︎
  15. For example the existing use value of agricultural land may be £10,000 per acre (depending on
    whether it is arable or pasture land); but hope value may significantly exceed the existing use value. Existing use value was originally provided for by s.51(2) of the Town and Country Planning Act 1947;
    and has now, to some extent, been reintroduced by amendments made by s.190 of the Levelling-up
    and Regeneration Act 2023. ↩︎