Is 1.5 million an achievable 5-year target?
The government has promised to build 1.5 million new homes in five years by various means, including fixing the planning system and new towns. The topic was covered in depth by the BMBI experts at the latest annual BMBI Round Table Debate. This is what they said:
Tim Wood – Editor, BMN: Is the building of 1.5 million homes in 5 years a feasible target?
Andy Simpson – Packed Products Director, Heidelberg Materials: According to ONS statistics, the last time we built anywhere near 300,000 houses per annum was in 1977/ 78, and the last time we built over 200,000 was in 2007/08, so I’d like to see the government’s strategy for achieving this.
We know we need new houses but there are a lot of constraints – supply chain being the biggest one. The last time we had a significant rise in volumes was just after COVID and within weeks the supply chain had crumbled. In the cement sector, the UK only holds about a week’s supply of bulk cement and mortar and runs pretty much at capacity most of the time. If we’re going to invest in new kit to increase those supplies, we’re not going to do that on a false promise.
The government has said, ‘Get ready, it’s coming, gear up’ but housebuilders build to demand, not to promises, and they are going to want to see how these promises are going to unfold.
Tim Wood: So, the short answer is no?!
Andy Simpson: The sector needs stimulus, but it has to be sustainable. We can’t cope as an industry with peaks and troughs. A lot of people have geared down, so putting production back in place is not a quick fix or easy to do.
Ian Doherty – Chief Executive, Owlett-Jaton: The whole supply chain will take time to ramp up, and it will only do that based on investment decisions where people have confidence it’s sustained demand and they’re going to get a return on investment.
Going back to when we last built 300,000 houses, my understanding is a big chunk of that was for social housing. It’s in the government’s hands to do something about the rules and regulations about how councils build social housing.
The rest of housebuilding is driven by private industry, so the economy needs to be in a place where developers feel confident to build a house because they know they’re going to sell it. They’re not building it for altruistic reasons!
300,000 a year by the end of the parliament is a reasonable target but 1.5 million? Not a chance in my view.
Andrew Brewin – Finance Director, Keystone Lintels: It’s great there’s ambition but the reality is there are so many constraints to overcome. We’re in a depressed market, and labour is an issue on the manufacturing side as well as the construction side. How do we manage that?
Affordability is also key. The 2% and 3% interest rates that were the norm are coming to an end. We’ve got to get affordability back such as offering a fixed interest rate, as America has, over a 20 to 30-year period so people have certainty.
John Newcombe – Chief Executive, BMF: I think the 1.5 million target is possible. Speak to most major housebuilders and they will tell you the 200,000 is achievable. And then you need 100,000 social houses.
I was at the Labour Party Conference recently and every conversation I had, whether it was with the Construction Minister or the Housing Minister, they’re obsessed with these targets. And the questions are more about, ‘How do you, as an industry, help us to achieve those targets?’. It’d be easy to be cynical about them but maybe we should be looking at how we help the government achieve the targets that they’ve set out in their manifesto.
Dan Cheung – Lead Channel Marketing Manager, Wienerberger: From a major manufacturing perspective, the targets can be hit but it’s about managing levels of demand. If one minute we’re saying, ‘Build’, and the next minute, we’re saying, ‘Oh, hold on, we can’t build,’ it creates a very uncertain situation where it’s difficult to invest. You’ll be constantly scrabbling to find the right skills, and that’s not just the skilled craftspeople that handle our products, but the engineers to operate factories efficiently and planners to make sure projects go ahead in a timely manner.
For me, skills is one of those areas where we’re starting to have really positive conversations. The BMF are really pushing that area with their Materially Different campaign.
Matt Williams – Managing Director, Polypipe Building Products: To ensure a steady supply of skilled workers, government-funded training programs, apprenticeships, and partnerships with industry bodies are essential. Additionally, supporting small and medium-sized builders through providing access to affordable finance, simplifying tendering processes, and offering mentorship programs is vital.
As a manufacturer deeply involved in the construction supply chain, I think the government must prioritise streamlining planning processes, particularly for large-scale developments. Investing in infrastructure, including expanding road networks and improving public transport is also crucial.
Ian Doherty: As John mentioned, 50% of MPs have never had a position in Government or run something big, so part of our role is to lay out the realities of what they’re asking and some of the problems about investment, and then that feeds into fiscal policy. For example, what are the capital allowances? How do you encourage businesses to invest?
I agree that infrastructure is a key consideration, as the ability to build houses is limited by the sewerage system. There isn’t capacity and we have a water system which is falling apart. Where are all the investments in infrastructure, which is privatised, to support additional housing?
Mike Rigby – CEO, MRA Research: That’s a really big point. It’s great that housing is a number one priority, but the government doesn’t really understand the wider implications.
I read recently that Tata Steel have delayed their new electric arc furnace for two years because there’s not enough capacity to plug it into the Grid. There’ve also been housing projects which couldn’t go ahead because they couldn’t connect into the Grid or there wasn’t enough water or sewerage capacity.
The conversations industry has with government need to spell it out because they’re not counting in all those other things. They’re just thinking, ‘Housing. Okay, bricks, cement, build and planning.’
Charles Burns – Divisional Director, Brett Martin: Manufacturers require consistency of approach and currently we have a very inconsistent market. When you have that, either the government steps in from a fiscal position and acts as a pressure release, or you do what US, Norway and Ireland have done with a bipartisan, cross-party agreement in terms of long-term planning.
John Newcomb: I think that is Labour’s desire with their industrial strategy because it’s a 10-year strategy. But with the politics of this country, cross-party politics doesn’t work.
Charles Burns: In the USA, which is the ultimate splitting of politics, they agreed on the IRA – the Inflation Reduction Act. They did an Infrastructure Bill bipartisan, that lays out a 15-year investment plan by the US government. CRH are now heavily investing in the US and chip manufacturers are building plants there. If we had something akin to that, you would find capacity as you’ll attract big players looking for long-term investment plans.
Andrew Brewin: When the Conservatives were in government, they had a plan for a similar level of housebuilding which wasn’t achieved. There are probably lessons to be learnt from gap analysis about why they failed, which will help us get closer to achieving the 1.5 million.
Andy Simpson: While we should take the positives from the government saying they want to build 1.5 million homes, we need to make sure it’s sustainable construction, not just building.
This write-up was first published in the Builders Merchants News.
