Director of External Affairs, Emma Ramell recaps on the Chancellor's Spring Statement and what it really means for the home building industry.
In the lead-up to this year鈥檚 Spring Statement, a flurry of significant and welcome home building announcements emerged, including commitments to train 60,000 new construction workers, an additional 拢2 billion for the Affordable Homes Programme, and the postponement of the introduction of Building Safety Levy to 2026 鈥� all within the three days preceding the Chancellor鈥檚 speech.
This naturally raised the question of what, if anything, Rachel Reeves would say about home building when she finally took to the dispatch box on 26 March.
As it turned out, she had plenty to say 鈥� home building took centre stage at a fiscal event in a way not seen since the announcement of the first Help to Buy scheme in 2013.
Unlike in 2013, this year鈥檚 focus on housing was less about what the Government could do to boost delivery, economic growth, and homeownership, and more about celebrating what it claims to have already achieved.
Addressing the House of Commons, the Chancellor stated:
鈥淭he OBR has concluded that our reforms will lead to house building reaching a forty-year high of 305,000 a year by the end of the forecast period. And changes to the National Planning Policy Framework alone will help build over 1.3 million homes in the UK over the next five years, bringing us within touching distance of delivering our manifesto promise to build 1.5 million homes in England within this Parliament.鈥�
All very positive, you might think.
But as is often the case, a closer look reveals the picture isn鈥檛 quite as rosy, or the outcome anywhere near as certain, as Reeves would have us believe.
Numbers are not always what they seem
A key point overlooked in much of the coverage of the Spring Statement is that the OBR has forecast a significant shortfall against the Government鈥檚 1.5 million homes target.
Specifically, the Government鈥檚 target applies to England within the current Parliament, which will conclude by July 2029 at the latest.
Over the OBR鈥檚 forecast period (2024/25 to 2028/29), the UK-wide net housing supply is projected to reach just under 1.2 million.
Assuming around 125,000 net additions come from other UK nations, this suggests between 1 million and 1.1 million net additions in England - well below the Government鈥檚 target and only marginally higher than the previous Parliament鈥檚 achievements.
Moreover, these forecasts rely on the OBR鈥檚 expectation of a 27% year-on-year increase in housing starts for 2025/26 鈥� an assumption that appears more optimistic than realistic based on the numerous ongoing challenges that home builders are facing.
The socio-economic benefits of home building
On a more positive note, the economic benefits of home building were brought firmly into the public spotlight. During her speech, the Chancellor not only highlighted future housing delivery but also underscored its anticipated impact on economic growth.
Speaking about the expected impacts of the NPPF reforms, Reeves stated, 鈥淭hat is the biggest positive growth impact that the OBR has ever reflected in their forecast for a policy with no fiscal cost.鈥�
Of course, as previously mentioned, whether housing delivery will reach the levels needed to drive such growth remains highly debatable.
However, raising public awareness of the industry鈥檚 contributions beyond bricks and mortar is crucial to building greater support for residential development.
This has long been a priority for the 午夜剧场.
You may recall that last year, in collaboration with Lichfields and United Trust Bank, we published updated figures on the socio-economic contribution of new homes.
The findings revealed that the industry generates over 拢50 billion in economic activity each year and supports around 800,000 jobs.
Risks and opportunities
By closely tying home building to its core objective of driving economic growth, the Government has laid the groundwork for ongoing collaboration with the industry.
Much of the Government鈥檚 economic agenda, including the headroom available for tax cuts and investment, depends on the success of the planning reforms and a well-functioning new homes market.
Meanwhile, the Chancellor鈥檚 tacit admission that the government is not quite on track to meet the ambitious housing supply targets set by this administration begs questions about the potential increase in supply that might come from supporting first-time buyers, fixing the Section 106 market issues or reducing the regulatory burden.
However, significant risks lie ahead for both the Government and developers.
For the Government, the greatest risk is failing to meet its housing target.
For the industry, it鈥檚 the likelihood that responsibility for any shortfall will be placed squarely on its shoulders.
This risk has only intensified following the Spring Statement, where the Government framed substantial increases in housing as a certainty, using the OBR 鈥� an independent body 鈥� to bolster its claims.
For 午夜剧场 and its members, this creates a challenging balance to strike.
We must support the Government鈥檚 positive steps to boost house building 鈥� such as planning reform 鈥� while holding them accountable for areas they have yet to address, including demand-side measures.
If one thing is certain, it鈥檚 that uncertainty remains. But at the very least, we have a Government that acknowledges the vital role of home building 鈥�