The Labour Government faces a range of problems in its housing policy. Some stem from long-standing structural weaknesses in a market-based housing sector, while others may reflect wider economic pressures related to Brexit and other external factors.
However, the central question is whether the Government’s current approach can achieve its housing goals or meet actual housing demand, particularly among lower-income groups. This article examines some of the issues involved.
Are there enough construction workers?
Can meaningful housing targets be set without ensuring there are enough construction workers? The Government apparently believes so. The construction industry appears to recognise the problem of shortages, particularly of experienced rather than entry-level workers. The industry was projected to require about 266,000 additional workers by 2026, the numbers having already shrunk by 10.8% since the Covid pandemic. Barriers to inward migration, tightened by Labour – for example by increasing income requirements for UK entry – will not help with some categories of workers. The Government operates a skilled worker visa scheme intended to bring in construction workers and others to address skills shortages. Yet shortages persist. Declining migrant worker entry to the UK was evident before the recent 2025 drop in net migration to the UK.
Therefore, we must ask why people don’t want to come to the UK to work. If construction workers and others can move freely across national borders within the EU, why would they choose to endure jumping through hoops to come to the UK? The Chancellor has said £39bn will be allocated to social and affordable housing over a decade, in a Spending Review. However, extra funding does not guarantee a net increase in construction workers.
Are Labour’s housing targets realistic?
The Government’s target of 1.5 million new homes in England by August 2029 was seen by some as unachievable not long after its election in 2024. It has been noted that government housing targets apply only to England, and the pace of construction has slowed. One report notes local government lacks the capacity, infrastructure, or means to deliver the homes the Government is demanding. Councils do not have the financial resources to build enough new homes themselves and are struggling to repair their existing stock. In London, the Government expected a further 88,000 homes from October 2025 to January 2026. However, by October 2025, only 3,248 units had been started.
Housebuilding slowdown deepens
By January 2026, housebuilding had entered its worst slump since 2020, with 12 months of continuous contraction. By April, the largest UK housebuilder was cutting back on land purchases. To underscore the Government’s entrenched faith in failing market housing policies, the Yorkshire Building Society revealed in a report that 1.4 million planning permissions for homes had been granted but not built. In addition, they calculated that 2.5 million homes could be obtained from existing brownfield land and sites. In short, well over 3 million homes could be created with no additional green space allocations.
The long shadow of Right to Buy
Both Scotland and Wales abolished Right to Buy in their social housing sectors, in 2016 and 2019, respectively. In England, a net loss of 12,000 units of social housing occurred in 2025 alone; in 2023, 22,023 social homes were either sold or demolished. Labour has no plans to abolish Right to Buy despite the need for more very low-cost homes. It is not considering the evidence.
Right to Buy in England created a housing crisis and generated a cost to taxpayers of about £200bn. The loss of council homes was not offset by adequate new build, by buying homes from existing stock, or by using empty homes. A detailed investigation has shown that empty homes are increasing. During 2025, Right to Buy sales appeared to be heading for eight times as many as new council homes built in the previous year.
This can be traced to Government policy under Thatcher, which restricted local authority capital spending. It can be argued that this form of austerity has not been lifted by successive governments, undermining council and keyworker housing additions to stock. Buy-to-let mortgages mean high rents for tenants, potentially undermining their ability to save for a mortgage deposit.
Who benefits from ‘Help to Buy’?
A recent study suggests those most likely to benefit from Help to Buy initiatives were high-income individuals and, similarly, that the mortgage guarantee scheme had little effect upon affordability for nearly all those not already owning homes. Additional contributing factors include building safety improvements implemented post-Grenfell, which are alleged to be delaying housing completions, as well as inflation, raising the cost of building materials, plus high home prices and mortgage interest rates.
Questions over the Land Use Framework
The Land Use Framework for England is primarily concerned with land use outside settlements. It does not address the long-neglected issue of how sustainable urban regeneration might occur. It does not appear to offer hope that pressure and policies will reduce pastureland, and the animals on it, to allow for crop planting to feed people in the long-term and reduce food imports. It asserts that new towns are needed but provides no evidence for this claim. It is alarming that homes vulnerable to flooding are predicted to increase in number, and the UK remains a nature-depleted country with an amended planning system apparently designed to make this worse.
Will new towns help?
In principle, new towns will use land that could serve many other purposes and will create costs for new infrastructure. By contrast, sustainable urban regeneration means improving conditions in existing settlements, including access to very low-cost housing where other facilities already exist. Where the construction workforce will come from – currently a major constraint on the whole new towns strategy – remains to be seen. A substantial critique of the Government’s New Town approach has already been made.
Coastal protection
Clarity about the future of coastal communities and climate change adaptation is needed to determine where practical protection from sea level rise and more powerful storm surges is possible. The insurance industry is already warning that three million homes could become worthless.
What else could be done?
- Increase payments to apprentices in construction skills to encourage both more apprentices and better retention.
- Allow freedom of movement with minimal constraints for migrants coming to the UK with construction-relevant skills.
- Restore the 1980s Community Programme with incorporated construction training in each local council area, with a strong emphasis on bringing empty homes and unused buildings into use for housing.
- Expand the range of keyworker categories after consultation to address general skill shortages, with a new national scheme delivered by local councils to reduce monthly payments for those wanting to enter part-rent/part-buy schemes to access homes. Homes could be new builds or obtained from empty homes or buildings. Targeted local spending by councils should be supported by national government to meet actual housing demand for council and keyworker homes.
- Pass legislation to zone all car parks with more than 10 spaces as potential locations for generously sized apartments, retaining car parking at ground level if desired. Such homes should be either council or keyworker part-rent/part-buy. This would help to avoid the pressure on State funds to build extensive new infrastructure in new towns or urban extensions, as communities would already have some of the infrastructure needed to support additional residents.
- Re-examine measures to encourage people to move to, or remain in, areas with very low birth rates or declining populations, including housing and infrastructure improvements as part of urban regeneration.
- Gradually increase the economic functions of local government, particularly to support the formation of new cooperative enterprises.
- Replace targets for new market housing with local targets to increase council and keyworker housing according to demand.
- Add new market housing by allocating parts of existing car parks for self-build homes and by completing payment periods for keyworker homes so that they become part of the stock of owner-occupied properties.
Conclusions
The Labour Government, like its Conservative predecessors, has apparently been naïve about the utility of market-based housing to meet the needs of the lowest household income groups. Private rentals, the subject of a future article, have simply provided another form of overpriced housing and undermined the public’s capacity to save for any purpose by increasing the proportion of household income spent on housing costs.
Markets exist to provide profits, not to meet the needs of those most in need of homes. This is an ideological problem, likely to persist unless people elect parties with entirely different ideas about the purpose of housing, and whose needs it should prioritise.
Author’s note: Thanks to Hazel Dawe for helpful comments.
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