Industry leaders voice concerns over 1.5 million homes target to MPs

The government’s ambition to build 1.5 million homes by the end of this Parliament faces significant challenges, MPs heard in an evidence session held by the Housing, Communities and Local Government Select Committee yesterday.

The cross-party group of MPs convened the one-off session in response to concerns raised in an ongoing inquiry into land value capture, where several witnesses highlighted industry capacity as a key issue in meeting the government’s housebuilding target.

Witnesses pointed to systemic issues in planning, workforce capacity and financial viability as major barriers to delivery. Rising construction costs, pressures on local authority planning departments and inefficiencies in training and recruitment were all identified as factors contributing to uncertainty about whether the target can be achieved within the current parliamentary term.

Among the industry leaders giving evidence were Tim Balcon, chief executive of the Construction Industry Training Board, RIBA president Muyiwa Oki and Federation of Master Builders chief Brian Berry.

Balcon warned that an additional 161,000 people would need to enter the construction workforce to meet housing targets.

“If we can create a more efficient and less wasteful training model then we can achieve the numbers that we’re talking about here,” he said, criticising the disconnect between training and employer needs. He argued that many young people enter construction courses without having actively chosen the field: “They ended up there because their options were limited.”

Balcon also pointed out that small and medium-sized enterprises (SMEs) find it costly and difficult to take on trainees. “Employers are largely wanting to recruit experienced people,” he said, highlighting the need for a training model that delivers job-ready workers rather than one requiring firms to “babysit” trainees for long periods.

Planning system inefficiencies were another major barrier discussed with Victoria Hills, chief executive of the Royal Town Planning Institute, saying local authorities have lost 25% of their planners over the last five years.

“When people talk about planning not working, we would argue that the system is not bad… but it’s hardly a surprise if certain things go a bit slower if a quarter of the people you used to speak to are no longer there.”

Berry pointed to the decline of SME housebuilders as another major issue, saying their share of housebuilding had fallen from 40% in the 1980s to just 10% today. He described this as “really unhealthy,” arguing that SME builders were better placed to deliver well-designed, community-focused housing.

“If we want to get communities on side, if we want to provide well-designed homes that meet the needs of local people, then we actually need to see more organic growth in every village, town and city across the country.”

He also blamed the planning system, saying it was the “number one problem for micro housebuilders”, with many struggling to navigate an underfunded and bureaucratic process.

Mark Reynolds, co-chair of the Construction Leadership Council, went further, arguing the government should be aiming for 4 million new homes over the next 10 years. He called for more support for Modern Methods of Construction (MMC) and challenged the view that skills shortages were the key problem.

“We don’t have a skills problem, we have an absorption problem – employers do not employ enough people,” he said, adding that investors need greater confidence in the sector.

RIBA president Muyiwa Oki urged the government to focus on densification of existing urban areas rather than sprawl. He pointed out that most English cities are nowhere near London’s density levels, highlighting the potential for more homes to be built within existing urban areas.

“We need to be making better places – the communities of the future,” he said, supporting a high-quality approach to housing delivery.

The hearing also explored financial pressures on developers. Anna Clarke, director of policy and public affairs at The Housing Forum, described the 1.5 million homes target as “a challenging and probably unlikely target to be met in those five years”.

She highlighted the sharp rise in construction costs alongside a flatlining housing market caused by high interest rates.

“The financial climate is incredibly tough at the moment and I would say that that’s probably the biggest barrier for our members.”

Dan Turnbull, senior director for markets at the Competition and Markets Authority, welcomed the 1.5 million homes commitment but pointed out that the UK had only achieved this scale of housebuilding in the past when local authorities were heavily involved.