The Labour government is on a mission to ‘kickstart economic growth’ and it put housing at the centre of its strategy soon after the general election.
Now it’s hung its hat on getting within ‘touching distance’ of the ambitious target to build 1.5m new homes by the end of this parliament.
In fact, with economic growth now expected to hit just 1% this year, the anticipated construction boom is necessary to get the country back on track from 2026 onwards.
What did the Chancellor say?
Planning reform and investment in homebuilding will help the UK economy grow from 2026 onwards, according to The Office for Budget Responsibility (OBR).
In her Spring Statement, Chancellor Rachel Reeves outlined the latest growth estimates for the UK economy.
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While overall growth is expected to fall this year from an expected 2% to 1%, it will rise by 1.9% in 2026 and reach cumulative growth 9.4% by 2030, higher than previous predictions.
Digging deeper into the OBR figures, it’s clear that much of the ‘extra’ growth comes from construction, as a result of loosening planning rules. Reforms to the government’s National Planning and Policy Framework will increase the level of real GDP by 0.2% by 2029-30, adding £6.8 billion to the economy.
The OBR considers it ‘plausible’ that the government will build 1.3 million new homes by the end of this parliament, which would be a 40-year high. This may be short of its 1.5 million target but within ‘touching distance’ said Reeves, and still a huge achievement, if it happens.
Jonathan Stinton, head of mortgage relations at Coventry Building Society, said: “It’s good to hear the Government talking about growth and reducing unnecessary red tape, highlighting the ambitious plans to get housebuilding to a 40-year high. What matters now is making it happen, fast.
“Housebuilding is crucial to tackling the housing crisis, and while plans and targets set the direction, it’s the delivery that counts. We need projects happening at a scale and pace to meet demand – there’s still a long way to go, and time is ticking. The focus now must be turning promises into real homes for the people who need them.”
Housing announcements
The government announced an additional £2 billion for social and affordable housing for 2026-27, in what it called a ‘down payment’ on its ambition to build 1.5 million homes.
There was also a commitment to funding a £625 million package for skills in construction, expected to provide up to 60,000 more skilled workers. This is essential to make sure the construction industry can deliver the government’s building plan.
However, there was no announcement on the looming stamp duty changes, which will disappoint buyers. From next month, temporary higher thresholds revert to their previous lower level, meaning more buyers will incur more tax.
Rightmove’s property expert Colleen Babcock, said: “It’s extremely disappointing that the government have not used the Spring Statement as an opportunity to extend the impending Stamp Duty deadline for those currently going through the home-moving process. We estimate over 70,000 buyers are going to miss the deadline and complete in April instead, and a third of those are first-time buyers.”
Housing matters
Today’s Spring Statement may have been light on policy announcements, which was expected, but it hammered home the importance of the housing market to the government’s entire growth strategy.
Growing the UK economy is directly linked to building more homes and the infrastructure to support them. Loosening planning rules is the first, and one of the most important, steps to achieving this.
