The government will fail to meet its target of building 1.5m homes by the end of the decade, house builders have warned in a letter to the budget watchdog – a fresh blow to Rachel Reeves ahead of what is expected to be a difficult budget in November.
In a letter to the Office for Budget Responsibility (OBR), the Home Builders Federation (HBF) – the representative body of the home building industry in England and Wales – said that its forecasts for economic growth from house building were too optimistic.
The organisation’s chief executive, Neil Jefferson, said the OBR’s numbers would only be achievable if ministers gave more help to first-time buyers to stimulate demand and slashed planned taxes on new homes, which he said were making many sites “unviable”.
He said: “The OBR’s forecasts for housing supply were ambitious. The numbers are only achievable in the right policy environment.”
The private warning, seen by The Times, is likely to harm prospects for the watchdog upgrading its forecast for economic growth from construction. In a worst case scenario, it could even result in a downgrade.
In its manifesto, Labour pledged to begin work on 1.5 million new homes over the course of the Parliament, to expand homeownership to more Britons. But house builders have repeatedly sounded the alarm over the pledge, arguing it is too ambitious.
MP Chris Curtis, chair of the Labour Growth Group, said his party is “at risk of not hitting our targets because reform has been too slow”.
“The House of Lords has been holding up legislation, and the government hasn’t been strong enough in standing up to opposition,” he told The Times.
“That’s why we now need to go further, by reforming the building safety regulator, fixing the broken approach to nature regulation, and swiftly getting on with the New Towns programme.”
It came as the chancellor insisted that Britain does not have to “accept” grim economic forecasts, despite reports she faces a barrage of fiscal bad news ahead of next month’s Budget.
Writing in The Guardian, the Ms Reeves acknowledged that productivity forecasts from the Office for Budget Responsibility (OBR) could make for tough reading.
And she argued that austerity, Brexit and the pandemic had left “deep scars” on the UK’s economy.
But she said she was “determined that we don’t simply accept the forecasts but we defy them” and would not “relitigate the past or let past mistakes determine our future”.
Her comments come as she prepares to deliver a Budget next month widely expected to involve further tax rises as she seeks to close a multi-billion pound gap in her plans.
A government spokesman said: “We will leave no stone unturned to build the 1.5 million homes this country desperately needs and restore the dream of homeownership.
“On top of the major planning changes we have already introduced to get developers building and our huge £39 billion investment in social and affordable housing, we are going further and faster to accelerate reforms and bring about the biggest era of housebuilding in our country’s history.”
