In a statement to the House of Commons yesterday, the Chancellor of the Exchequer, Rachel Reeves MP, announced a £2 billion boost for social and affordable housing in England, which is set to represent a down-payment of a larger funding settlement in the Spending Review in June.

The funding is set to assist local authorities and housing associations in bridging financial gaps for affordable housing projects and aims to support the construction of up to 18,000 social and affordable homes.

For the SFHA, any Barnett Formula Consequentials as a result of the announcement must be reinvested into Scotland’s affordable homes programme. 

It comes after Scottish Government figures this week revealed the number of homes built by housing associations in Scotland last year had fallen by over a quarter. 

SFHA chief executive Sally Thomas said: “With the number of homes built by housing associations falling by a quarter last year, the latest Scottish Government statistics again underline the scale of our national housing emergency. 

“We note the additional £2bn in funding set out by the Chancellor ahead of the Spring Statement for affordable housing in England. If there are any Barnett Consequentials for Scotland as a result of this announcement, then it simply must be invested in Scotland’s affordable homes programme.

“Following the Chancellor’s Spending Review in June, we also need to see the UK and Scottish Government commit to a multi-year funding settlement for Scotland’s Affordable Housing Supply Programme.”

GDP quantification of planning reform

Homes for Scotland (HFS) welcomed confirmation by the Chancellor and Office of Budget Responsibility that planning reform being undertaken in England would add £6.8bn to real GDP in 2029-30 and £15.1bn within ten years.

The government plans to construct 1.5 million new homes by 2030, the highest level of housebuilding in over four decades, facilitated by streamlining planning permissions to expedite the development process. ​

Mandatory housing targets will be reinstated for local authorities, aiming to ensure consistent and increased housing development across regions, while changes to national planning policies are designed to ease development procedures, encouraging more rapid construction and addressing housing shortages. ​

The initiatives are expected to raise property sales from 290,000 per quarter in late 2024 to 370,000 by 2029, Ms Reeves said.​

Kevin Murphy, HFS director of planning, said: “It is positive to see the level of ambition set out by the UK Government in the Chancellor’s Spring Statement today, reaffirming its intent to accelerate new housing delivery in conjunction with reform of its respective planning system. In doing so, the Chancellor has accurately acknowledged the significant economic benefits that new home building can bring, not just across local communities but nationally, in addition to the wide-ranging social benefits such as improved health and education outcomes.

“At the forefront of English planning reform, sits the national objective to deliver 1.3 million new homes by the end of the current Parliament, with the re-introduction of mandatory housing targets across Local Authorities.

“HFS has consistently advocated that this level of ambition be reflected by the Scottish Government, and has called for the adoption of an all-tenure home building target of at least 25,000 homes to be delivered annually to ensure that new housing delivery is recognised throughout Scottish Government Directorates as central to achieving the First Minister’s priorities for Scotland of eradicating child poverty, growing the economy, tackling the climate emergency and reforming public services.

“Issuing a clear call to deliver an all-tenure target of at least 25,000 new homes each year in Scotland would give clear strategic direction and intent between national and local policymakers to prioritise new housing delivery. Returning to pre-recession levels of home building in Scotland would generate £3.7bn in total economic output to the Scottish economy and support 87,000 high quality jobs each year.

“In the last two days, statistics have highlighted that new housing starts and completions have declined for the third consecutive year whilst planning processing times for new housing remain far above the statutory timescales in Scotland. In the context of the ongoing housing emergency, these statistics must be a clear call to action for the Scottish Government to implement similar levels of radical reform.”

£600m for training

To address labour shortages in the construction industry, the government is investing £600 million to train up to 60,000 new construction workers through educational and apprenticeship programs.

Despite this positive news, the Federation of Master Builders (FMB) said it is all down to delivery with housing numbers still low and construction workforce numbers in short supply.

Brian Berry, chief executive of the FMB, added: “Rachel Reeves has tasked builders with delivering economic growth according to today’s Spring Statement. This week’s injection of funding to train 60,000 new construction workers is welcome, but the Construction Industry Training Board (CITB) estimate we will need 250,000 more construction workers by 2028 to even get close to the Government’s targets. The numbers of workers don’t go far enough and the announcement of 1.3 million new homes by the end of this Parliament, seems to be a clear indication the original target was a step too far.

“The Chancellor pointed to OBR figures showing that house building stands to add 0.2% to the UK economy by 2029-30, worth an additional £6.8bn, with that rising 0.4% by 2035 worth £15.1bn to the UK economy. Builders have an essential role to play in kickstarting the UK economy, and today’s figures demonstrate the immense potential of the industry. Now, more than ever, we need to see the Government support the nation’s SME house builders, so that homes can be delivered by a healthy market, and not just a few companies at the top of the tree.”

For BCIS, the construction workforce investment still falls short.

Karl Horton, chief data officer at BCIS, said: “There wasn’t much in the Chancellor’s statement for the construction industry to rely on over the coming months, especially with the OBR halving its 2025 growth forecast since the Autumn Budget.

“It’s interesting that the government is now talking about getting ‘within touching distance’ of its housing target after months of the industry outlining why it was so unlikely 1.5 million new homes was possible, though the £2bn additional investment in social and affordable homes is welcome.

“Elsewhere, the already-announced £625m investment to train up to 60,000 skilled construction workers over the next four years is still insufficient to replenish the workforce lost since before the pandemic.

“While making the industry more attractive to new workers isn’t solely the government’s responsibility, firms have little incentive to expand their workforce and invest in training while economic uncertainty persists.

“Unfortunately, investment and funding decisions are subject to ongoing volatility, with the threat of tariffs and escalating trade tensions hanging over the UK.”

Brian McArdle, managing director Gleeds UK, added: “The Chancellor’s first budget raised taxes by £41.5bn and, while we did not expect this second to reverse them, what she did need to do was restore confidence to those operating in the built environment who currently feel dispirited, unsure and under-confident. The news of £600m worth of investment to train up to 60,000 additional skilled construction workers as well as a Local Skills Improvement Plan (LSIP) which will benefit from £20m is to be welcomed, but there was nothing in today’s statement to buttress investor confidence.

“It’s certainly not jam today it is jam tomorrow and any jam available seems to be being spread over an ever-widening piece of toast. This was not a statement that will empower investors. It was a fingers-crossed approach from a Chancellor being driven by the markets, rather than the other way round.”

Steve Mulholland, chief executive officer of the Construction Plant-hire Association (CPA), said: “Today’s Spring Statement has failed to address the challenges facing the construction sector arising from the National Insurance hike and proposed reforms to inheritance tax. These changes threaten the existence of thousands of family-owned businesses in the construction sector.

“Next month’s National Insurance hike will make it more difficult for family-run businesses to recruit and tackle the skills crisis, while changes to inheritance tax could force many to sell up just to cover the tax bill.

“If Labour truly wants to drive growth it must urgently reconsider its approach and assess the real-world impact of these changes. Family firms are the backbone of the construction industry, so if the government wants homes built and infrastructure projects delivered on time, it has to support those independent, family-run companies doing the actual work.”