The government’s ambition to deliver 1.5 million new homes has been central to its messaging since day one, yet the latest Budget offered very little to turn that ambition into reality. The narrative was built around responsible growth and economic discipline, but for the housing and construction sectors, who are expected by many policy makers to drive that very growth, there was little to celebrate. For all the rhetoric, the gap between aspiration and policy remains stubbornly wide.
The most immediate challenge facing the new build sector is the skills shortage. More than 140,000 vacancies in construction remain unfilled according to Places for People, and by 2035, over one-third of construction workers will retire, worsening the crisis and leaving the industry without the labour capacity it needs to scale. If the UK is serious about delivering new homes, modernising infrastructure, and accelerating the transition to cleaner, more energy-efficient buildings, then attracting and retaining talent is fundamental. Businesses need an environment where they can offer competitive packages and invest confidently in their workforce. Instead of easing that pressure, this Budget has intensified it.
The cumulative rise in employment costs that includes the previous 1.2% increase in employer National Insurance, a £4,100 drop in the threshold and a 6.7% increase in the National Living Wage, delivers a particularly heavy blow to labour-intensive industries such as construction. Companies employing hundreds of people now face substantial additional costs at the same time they are being asked to scale up delivery, not tighten their belts. These increases might be defensible in isolation, but for an industry already stretched, the combined effect undermines the very stability and growth the Chancellor is keen to promote.
Planning reform and renewed funding commitments for new homes were among the brighter signals in the Budget, but planning policy alone cannot unlock housing delivery. New homes cannot be built in isolation from the communities they sit within. We all know that housing is not just bricks and mortar, it is schools, healthcare, transport, utilities and public services. Without investment in this wider infrastructure, the promise of more homes risks creating developments that are disconnected rather than communities that thrive. A holistic, integrated approach is essential; otherwise, the UK will simply build houses rather than build places.
The introduction of a new tax on higher-value homes may appear to target only the upper end of the market, but its impact risks being felt far more broadly. In regions such as London and parts of the South East, where property values naturally sit above proposed thresholds, the surcharge could deter developers and investors at precisely the moment the capital needs renewed momentum. By raising the cost of market activity, the policy risks further dampening supply and complicating the delivery of the government’s ambitious housing target.
Stamp duty remains another significant drag on market liquidity. For years developers, estate agents and investors have warned that it is one of the clearest obstacles to mobility and transaction flow. A government committed to a “prosperous, dynamic” housing market cannot afford to ignore the role this tax plays in locking people in place and discouraging investment. A stagnant market does not stimulate growth; it suppresses it.
For all the talk of responsible growth, what the market needs is responsible alignment: a Budget that recognises that housing delivery, infrastructure, employment policy and taxation are not separate policy strands, but interlocking parts of a single system. Until housing policy is treated as such, the ambition of 1.5 million new homes will remain exactly that, an ambition, rather than an achievable plan.
