Andy Burnham made a vow upon entering No 10 that he would “rewire” Britain, with a core aspect of his vision to deliver “the biggest council housebuilding drive since the post-war period,” reports BritPanorama.
The Prime Minister admitted the country is experiencing a severe housing crisis, with millions facing unaffordable rents and a social housing backlog exceeding 1.3 million households.
However, the challenges facing Mr Burnham are significant. His predecessor, Sir Keir Starmer, pledged to construct 1.5 million houses before the next election—a target that newly reinstated housing secretary Angela Rayner acknowledged as a “really difficult challenge.”
The government’s goal to reach this figure through constructing 300,000 new homes annually is already lagging behind, with only around 840,000 homes—roughly half the targeted total—expected to be under construction by mid-2029, according to property agent Savills.
Many attribute the decline in housebuilding to Britain’s decision to leave the European Union. A report by the training group PfP Thrive estimates that Brexit has reduced the UK construction workforce by more than 200,000 workers.
Additionally, construction materials in the UK have risen in price by 60 per cent, compared to 35 per cent within the EU, as reported by the UK Trade and Business Commission.
The faltering housebuilding, linked in part to Brexit, hampers the delivery of affordable housing. Sir Keir’s administration allocated £39 billion for the Social and Affordable Homes Programme (SAHP) to help fulfil the 1.5 million target.
Local council housing represents another challenge. This type of housing, owned by local authorities, typically offers a much lower ‘social rent’ for residents—around 50 per cent of market rates, in contrast to the 80 per cent rate for ‘affordable’ homes.
Boris Worrall, chief executive of Rooftop Housing Group, commented: “Brexit has been a key factor in accelerating inequality and deepening the structural challenges the UK faces—including a shortage of affordable housing and a rising, unsustainable welfare bill due to falling GDP… We have built fewer homes than we would have done had we remained in the EU. It is that simple.”
Labour’s struggles to meet its housebuilding targets stem from rising costs in the sector. Steve Turner, executive director of the Home Builders Federation, pointed out, “It’s now £76,000 on average more expensive to build a house than it was five years ago, primarily due to increased material costs.”
Policy costs, including building safety levies, landfill taxes, and green initiatives, also diminish private sector margins, Turner explained. While acknowledging these measures as well-intentioned, he noted that their cumulative burden has made many development sites unviable.
The construction industry has experienced its fastest decline in output since the height of the Covid-19 pandemic, influenced by ongoing concerns over US President Donald Trump’s war in Iran and protracted political uncertainties in the UK.
The S&P Global UK construction PMI exhibited a reading of 38.2 in May, down from 39.7 in April, signalling a steep contraction in overall business activity. Any reading above 50 indicates growth, while below that threshold suggests contraction.
Historically, English local authorities built an average of 103,000 homes annually during the post-war peak in the 1970s. However, they managed a mere 2,000 completions each year in the five years leading up to 2025.
Despite this low starting point, a report from the Resolution Foundation suggests that increasing social housing could still be achievable alongside a target of 30,000 affordable homes per year.
The key recommendation involves ringfencing the £39 billion SAHP exclusively for social rent, which would decrease annual completions by 5,000 to a target of 25,000. This, combined with adjustments to developer regulations and provision of cheap loans to housing associations, could enable the achievement of just over 30,000 affordable homes, 25,000 of which would be for social rent.
However, the report acknowledges this figure is “far cry” from Mr Burnham’s promise. Hannah Aldridge, senior research and policy analyst at the think tank, remarked, “And with the best will in the world, new homes still take years to build,” emphasising that delivering at scale demands significantly more government funding.
To meet its 300,000 target for social rent, the government would need to increase its spending to £47 billion by 2036, the findings indicate.
While local authorities have welcomed Mr Burnham’s focus on social rent, they caution that favourable messaging cannot overcome persistent financial barriers. Councils across England are contending with a historic housing debt that has escalated from £29 billion in 2012 to £31 billion. This debt was intended to be settled starting in 2012, but has instead ballooned due to the Right to Buy policy implemented under the Conservative government, resulting in diminished revenue for councils.
Additionally, rent freezes and caps introduced during the pandemic meant that councils lost income from their properties, exacerbating their debt situation.
Many council leaders advocate for restructuring this historic housing debt burden, positing that a more realistic framework would enable them to construct new homes.
Several have also proposed levelled playing fields for councils and housing associations, as housing associations are slated to receive £2.5 billion in loans at a mere 0.1 per cent interest, while local authorities face fluctuating Public Works Loan Board rates of 4 to 5 per cent.
James McAsh, the Green Party leader of Southwark Council, remarked, “We are straightforwardly paying more to borrow than a housing association building the exact same homes. And I can see no justification for why that should be the case.”
His authority reported constructing 689 council houses in 2024/25, establishing it as the top builder in recent years. However, Mr McAsh alerts that ambitious plans may stall without increased governmental support.
“We’re already trying to build as many council houses as we can; we don’t need Andy Burnham to tell us to do that. What we need from Andy Burnham is funding to allow us to do it,” he stated.
Mr Burnham’s new pledge signifies a marked political shift towards addressing Britain’s housing crisis with genuinely affordable solutions, a move which has garnered applause from policy experts and council leaders alike.
However, achieving a post-war scale building initiative may remain elusive in the absence of substantial funding commitments. As many await the forthcoming Labour government’s first Budget in October, the landscape for housing could yet turn considerably.
