The Government’s Spring Statement has unveiled a £625 million construction skills package aimed at training 60,000 new workers to support the delivery of £2 billion in social and affordable housing. However, fresh industry analysis suggests that Labour’s bold promise to deliver 1.5 million homes by 2030 may already be on shaky ground — with construction output dipping sharply after the party’s first Autumn Budget since returning to power.
Construction momentum lost after a promising start
According to data from the Office for National Statistics, reviewed by planning consultancy Ceres Property, total construction output for new housing in Great Britain fell by 5.7% in 2024 compared to the previous year — dropping to £43.5 billion.
The biggest hit was seen in public sector housebuilding, where output declined by 7.1%, while private new housing also fell by 5.5% year-on-year.
In the initial months following Labour’s election in July 2024, construction confidence was clearly boosted. Between July and October, output for all housing averaged £3.74 billion per month, compared to £3.56 billion in the first half of the year under the previous administration. Private new housing in particular saw a jump of 5.6% during this post-election window, suggesting early optimism.
But the trend didn’t last. Following the Autumn Budget in November, construction output reversed — dropping by 7.5% between November 2024 and January 2025. The public sector saw the steepest decline, with a 9.9% drop in average monthly output, while private output also fell by 7.1%.
Budget seen as “negative” for housing industry
Iain Halls, Partner at Ceres Property, said Labour’s policy direction initially instilled hope in developers. “Our new Labour Government was quick to put its stake in the ground with respect to new housing delivery,” he noted. “Despite widespread scepticism… it’s clear that the fresh slate of a new government had a positive impact on the construction sector.”
However, he added that the Autumn Budget “derailed the positive momentum,” calling it “a largely negative one for the construction industry.”
Halls pointed to overlooked challenges such as “rising material costs, supply chain issues, and Labour’s hike to National Insurance Contributions,” which he said “reduced the appetite for recruitment and further strained the labour shortage.”
For landlords, especially those considering build-to-rent or new development opportunities, these signals are worrying. A slowdown in construction could put further pressure on supply, driving up tenant demand — but also increasing project risk and delaying returns on investment.
Landlords call for clearer policy and regulatory relief
The analysis also highlighted deeper systemic issues, including regulatory delays following post-Grenfell building safety legislation. These new building rules — though necessary — have reportedly created bottlenecks for developments over seven storeys, with remediation works taking priority and slowing approvals for new schemes.
“Whilst wholly necessary, we’ve seen delays with respect to remediations on existing developments, and in turn this has caused a log jam for any new developments over seven stories in the last two years,” Halls explained.
For landlords and developers looking to invest in purpose-built rental accommodation or student housing blocks, these ongoing delays could prove costly. Projects are being held up not for lack of funding, but due to red tape and a lack of workforce capacity.
The Government’s £625 million skills investment is a welcome step, but many argue it’s a case of too little, too late. Landlords are increasingly calling for a joined-up plan — one that addresses regulatory delays, labour shortages, and planning bottlenecks in tandem.
Will labour recalibrate before long-term damage is done?
Labour’s commitment to building 1.5 million homes by 2030 may still stand on paper, but current construction trends suggest the party needs to act quickly to prevent a long-term slowdown. While the injection of funding into skills development is positive, the Autumn Budget missed the mark on tackling key structural issues.
For landlords, the current climate presents a mix of challenges and opportunities. Slowing construction could tighten rental supply further, supporting yields — but legislative uncertainty, higher taxation, and skills shortages are making it harder to expand or enter the market with confidence.
