Lack of skilled workers may be biggest barrier to Labour hitting 1.5m homes target, warns economist

A lack of skilled construction labour and product manufacturing capacity may hold back Keir Starmer’s plan to build 1.5 million homes over the next five years, a respected economist has warned.

Noble Francis, economics director at the Construction Products Association, said the government is likely to be hoping for a steady trajectory in increasing housebuilding to just over 380,000 homes by the fifth year of the parliament. This means housebuilding needs to increase by 60% as there were 234,400 net additions to the housing stock in England last year, once conversions are included.

Francis, writing on Linked In, said: “There are also key constraints on the availability of skilled construction labour and construction product manufacturing.

“As house building recovers over the next few years, these may emerge as the key constraints given that a significant rise in UK skilled labour and product manufacturing requires upfront investment (time and money) for a long-term return.”

Francis said the UK house building workforce and product manufacturing capacity have fallen in recent years, so “new investment in skills and capacity will initially be needed just to get them back to where they were 2-3 years ago”.

Francis pointed to figures showing there were 2.08 million people employed in construction in the first quarter of 2024, down 1.9% year-on-year.

Francis said housebuilding growth could see “double-digit” wage inflation, but stressed housebuilders and contractors have dealt with this before.

He said: “Medium-term, though, it is not just a cost problem, it is an availability problem. There just won’t be the people.”

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Francis said easing planning issues may make a big difference in the medium-term but said it “isn’t a panacea”.

He added: “New Towns may help, but New/Eco towns have failed in the past, and government’s commitment to 40% of these homes as so-called ‘affordable’ makes them less financially viable for developers.”

Francis’ comments come days after the London Homes Coalition, a group of social landlords, warned of a potential shortfall of 2,600 skilled workers in the social housing sector in London.

The Kings Speech on Wednesday is expected to contain measures to boost the Labour government’s housebuilding programme.