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Spring Statement: OBR admits ‘significant uncertainties’ over forecast of 40-year housebuilding high
The government’s planning reforms could result in annual housebuilding hitting a 40-year high of 305,000 homes, although several factors could knock that estimate, the Office for Budget Responsibility (OBR) has said.
The government’s planning reforms could result in annual housebuilding hitting a 40-year high of 305,000 homes, although several factors could knock that estimate, the Office for Budget Responsibility has said #UKhousingRachel Reeves, the chancellor of the exchequer, heralded the watchdog’s forecast at her Spring Statement today in parliament, pointing out that it was the biggest positive growth effect from a policy with no fiscal cost.
In its central forecast, the OBR said the reforms could lead to UK net additions to the housing stock of around 1.3 million homes by 2030, a 16% increase.
Overall, this would mean a “modest” increase of 0.5% to the UK’s overall stock to just over 32 million homes by 2030, the OBR said.
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Of the 1.3 million homes, the watchdog suggested 170,000 over the next five years could be due to changes to the National Planning Policy Framework (NPPF).
It is based on the idea that councils will be forced to release more land for housing as the government has reinstated targets.
However, the OBR said there were “several significant uncertainties” around the estimate.
It said “capacity constraints” in the housebuilding sector could be “more binding” than assumed, due to “growing demand on a limited construction workforce”.
The government is attempting to tackle the construction skills shortage with a £600m investment announced this week.
The OBR also warned that local opposition to the reforms could “prevent” or delay housebuilding, particularly if the plans were for green belt land.
The government is trying to address this issue by designating land as “grey belt”, which is “poor-quality” or “ugly” areas of the green belt, such as disused car parks.
The OBR’s low estimate was for 1.2 million net additions over the next five years.
It also said that greater adoption of what it called “modular construction methods” could boost the sector’s efficiency and its capacity to deliver more homes.
Planning reforms could also grow the economy by 0.2% because of a boost in residential construction, and more housing services due to a larger overall stock, the watchdog said.
The OBR said its forecast did not “fully” incorporate the government’s Planning and Infrastructure Bill as it was only tabled in parliament this month and it did not have the full details.
In a press release, the Treasury also claimed the OBR’s forecast did not take into account the upcoming long-term housing strategy and the new Affordable Homes Programme (AHP).
Yesterday the government announced an extra £2bn for social and affordable housing as part of a bridge to the next AHP.
However a OBR spokesperson told Inside Housing: “Overall, we judge that the effect of measures set out since our autumn forecast looks consistent with the increase in housebuilding set out in our Spring forecast.”
The government is hoping to oversee the development of 1.5 million new homes this parliament to tackle the housing crisis.
Andy Hulme, chief executive of Hyde Group, said it was also important to "get the finances of housing right" so the sector can play its part in boosting delivery.
He added: "To achieve this historic high, it is crucial the government delivers an expanded long-term Affordable Homes Programme at the spending review, and an ambitious 10-year, inflation-linked settlement for social rents, which includes the reintroduction and acceleration of rent convergence.”
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