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”.
The prime minister admitted the country is in the grip of a severe housing crisis with millions struggling on unaffordable rents and a social housing backlog that now extends to more than 1.3million households.
However, the task for Mr Burnham is substantial. The PM’s predecessor Sir Keir Starmer pledged to build 1.5 million houses before the next election, a target that newly reinstated housing secretary Angela Rayner admitted was a “really difficult challenge”.
The government’s target to reach the figure through 300,000 new homes a year is already off pace. Only around 840,000 homes, around half the total target, are expected to be under construction by mid-2029, according to property agent Savills.
The Independent looks at the scale of the challenge ahead and what might need to change to accomplish his goals.
Many point to Britain’s decision to leave the European Union as a key factor in the decline in housebuilding. Brexit is estimated to have reduced the UK construction workforce by more than 200,000 people, a report by training group PfP Thrive found.
At the same time, construction materials in the UK have increased by 60 per cent, according to analysis by the UK Trade and Business Commission, compared to 35 per cent in the EU.
Housebuilding faltering, partially as a fault of Brexit, means that affordable housing is not being delivered. Sir Keir’s government pledged £39bn for the Social and Affordable Homes Programme (SAHP), to deliver around 300,000 properties within the 1.5m target.
And council housing is another matter altogether. This is technically property that is owned by local authorities, and usually offers a much cheaper ‘social rent’ for residents – around 50 per cent of market rates, compared to around 80 per cent for ‘affordable’ homes.
Rooftop Housing Group’s chief executive Boris Worrall told Inside Housing: “It has played out exactly as feared. 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 and unsustainable welfare bill [because of falling GDP]… We have built fewer homes than we would have done [had we remained in the EU]. It is that simple.”
One reason Labour has fallen behind on its housebuilding targets has been due to increased costs on the housebuilding sector, says Steve Turner, executive director of the Home Builders Federation.
He told The Independent: “We did a report recently that showed that it's now £76,000 on average more expensive to build a house now than it was 5 years ago, and that's because material costs have gone up.”
Taxes and policy costs like building safety levies, landfill taxes and green initiatives are also all eating into private sector margins, he explained.
“These are probably the right thing to do,” Mr Turner adds, “but because you've layered them on over recent years, including increased affordable housing, it's got to the point now where not everything can be funded through development and sites are no longer viable.”
Continued concerns about the impacts of US president Donald Trump’s war in Iran and the political uncertainties festering over the UK for months meant that output from the construction industry declined at the fastest rate since the height of the Covid-19 pandemic.
The S&P Global UK construction PMI showed a reading of 38.2 in May, down from 39.7 in April and indicating a steep drop in overall business activity.
Any reading above the 50 threshold indicates that activity in the industry is increasing while anything below means it is contracting.
During the post-war peak in the 1970s, English local authorities built an average of 103,000 homes every year. In the five years leading up to 2025, they managed just 2,000 completions annually.
This is clearly a low point to start from. But there is a way to increase the amount of social housing and still deliver the target of 30,000 affordable homes a year, a new report from the Resolution Foundation has found.
The crucial measure is to ringfence the £39bn SAHP exclusively for social rent, dropping annual completions by 5,000 to 25,000, the think tank says.
Combined with tweaking developer rules and allowing housing associations to access cheap loans, this could be boosted to just over 30,000 affordable homes, 25,000 of which would be for social rent.
But this is still a “far cry” from the promise made by Mr Burnham, author Hannah Aldridge, senior research and policy analyst at the think tank, writes.
“And with the best will in the world, new homes still take years to build,” Ms Aldridge adds, noting that delivering at scale would require far more funding from the government.
To hit 300,000 homes for social rent, the government would need to boost its spending to £47bn by 2036, the report found.
While town halls have welcomed Mr Burnham’s focus on social rent, council leaders warn that the right message cannot overcome longstanding financial barriers.
Councils across England are grappling with historic housing debt, which has risen from £29bn in 2012 to £31bn. This was meant to be paid off beginning in 2012, but has instead risen as Right to Buy proliferated under the Conservative government, meaning less revenue for councils.
Rent freezes and caps during the pandemic – which protected tenants – meant that councils were forced to lose income from their homes, adding more to this debt.
Many council leaders are calling for the historic housing debt burden to be restructured, so that it is more realistic for councils to build new homes.
Several have also advised that the playing field should be levelled for councils and housing associations.
Housing associations will soon be able to access £2.5bn of loans at 0.1 per cent, while local authorities are stuck paying Public Works Loan Board rates which fluctuate between 4 and 5 per cent.
James McAsh, the Green Party leader of Southwark Council, said: “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 has built 689 council houses in 2024/25, making it the top builder of the past few years. But Mr McAsh warns that the work may have to slow down without more support from the government.
Mr McAsh said: “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.”
The new prime minister’s pledge represents a clear political shift toward tackling Britain's housing crisis through genuinely affordable homes, which policy experts and council leaders have welcomed.
But delivering a post-war scale building revolution may remain out of reach without serious funding commitments.
Many will be hoping that the new Labour government’s first Budget in October may deliver the answers they are looking for.
