Scrapping house building targets will prompt construction of new homes to slump by 20pc and put 800,000 jobs at risk, the Centre for Policy Studies (CPS) has warned.
The Government currently has a target to build 300,000 a year but senior Tories have argued that centralised housing targets are no longer necessary for more homes to be built per year. Former Prime Minister Liz Truss and her successor Rishi Sunak both argued against targets during the summer Conservative Party leadership campaign.
One proposal under consideration is reducing the amount of land local authorities are required to supply to meet their building targets. This would stymie efforts to build houses, the CPS said, and lead to a sharp drop in projects.
“National housing targets would still officially exist, but councils would be free to not deliver the land necessary to hit them,” the influential think tank said.
“Rendering housing targets ineffective in this way would mean at least a 20pc drop in housing supply, perhaps as much as 30-40pc.”
Another option is to let councils set their own targets for annual completion. However, the CPS said this would cause a crunch on a similar scale because of local political pressure to block developments.
A building downturn would have serious knock-on effects for workers and the wider economy. The think tank estimates that “a downturn of 20pc in housing supply might lead to 400,000 job losses in those working in construction and maybe another 400,000 in the wider construction-related economy”.
Samuel Hughes, head of housing at the CPS, said that pushing local authorities to allow more construction has successfully helped raise completions from fewer than 150,000 homes per year in England in 2012-13 to almost 250,000 in 2019-20.
“It has dragged local authority allocations up from where they were 10 years ago by a substantial margin,” he said. “It is not obvious what would stop those rates from falling back to closer to where they were, if the target mechanism was removed.”
Less damaging options to tweak the system could include letting councils continue local plans for development for a period of time even if Government policy changes, to avoid derailing construction schemes with each new measure from Whitehall, the CPS said.
Mr Hughes said it is important to encourage building in a way which is supported by local residents, rather than just reducing construction.
This could include a streamlined planning system for small building firms, which would help boost construction, as well as “letting local communities opt into planning permission through street votes” to give more residents a say on the design of new homes.
Britain’s biggest builders recently warned that dropping annual house building targets would lead to a 100,000 drop in the number of homes built each year and deal a £17bn blow to the economy.
A Department for Levelling Up, Housing and Communities spokesman said: “We must build homes in the places that people want to live and work and the government remains committed to delivering 300,000 homes a year in England.
“Decisions about homes should be driven locally and we want to get more local plans in place to deliver the homes people need. Our Levelling Up and Regeneration Bill will put power back in the hands of communities and local leaders, simplify the planning system and end outdated practices that slow down regeneration. We will set out more detail in due course.”