Labour’s 1.5 million home pledge could miss by 860,000 homes. That’s a 46% shortfall between what they promised and what the industry can deliver.
I’ve been tracking the construction sector’s decline, and the data keeps getting worse.
The UK construction PMI hit 46.2 in September 2025. Nine straight months below 50, the threshold separating growth from contraction. Civil engineering dropped to 42.9, the weakest subsector despite some recovery from August’s 38.1.
The problem starts before construction even begins.
To reach 1.5 million homes, approximately 40,000 planning applications are needed each month. The past year averaged just 18,284 monthly, less than half the required number. In the first six months of 2025, applications hit 101,000, down 10,000 from last year.
Job losses have hit nine months running. The longest workforce reduction since COVID-19. Hiring freezes and non-replacement of departing staff have become standard practice as firms navigate rising payroll costs.
Tim Moore, economics director at S&P Global Market Intelligence, notes that construction firms are “facing pressure on multiple fronts” with no apparent “turning point on the horizon.”
Budget uncertainty compounds the problem. Concerns about potential tax increases in Chancellor Rachel Reeves’ upcoming Budget are deterring investment decisions. Firms are putting major commitments on hold until they understand the fiscal landscape. Business confidence remains near record lows, the second-lowest since December 2022.
Housing Secretary Steve Reed faces mounting pressure as the “build, baby, build” initiative stalls.
Policy ambition requires more than targets. It requires business confidence, fiscal clarity, and workforce capacity. When those contract for nine months straight, aspirational goals become impossible.
Labour’s housing pledge addresses a real crisis. Solving it requires more than declarations.
The 860,000 home shortfall is what happens when political timelines ignore market capacity.