We Are Not About To Party Like Its 2020

Labour’s plans for 300,000 new homes per year seem to be getting a few out there a bit giddy. 1.5m new homes in five years would of course mean a lot more windows and doors, and of course, more spending on home improvements generally as more people could move freely in a market with more supply.

But whilst is it tempting to get carried away with the idea that there is going to be some kind of imminent building boom, bringing all the benefits that carries, there are a number of reasons why we are not going to be partying like it is 2020 and the post-lockdown boom which saw our supply chains crumble.

Lack of skilled workers

Every time the idea of 300,000 homes being built is mentioned we never hear of any plans to address the chronic lack of skilled workers required to actually make it happen.

The construction sector is short of workers by around 230,000, probably more by now. Also, we haven’t built 300,000 new homes since 1977. So for nearly 50 years, we have not been able to get near that magical number various governments have pledged themselves to.

Labour wants to impose mandatory house-building targets on companies. They want to increase council house building. It all sounds great on paper, but again, without the people required to do it, it’s simply not going to happen. Willpower alone is not going to see these policies become successful.

And we haven’t even mentioned the retrofit market yet and the tens of millions of homes in the UK that need major investment to bring them up to better standards. We know full well in our own sector that we are woefully short of skilled installers which was one of the reasons our sector’s growth was capped during the post-lockdown boom.

Still, after the malaise in the market over the last year and election uncertainty now over, there is still likely to be some kind of increase in house building, even if it is unlikely to reach the desired targets. Any increase will naturally bring a boost to all connected industries to housing, including ours. But it will be capped at the point where the existing workforce is maxed out.

Different economy

Another major factor we are missing here is that the economy today is very different to that of the second half of 2020 and 2021. Back then, millions of households were being bailed out by the government thanks to the furlough scheme. Many saw their entire wages paid for months whilst they were not able to return to work.

On top of that, millions were also getting refunds for their holidays which had to be cancelled. With people stuck at home and most of the economy shuttered, many of us began to see money simply pile up with very few avenues to spend it. With all that spare money sloshing around, homeowners were able to make plans for their houses as they were able to spend more time looking at what they wanted to improve. New windows and doors were high on that list and we were one of very few parts of the economy that actually did well in the months following the end of the first lockdown. Perhaps too well in the end.

The ending of lockdown and further restrictions acted like a dam bursting. All that spare cash around the country was suddenly able to be spent, and of course, after being unable to get on with life as usual, people were eager to spend as quickly as possible. The result was an incredible increase in demand for new windows and doors as well as other home improvements which saw supply chains crippled as we were all caught on the back foot. Unfortunately, the sheer size of Government stimulus and consequent spending put inflation through the roof which saw the Bank of England raise interest rates to try to cool the economy.

What followed was a multitude of crises which saw the UK economy go from boom to bust in very quick time. War in Ukraine contributed to the cost of energy crisis which saw homes and businesses smashed by rapidly rising gas and electricity costs. Then there was the cost of living crisis which saw the price of everyday goods skyrocket and limit the ability of consumers to spend, therefore knocking confidence. Our industry was hit just like everyone else, with double-digit price increases across all parts of our sectors at one point coming in every other week.

That cash has gone and went a while ago. The free-spending period has ended and the general public is way more conservative with their spending now than they were four years ago. The economy is in a very different place to what it was and a modest boost in house building isn’t going to change that landscape.

No concerns for supply chains

Whilst it is right that we learn from our experiences, and hopefully our industry re-learned the importance of stable supply chains in 2020 and 2021, I don’t foresee any problems to supply chains caused by an increase in house building.

My assumption is that we won’t get to the 300,000 mark in this parliament and so an increase in housebuilding is going to be tempered. As I mentioned above, we won’t be getting near that figure on a regular basis until we get the right number of people we need to make it happen.

Modest increases are going to be well handled by suppliers up and down the construction sector, including fenestration. We are still in a subdued period with slack in the system already. Any noticeable increases in demand I expect to be well handled.

Whilst we should all be hopeful that Labour’s plans will come to fruition, we have to be realistic. We don’t have the people needed to make it happen and the economy is in a very different place to what it was four years ago.