Housing secretary Steve Reed has been developing plans for a state-owned housing developer, according to leaked details obtained by the Guardian, as the government seeks to address persistently low housebuilding rates. The proposed entity could borrow at lower rates than private developers and housing associations.
Plans delayed until after Starmer's exit
The plans, which are not yet finalised, cannot be enacted before Prime Minister Keir Starmer steps down, following a cabinet secretary order barring major announcements until the new government takes office. However, they may appeal to the likely next prime minister, Andy Burnham, who has advocated greater public control over essential services.
Housebuilding targets lagging
Starmer promised to build 1.5 million new homes over this parliament, but government statistics show builders began work on just 130,170 in the past 12 months—half the annual average needed to meet the target. Overall building figures remain well below levels from three years ago.
The government has allocated £39 billion to social and affordable homes over the next decade and liberalised planning rules. Ministers announced a 26% increase in affordable housing starts in the past year compared to the previous year. However, high material and debt costs, exacerbated by wars in Ukraine and the Gulf, have hindered progress.
State-owned developer proposal
Under Reed's plan, the government would use funds currently allocated to Homes England to create an independent body overseeing new housebuilding. The organisation would buy land and develop projects, hiring private companies for construction. It could also gain borrowing powers, enabling significant expansion but potentially increasing government debt.
The developer would build all types of homes, including commercially available properties, potentially competing with major housebuilders. It would also construct affordable homes, partly replacing cash-strapped housing associations struggling to purchase subsidised properties from private developers.
Pilot and political context
The plan would initially be piloted in a small area and would not be allowed to undermine the private sector. Reed, a loyal Starmer ally, defended the outgoing PM but did not appear at his resignation speech and instead attended Burnham's inaugural photograph as Makerfield MP.
Burnham is expected to be named Labour leader on 17 July and become prime minister three days later. He will outline early policy ideas, including devolution and economic plans, in a Manchester speech on Monday. Ministers are barred from announcing new policy, but some have faced backlash for pitching ideas recently.
A housing department spokesperson stated: “New housing starts have increased by nearly a quarter compared to the same time last year, while last year also saw council housing completions at their highest since 1992. We are always looking at ways that we can go further and build the homes we need.”
