With the Government’s still focused on housing targets, Sean Keyes, CEO of Sutcliffe Consultancy, shares his predictions for the industry in the coming year
2024 has been anything but predictable, with the construction sector reacting to an ever changing political landscape marked mainly by the general election and autumn budget.
Amid these challenges, 2024 has seen the UK construction sector positively support the ambitious plans of the Prime Minister, Sir Keir Starmer, to build 1.5m homes during his first term in power. This in part will help to correct the housing shortage felt across the UK.
1.5m will be a tough figure to hit
I am sceptical that we will hit these figures as it will mean almost doubling the number of homes being built by 2029. We haven’t built this many homes since the 1970’s. This pledge promises to spearhead the creation of the next generation of towns and cities over the next four years, starting in 2025.
House building must now become a top priority for the Government, who must simply deliver, as we have not built at this level in my working lifetime. Housing is an essential part of a happy and healthy life. Quality housing shouldn’t be out of reach for people in one of the richest countries in the world, and the only viable solution to addressing the housing crisis requires bold measures such as constructing hundreds of thousands of new homes, something I expect to gather pace in the years to come.
My prediction is that we will not build 1.5m homes in five years but will get close to 300,000 in a single year, probably towards the end of Labour’s term in office, meaning that there will be a shortfall. To achieve this, national planning policy needs to radically change as, in my experience, most complex planning applications take 12 months and not the ideal 16 weeks.
Recently, the deputy prime minister, Angela Rayner, outlined plans to accelerate the removal of unsafe cladding to the exterior of many homes by the end of 2029, something I expect to gain momentum in 2025. However, this is not going to be a quick fix as the costs involved are astronomical and, fundamentally, the Government finances are tight, and there is a skills shortage when it comes to this type of work.
Tackling education and healthcare
The construction sector’s contribution to GDP is expected to rise and remain resilient in 2025, driven by strong demand for essential infrastructure and housing targets. With the UK population projected to rise by 0.6% in 2025 and showing no signs of slowing down, the need for high-quality housing solutions will continue to increase, highlighting the national need for a substantial pipeline of residential projects.
Buoyed by the allocation of funds for the development of new schools and hospitals to accommodate expanding communities, I predict 2025 will acknowledge long-standing gaps in education and healthcare infrastructure. Starting these projects will not only meet pressing social needs but also act as a necessary economic stimulator, providing jobs and opportunities.
Despite economic uncertainties, the construction sector’s unique position in addressing people’s fundamental needs for housing, hospitals and schools positions it as a pillar of economic stability. With sustained demand for vital infrastructure, I expect construction GDP to not only grow, but serve as a critical driver of economic resilience.
“My advice to businesses will be to expect the unexpected”
The unexpected will always undoubtedly have an impact on the construction industry. World leaders will make decisions that will impact the UK – hopefully positively – such as working to end some of the world’s worst conflicts. I am also expecting some further hidden taxes to be imposed upon businesses and the wealthier, which I feel will damage the economy. The construction industry will embrace AI that makes engineering design more efficient in 2025, which in turn will save us time and money, and reduce our carbon footprint.
However, the outlook for businesses in 2025 is optimistic even if there are tax rises coming; businesses will adjust and make it work. If we build the homes predicted, then the construction sector will be busy.
The recent hike in national insurance is poised to place an extra tax burden solely on businesses, exacerbating an already demanding tax landscape. The harsh reality of this will be that it will lead to inflation. The idea that prosperity for all can be achieved through taxation is flawed. This rising tax pressure will slow down innovation and ultimately hinder economic success. Addressing this issue will be essential to safeguard the country’s business landscape.
