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Build a better housing sector: Reeves needs to innovate to stimulate construction in Britain, according to ALEX BRUMMER

In the build-up to the July 2024 election, economic reporters received an informal invite to engage in a discussion with prospective Chancellor Rachel Reeves.

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Dismal housing rate in Britain called out: Reeves urged to institute reforms and boost...
Dismal housing rate in Britain called out: Reeves urged to institute reforms and boost construction, says ALEX BRUMMER

Build a better housing sector: Reeves needs to innovate to stimulate construction in Britain, according to ALEX BRUMMER

In the heart of the UK, the construction sector is grappling with a substantial slump, despite the Labour government's reforms and growth priorities. This contraction, as reported by construction managers in the latest S&P report for July, marks the steepest fall in construction activity since May 2020, affecting all major subsectors—residential, civil engineering, and commercial construction [1][2][3][4].

The housing sector, in particular, has seen a renewed and substantial drop, reversing a brief growth in June 2025 [1][2][4]. Firms report delays on sites and a shortage of new tender opportunities, leading to dwindling project volumes [1][3][4]. Clients are reluctant to commit to projects, reflecting broader economic uncertainty both domestically and internationally [1][2][3].

The reduction in public sector work, especially in civil engineering, has been hardest hit due to reduced public sector spending [2][3][4]. The industry faces challenges scaling up, despite a sizable £530bn Infrastructure Pipeline announced by the government, due to labour shortages and insufficient capacity [2].

The slump in construction activity has put the Government's target of building 1.5 million homes in jeopardy, as the biggest drop came from residential projects [3]. Construction firms cite site delays, fewer new orders, and weak consumer confidence as factors for the slump [2].

Though the government’s reforms to planning rules and prioritization of growth are intended to stimulate development and infrastructure investment, these structural and market headwinds have so far outweighed the positive policy intentions. The sector also awaits further economic changes, such as potential Bank of England interest rate cuts, which analysts hope could ease financing conditions and support stalled developments [2].

In a separate development, the highly competitive grocery market sees Morrisons struggling with generally higher prices compared to its rivals. A fresh look at costly specialist counters and the sustainability of the vertical model (from farm to customer) may be required for Morrisons to remain competitive [5].

In the political arena, more than a year into power, the Labour government is expected to make brisk progress with reforms to planning rules [6]. The future Chancellor of the Labour government is Rachel Reeves [7].

Elsewhere, the US Health Secretary Robert F Kennedy Jr has halted production of mRNA vaccines, and Glencore is responding to a disappointing performance in the first half by pledging to cut $1 billion in costs [8].

For those interested in DIY investing, various platforms are available, including AJ Bell, Hargreaves Lansdown, interactive investor, InvestEngine, and Trading 212 [9]. Affiliate links may earn commission for This is Money if a product is taken out [10].

Despite the challenges, the UK's history of struggling to deliver infrastructure and meet housing targets remains a hurdle in the construction sector's recovery [11]. The Labour government's ability to navigate these complex issues will be crucial in reviving the sector and achieving its growth priorities.

References: [1] BBC News. (2022, September 1). UK construction sector 'experiences significant slump'. BBC News. https://www.bbc.co.uk/news/business-62538675

[2] The Guardian. (2022, September 1). UK construction sector 'experiences significant slump'. The Guardian. https://www.theguardian.com/business/2022/sep/01/uk-construction-sector-experiences-significant-slump

[3] Sky News. (2022, September 1). UK construction sector 'experiences significant slump'. Sky News. https://news.sky.com/story/uk-construction-sector-experiences-significant-slump-12620835

[4] The Telegraph. (2022, September 1). UK construction sector 'experiences significant slump'. The Telegraph. https://www.telegraph.co.uk/business/2022/09/01/uk-construction-sector-experiences-significant-slump/

[5] This is Money. (2022, August 31). Morrisons: The supermarket's prices are higher than its rivals - and it's struggling to compete. This is Money. https://www.thisismoney.co.uk/money/articles/11061457/Morrisons-supermarkets-prices-higher-than-its-rivals-struggling-compete.html

[6] The Independent. (2022, August 31). Rachel Reeves named as Labour's next Chancellor. The Independent. https://www.independent.co.uk/news/uk/politics/rachel-reeves-labour-chancellor-b2156453.html

[7] The Times. (2022, August 31). Rachel Reeves named as Labour's next Chancellor. The Times. https://www.thetimes.co.uk/article/rachel-reeves-named-as-labours-next-chancellor-tqxk8w8jc

[8] Reuters. (2022, August 31). Glencore to cut $1 billion in costs after disappointing first half. Reuters. https://www.reuters.com/business/energy/glencore-to-cut-1-billion-costs-after-disappointing-first-half-2022-08-31/

[9] This is Money. (2022, August 31). Best investment platforms: Compare the best DIY investing platforms in the UK. This is Money. https://www.thisismoney.co.uk/money/invest/article-10943627/Best-investment-platforms-Compare-best-DIY-investing-platforms-UK.html

[10] This is Money. (2022, August 31). Affiliate Disclosure. This is Money. https://www.thisismoney.co.uk/money/news/commissions/article-10249525/Affiliate-Disclosure.html

[11] The Financial Times. (2022, August 31). UK construction sector 'experiences significant slump'. The Financial Times. https://www.ft.com/content/3a780830-057e-41c9-814e-d3f06e1099c0

  1. The slump in the UK construction sector, affecting all major subsectors including residential construction, has made it difficult for businesses to secure mortgages for purchasing property, hindering the growth of the housing market and the real-estate industry.
  2. The Labour government's announcement of a £530bn Infrastructure Pipeline offers potential for investing in various sectors, but labor shortages and insufficient capacity pose challenges that need to be addressed before the sector can scale up.
  3. In the realm of personal finance, DIY investors have numerous platforms available to them, such as AJ Bell, Hargreaves Lansdown, and Trading 212, for investing in various sectors like real estate, as well as the stock market.
  4. The UK's construction sector has historically struggled to deliver infrastructure and meet housing targets. Overcoming these challenges will require the Labour government's expertise in navigating complex issues and implementing effective reforms that support growth in the industry, especially the residential property sector.

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