Housebuilding shortfall threatens at least £1.6bn of Healey's fiscal headroom

Britain Remade's projected miss of more than 400,000 homes ^[4] is about 2.4 times the 170,000 extra homes the OBR credited to planning reform ^[2][1]. Take out the whole reform uplift and more than half the shortfall is still unexplained ^[2]. If the forecast being missed is the OBR's 1.3 million total ^[2], Britain is on course for fewer than 900,000 new homes by the end of the decade. That is at least 230,000 below what the OBR expected before it counted planning reform at all ^[4]. The 36% figure points higher, to roughly 468,000 missing homes ^[3].

The OBR valued the reform at 0.2% of GDP, or £6.8bn in 2025 prices ^[3]. Ashley Webb of Capital Economics said a downgrade of this magnitude would cut the Chancellor's headroom by an additional £1.6bn through lower tax income ^[5]. The report does not spell out which downgrade he modelled. If it is the loss of the reform's 0.2%, the Treasury gives up about 24p of headroom for each pound of output that disappears ^[5]. Sam Dumitriu, head of policy at Britain Remade, said the effect could be even bigger because low building rates will more than eradicate the 170,000 extra homes ^[6]. Scale Webb's number by the ratio of the miss to the uplift and it comes to about £3.8bn ^[6]. That is my own straight-line extrapolation, and the OBR may model it differently.

The harder puzzle is what the OBR scored in the first place. It credited the uplift to planning, a limit on supply ^[2]. The property industry blames the weak figures on too few people being able to afford new homes ^[7]. Industry sources said housebuilders had warned the OBR that building is likely to slump further because of high mortgage rates ^[8]. If the builders are right, looser planning adds few homes while buyers cannot borrow, and the growth credit was attached to a constraint that was not binding. The counter-case sits in the same data. Planning consents have slumped too, alongside viability problems and soaring build costs ^[9], so the pipeline may simply not have filled yet. If consents and completions recover while mortgage rates stay high, the builders' account is wrong.

The builders' answer is the Help to Buy equity loan scheme, government-backed loans for buyers of new builds, and they are lobbying Healey to revive it in his Budget ^[10]. A revival helps the headroom only if the OBR judges that the loans raise construction and growth ^[11]. It would also mean Budget money spent on demand for new homes to rescue a forecast the OBR built on freeing supply. Andy Burnham on Saturday announced Your First Home, a scheme of state-backed loans to help young people with deposits ^[12].

At its next forecast the OBR can strip out the reform uplift alone, a hit near Webb's £1.6bn ^[5], or mark down the full shortfall, as Dumitriu's argument implies ^[6]. A third path runs through the Budget: the OBR credits a loan scheme with adding homes and hands some headroom back ^[11]. I'd expect the second, because a miss more than twice the size of the reform is hard to confine to the reform ^[1]. The case against is timing. The OBR's figure runs to 2029-30 ^[2], which leaves consents time to recover.