Can the UK Government Hit Its House-Building Targets Despite Construction Insolvencies?

23rd January 2026

The UK government has set an ambitious target to build 1.5 million new homes in England over this Parliament, which equates to roughly 300,000 homes per year. This target reflects an urgent political commitment to address the long-standing shortage of housing and make homes more affordable — a priority that successive governments have struggled to meet.

However, a range of structural issues in the construction sector, especially a historically high rate of business insolvencies, calls into question whether this target can realistically be achieved.

Further down you will see Scotland also has its own problems increasing after a period of good statistics beginning to decline.

A Fragile Construction Sector and Rising Insolvencies

The UK construction industry remains one of the sectors most affected by business insolvencies — a factor that directly undermines housing capacity and delivery timelines. Construction firms have consistently accounted for a disproportionate share of all company failures in England, Wales, and Scotland — typically around 15 - 17 % of total insolvencies in recent rolling 12-month periods. In England and Wales, roughly 3,900–4,000 construction firms entered insolvency over a recent year — well above pre-pandemic levels and illustrating ongoing financial fragility within the sector. Construction insolvencies in Scotland, while smaller in absolute numbers, similarly make up around 12 – 15 % of all insolvencies there, underscoring that the problem is embedded across the UK's housing supply chain.

These insolvencies affect firms of all sizes but hit SMEs and specialist subcontractors particularly hard, often disrupting ongoing projects and eroding confidence among lenders and developers. Higher material costs, labour shortages, supply chain bottlenecks, and interest-rate pressures all contribute to more companies failing or retreating from new work.

What Recent Housing Delivery Trends Suggest

Against this backdrop of construction fragility, recent data shows that England’s actual housing delivery has lagged considerably behind what is needed to meet the government’s target. Current figures indicate that net additional homes in England have been delivered at a rate closer to 205,000 homes per year, substantially below the target pace of 300,000 annually. If this trend continues, the cumulative output over a five-year Parliament would be around 1.0 million to 1.2 million homes, meaning the government would fall several hundred thousand homes short of its 1.5 million target.

In practical terms, even a modest acceleration of delivery to about 230,000 homes per year would still leave a significant shortfall. These estimates reflect the fact that underlying delivery rates have been historically weak, affected by both demand-side factors and ongoing supply chain and capacity constraints.

To put this into human terms: on the current trajectory, the government might deliver around two-thirds to three-quarters of its promised total, assuming no major policy or market changes. To reach the official target, delivery rates would need to accelerate significantly before the Parliament ends.

Scotland’s Mixed Housing Performance

Scotland’s housing story is complex and contrasts with the challenges facing England. On one hand, Scotland outperformed other UK nations in affordable home delivery in a previous parliamentary term, exceeding its target of 30,000 affordable homes by more than 10 %, with over 33,000 delivered. The Scottish Government has since set a new, higher target of delivering at least 50,000 affordable homes by the end of this Parliament, backed by more than £3 billion in investment.

However, the most recent quarterly statistics show that total housebuilding activity in Scotland has slowed, with around 18,000 homes completed in the year to the end of September 2025 and both private and social sector completions below the previous year’s levels. Start rates are also down, and some social housing completions are at their lowest in years. This slowdown raises concerns about hitting Scotland’s longer-term targets for affordable and overall housing delivery.

Scotland has also not been immune to construction insolvencies, with firms in the sector accounting for over a tenth of all insolvencies, and recent annual totals for construction failures remaining elevated. These company failures can delay projects and add to wider uncertainty within the market.

What This Means for the UK’s Housing Ambitions

Taken together, these trends reveal a difficult reality. The UK’s house-building targets were set against an industry backdrop of financial stress, weakened capacity, and systemic delays in planning and infrastructure delivery. Construction insolvencies both reflect and contribute to the sector’s fragility, undermining firms’ ability to take on new work and complete existing projects on schedule.

Although the UK government has introduced reforms to planning and pledged additional investment to stimulate building, current delivery data suggests that reaching the official target of 1.5 million homes will require more than business-as-usual progress.

Acceleration of starts, stronger support for smaller builders, and direct public sector delivery will all play a role if housing delivery is to improve significantly.

Meanwhile, Scotland’s efforts illustrate that success is possible in some areas, but even there, declining output highlights the challenges ahead.