At the end of September new Housing Secretary Steve Reed launched Labour’s new ‘build baby build!’ campaign with a party conference vow to ‘do whatever it takes to get Britain building again’.
But it appears that the country’s builders were not listening, as the following fourth quarter of 2025 saw the largest fall in construction work since the Covid pandemic halted activity on sites across the UK.
New figures from the Office for National Statistics today showed that output dropped 2.1 per cent between October and December, compared with the previous three months.
New work and repair and maintenance both fell, by 2.6 per cent and 1.5 per cent, respectively, in the latest sign of economic stagnation under Labour.
It was the first time output had fallen since Keir Starmer entered No10 and the worst drop since the height of the pandemic in the spring and summer of 2020.
It puts further pressure on Labour and Mr Reed, who took over housing after the resignation of Angela Rayner and inherited her pledge to build 1.5million homes before the next general election. At 300,000 a year it is a target not hit since the 1970s.
Shadow housing minister David Simmonds said: ‘Labour’s Housing Secretary Steve Reed’s promised to ”build, baby, build”. But this hasn’t just failed to get off the ground – it’s actually gone into reverse, with construction output falling.
At the end of September new Housing Secretary Steve Reed launched Labour’s new ‘build baby build!’ campaign with a party conference vow to ‘do whatever it takes to get Britain building again’.
‘Ministers keep repeating their commitment to their 1.5 million homes target, but the facts tell a different story.
‘Labour delivered fewer homes in their first year in office than the Conservatives managed during a global pandemic.
‘Their higher taxes are driving investors away and stopping development. And they have no plan to deliver the qualified construction workers we need to get homes built.’
It comes after December’s S&P Global UK construction purchasing managers’ index (PMI) showed it at a five-and-a-half-year low of 40.1.
It achieved a reading of 46.4 for January, the best result since June last year with most economists expecting a reading of 42 for last month.
But the reading remained below the 50 level threshold, indicating activity in the sector remains in contraction.
Builders surveyed in the report said they were seeing a gradual turnaround in sales pipelines, with business optimism the highest since last May.
But costs also continued to weigh on builders, with those surveyed reporting that suppliers were passing on higher material costs and wage bills following last year’s national insurance contribution hike and minimum wage increases.
It came as wider economic figures showed Brits have suffered six months of getting poorer amid chaos over Labour’s Budget and tax hikes.
Official figures showed GDP effectively flatlining in the final quarter of 2025, with just 0.1 per cent expansion.
But even that minimal progress masked a bleak picture, with activity now seen as having gone into reverse in the three months to November – the lead-up to Rachel Reeves delivering her fiscal package.
Worryingly for the government, which has made growth its ‘number one priority’, construction output showed its worst performance since 2021, dropping by 2.1 per cent in the quarter. The crucial services sector stalled entirely.
The limited advance recorded by the ONS was only down to immigration pushing up the population. On a per head basis, GDP fell by 0.1 per cent in the latest quarter, following an equivalent decline in the previous three month period.
The fourth quarter estimate means the economy grew by 1.3 per cent overall in 2025, up from 1.1 per cent in 2024 and the highest growth since 2022 – but lower than the 1.4 per cent expected by the Bank of England and most economists.
Despite the figures showing people worse off for the past six months, Keir Starmer – who is fighting to cling on in No10 – insisted money is going ‘back in your pocket’.
‘Job number one is easing the cost of living pressure that many people still feel. Today’s GDP figures show our economy is growing. That means more money back in your pocket,’ he said.
Chancellor Rachel Reeves pointed to the improvement in GDP per head over the first six months of 2025 – which came after a complete standstill in the wealth metric in 2024. Overall in 2025 GDP per head was up 1 per cent.
‘Thanks to the choices we have made, we’ve seen six interest rate cuts since the election, inflation falling faster than predicted and ours is the fastest growing G7 economy in Europe.
‘The Government has the right economic plan to build a stronger and more secure economy, cutting the cost of living, cutting the national debt and creating the conditions for growth and investment in every part of the country.’