Government plans to build three million new homes in the twelve years are under threat from the problems affecting the economy, according to a senior Civil Servant. Richard McCarthy, the director general of housing and planning at the Department of Communities and Local Government, told MPs the targets were now extremely challenging.

The Government wants to see two million new homes by 2016 and a further million by 2020 to keep pace with demand. Mr McCarthy told members of the Communities and Local Government Select Committee that figures from the Office of National Statistics suggested 223,000 new households would be created every year until 2026.

The National Housing Federation and the Royal Institution of Chartered Surveyors had already claimed that meeting the targets was looking increasingly unlikely. Mr. McCarthy accepted that the two goals were under threat and added, “Ministers have made it very clear they know those gross figures are now very, very challenging.”

His comments follow a drop in activity in the building industry amid the economic downturn but he said the fact was that the new homes had to be provided to meet the growth in households. “Clearly that’s a challenge at present because, of course, we are building less homes than we would like at this point in time and there’s a serious decline,” he said and added, “We will be discussing with ministers if and when it’s the right time to review those gross targets.”