The UK government will miss its manifesto target of building an additional 300,000 homes a year by the mid 2020s and is imposing unrealistic goals on English cities, business groups and councils have warned.

To meet the pledge the 20 largest cities would need to increase their existing home-building targets by 35 per cent. But local authorities and planning consultants have said the requirement imposed “absurd” demands on some urban areas.

Business leaders have warned the target is undermining the government’s levelling-up agenda to reduce inequality across the UK, by hurting economic growth prospects as land used for local businesses is taken for housing.

The “uplift” was devised after Conservative MPs rebelled against a government plan to spread the burden of housebuilding across the country by using a controversial algorithm to calculate local targets, which former prime minister Theresa May described as “mutant”.

In a major U-turn in December 2020, the government scrapped the plan. Instead, ministers retained their previous assessment of where housing was needed but suggested the 20 cities increase building by more than one-third on existing targets.

In theory, the revision would generate 300,000 new homes a year but in practice has been hopelessly unrealistic for some cities. “The 35 per cent uplift was really a quick fix created when the mutant algorithm failed,” said Matthew Spry, a director at planning consultancy Lichfields, adding it had always been seen as a “stop-gap”.

Spry said it was already clear that the target would be missed. “What’s going to be built by the mid-2020s has to have planning permission now, and doesn’t.”

While the government has dropped plans for a sweeping liberalisation of the planning system, the levelling-up bill expected to be announced in the Queen’s Speech next month will include some more modest measures.

Michael Gove, levelling up, housing and communities secretary, is expected to replace the current system of developer contributions towards local amenities with a new levy designed to help councils boost affordable housing.

Some cities such as Manchester have sufficient land and space to meet the targets, others, including Bristol, Brighton and Sheffield, were failing to meet their targets even before the “uplift” was imposed.

Several council planning officials said the 35 per cent target was unattainable, particularly because it focused housing growth narrowly on those cities, rather than taking a regional approach that could spread the load.

Nicola Beech, a Labour councillor and cabinet member for planning in Bristol, said the imposition of the target had left the city in an impossible position, creating “poisonous” choices between job creation and residential building.

Under the new policy Bristol, which had a shortfall of 12,000 homes, is required to deliver an extra 3,300 houses a year, nearly double its current level of 1,700.

“It’s just an absurdity. Bristol is a pro-growth city. Housing is one of our top-ticket items but that land does not exist in the city. We’re all totally aware that this target is just a retrofit exercise to help the government meet its manifesto commitment,” said Beech.

In Sheffield, the city’s own target was to build 40,000 homes over the next 20 years, a figure that would have stretched land availability “to the limit”, said local officials. Under the revised goal the city must produce 53,000 new homes by 2038, which far exceeds projected need, according to the council.

Brighton, which is bounded by the sea on one side and the South Downs National Park on the other, is another place with no chance of meeting the government’s pledge.

“It’s pretty much impossible and I’d be surprised if anyone thought it was ever possible. Which begs the question, ‘To what end are we talking about these numbers when they are not achievable?,” said Ed Allison-Wright, vice-chair of Brighton and Hove Economic Partnership.

In London, meanwhile, there are yawning gaps between the central government’s assessment of how much housing is needed, City Hall’s own target and the reality of what is being built.

Factoring in the 35 per cent increase, London would need close to 94,000 homes a year, when the London Plan sets a target for an average of 53,000 additional homes per year over the decade.

In reality just 37,000 new homes were delivered on average between 2017-2020, according to Lichfields.

The move could have negative knock-on effects for local businesses as land used for employment is given over to residential housing, according to analysts.

In Bradford, a 2019 report by the local Chamber of Commerce identified a shortage of employment land, warning the consequences for future economic growth in the district could be “quite significant” if not addressed.

Mike Cartwright, the Bradford lead for West and North Yorkshire Chamber of Commerce, said the policy had forced the council to shelve a principle that residential land allocations would be matched “tit for tat” with employment land.

While in Bristol, local businesses have complained to the Chamber of Commerce that they are being squeezed out of premises. Jo and Lee Bryant, who run an MOT testing centre in Whitehouse Lane, said they had no choice but to move since the area had been slated for residential redevelopment by August.

“There’s nothing within a five mile radius of here. We’ve looked at 74 properties. We pay £25,000 a year rent now and the cheapest unit of a similar size is £75,000. We don’t know what we’re going to do,” said Jo Bryant.

Matt Griffith, director of policy at Business West Chamber of Commerce, said the politics of the planning policy appeared to be fed by nimbyism and were incompatible with government promises to drive UK competitiveness.

“Focusing a large uplift on to just city authorities is forcing a significant loss of employment land — rising prices, further hurting UK business competitiveness and losing jobs, particularly the blue-collar jobs that are central to levelling up,” he added.

However, the levelling up department said the target reflected the government’s priority to make more use of previously developed land.

“This change will help breathe life into urban areas by regenerating brownfield sites across the country, while reducing reliance on high-carbon forms of transport for new development,” it added.

Additional reporting by Jennifer Williams in Manchester