Business leaders have called for a “step change” in housebuilding if the government is to meet its ambition of delivering one million new build homes by 2020.

The CBI said there should be an “ambitious new way of thinking”, insisting that the crisis in the housing market is an “acute problem” for businesses as well as being a growing social issue.

The government was commended for having taken “bold steps” to deal with the problem – from Help to Buy to the more recent combined Home Building Fund – but a lack of affordable homes continues to hamper firms’ ability to recruit and retain talented staff, and long commutes impact workers’ productivity, according to the CBI.

With the country’s population is set to grow by 10 million in the next 25 years, the government is now being urged to offer help to small and medium sized housebuilding firms through improved release of public land as well as easier access to finance to ensure the UK’s housing challenge is adequately met.

Josh Hardie, CBI deputy director-general, said: “Solving the UK’s housing shortage has long been a tough nut to crack. For Britain’s businesses, it is far from something confined to the news columns. It’s a problem the impacts of which are seen every day, from high prices barring people moving home and deterring them from applying or staying in a job, to the dent it puts in productivity.

“A quiet revolution in the way business and the government think about, provide and deliver housing is necessary if we are to reach the welcome target of one million new homes by 2020.”

Hardie believes that the “one size fits all” approach has “passed its sell-by date”, and that as the demographic landscape changes, new types of homes are needed to fit the needs of people who live in them, creating vibrant and attractive communities, and for that to happen, different types of players in the market are required, “like small housebuilders”.

He added: “A flexible approach, underpinned by government working with business, will enable us to deliver the homes we sorely need, and which will drive productivity, boost growth and increase prosperity in every corner of the country.”