New measures to kick-start the construction industry are welcome, but it’s no substitute for greater investment, says Denise Chevin
To paraphrase Bill Clinton: It’s the construction industry, stupid. It’s taken three years hard lobbying, hundreds of thousands of people to lose their jobs, and the lowest levels of house building on record for the government to start listening. But from announcements made this week, there is at least some sort of semblance that the coalition gets it: that the fortunes of the economy are by and large linked to the fortunes of construction.
The medicine comes in a series of measures intended to kick-start building projects, create 140,000 new jobs and build 70,000 new houses and then a reshuffle that’s framed as ensuring that all those now in post are pulling in a direction that aligns to the needs of business.
For construction it’s vital that this is actually on board. To date so much of coalition government has had the feel of an array of individual fiefdoms, with decisions and policy forged in one department without any consideration of unintended consequences for construction – the delays to the schools programme; the effects of localism on planning decisions; or even the change to social housing which has seen the building programme delayed not because of cuts, but because of the switch to so-called affordable rent, causing a row between housing associations and councils which delayed the programme getting started.
In essence, on top of the cuts to public spending, which really haven’t properly started to bite, the government has been shooting itself in the foot. So hopefully Mark Prisk, the former construction minister coming in to replace Grant Shapps at housing, will be able to take decisions that do not undermine the positive noises being made elsewhere.
And what of these new kick-start measures? Just to recap these are:
- For a set time planning rules on extending homes and business premises will be relaxed.
- All householders will be able to build 6m long extensions without planning permission (it’s currently 3m)
- Removing requirements for developers to include affordable housing – if they prove they make a site “commercially unviable”.
- An extra £280m for the First Buy scheme to help would-be homeowners with a deposit.
- A new bill to provide £40bn in government guarantees to underwrite major infrastructure projects and £10bn to underwrite the construction of new homes – particularly in private rented sector.
- Funding of £300m to provide 15,000 affordable homes and bring 5,000 empty homes back into use.
- A new “major infrastructure fast-track” for big projects.
- Putting poorly performing council planning departments into “special measures” and allowing developers to bypass them if they fail to improve.
- A £200m investment in stalled housing sites.
- Encouragement for councils to reconsider the use and/or reclassification of previously developed land lying with the Green Belt.
- An industry-led group convened by government to look in detail at the barriers holding back off-site construction of homes, to provide proposals by the next Budget.
- Accelerated disposals of public sector land via the Homes and Communities Agency (HCA).
- Acceptance of measures in the Montague report to kick start private rented housing
Many of these measures make good sense and are to be welcomed. And it’s good to see there is something in there for small and medium firms in terms of scrapping planning permission for extensions. It’s good to see, too, the recommendations of the Montague report, which was all about getting the private rented market going, being taken on board. Providing homes for those who can’t get a mortgage but don’t qualify for social housing has long been a missing part of our housing provision. The extension to the First Buy scheme will be a fillip for house builders and the underwriting of the construction of new homes, a real boost to housing associations if it brings down their costs of borrowing.
One wonders if we really need yet another task force to look at pre-fabrication – we all know the problem there – it’s too costly because there isn’t the volume. And at this moment in time, it’s hardly top priority either.
But when you add up all of these proposals what really does it amount to?
While social housing bodies generously say it “has the potential to transform house building” the general consensus is that it’s that it doesn’t really come close to tackling the full scale of the problem. The RICS was particularly dismissive. “What the market needs now is investment, not piecemeal planning reform. More ambition from the government would help create the homes and jobs we need to pull the UK out of recession,” said Peter Bolton King, RICS global residential director.
It’s also worth remembering that housing is all about money. The very foundations of the business model are based on confidence and ever increasing house prices – house builders can’t sell three and four bedroomed homes because buyers haven’t built enough equity in two bedroomed ones. And anyway they have moved financial models to concentrate on margins rather than volume.
So certainly we ought to expect some improvement for the better in terms of new homes getting built and it has to be good news that the government seems to be really turning its attention to the plight of the construction industry. (If it’s really serious let’s get son of PFI sorted out and delays to the school building programme please).
So it won’t I’m afraid provide, as the prime minister claimed, “a comprehensive plan to unleash one of the biggest homebuilding programmes this country has seen in a generation”. We’ll have to wait for the economy to improve significantly all round before the private house builders rev up the JCBs to full throttle.
