Philip Hammond’s first and last Autumn Statement has made a clear move back to borrowing to pump-prime the economy, with infrastructure projects being the main beneficiary. But has there really been new investment in the construction sector, asks Assad Maqbool.
Assad Maqbool
Housing associations and affordable housing
The implementation of a right for housing association tenants to buy their properties was a 2015 Conservative General Election manifesto pledge.
In yesterday’s Autumn Statement, the chancellor announced “a large-scale regional pilot of Right to Buy for housing association tenants”.
A pilot is clearly sensible to ensure that the scheme is given proper consideration, but this is a long way from enforcing a policy that would have essentially required housing associations to take on development expertise to maintain stock levels and fund the gap between purchase price and value.
It looks like Hammond’s announcement confirms that the policy is moving down the list of priorities.
The chancellor also announced that an additional £1.4bn will be made available to provide 40,000 new affordable housing starts by 2020-21. This is intended to include housing on shared ownership terms and affordable rent, which continues the intention to broaden access to the housing market.
Housing infrastructure
The chancellor promised to unlock land for housing “with a new £2.3bn Housing Infrastructure Fund to deliver infrastructure for up to 100,000 new homes in areas of high demand”.
The fund is not intended for the direct funding of housing construction. Instead, its aim is to develop the infrastructure in particular areas to unlock the route to additional housing. This is intended to be both social and transport infrastructure development, providing access to new areas of development.
Clearly, there are two streams of potential work for the construction industry: the primary infrastructure works; and the resulting housing developments. This new investment structure appears to have some of the same themes as the current Housing Zones programme, which has been gaining traction over the last year.
Of course, such investment in infrastructure to avoid planning objections and to make land more investable is welcome, but what is not clear is how this relates to the funding discussed in the National Infrastructure Plan published in March of this year, which suggested that precisely this type of housing and regeneration infrastructure pipeline would amount to £9bn by 2020-21.
It is questionable whether this is therefore new investment. If it is new investment, then some consideration needs to be given to the other objectives of the National Infrastructure Plan. There was intended to be a clear long-term pipeline of work. This is, of course, difficult when spending needs to react to the economic effects of the EU referendum, but that clear pipeline has some real function for the construction industry.
The National Infrastructure Plan is intended to allow providers to the sector to have confidence to invest in technology and invest in people. Without clarity on the pipeline and coupled with silence in the Autumn Statement on apprenticeships and training, and the potential tightening of the labour market if infrastructure projects are rushed through to fulfil spend requirements during this term, this does not instil confidence in a shrinking post-Brexit labour market.
Assad Maqbool is a partner at Trowers & Hamlins specialising in projects and construction
