Tories’ £5 billion boost greeted with healthy cynicism

The government has flashed the cash at the housebuilding industry, promising a £5 billion boost to ‘get Britain building again’. While the announcement has been greeted with enthusiasm, the ministers’ speeches have raised a few eyebrows.

“The big developers must release their stranglehold on supply,” Communities Secretary Sajid Javid, said in his speech at the Conservative Party Conference. “It’s time to stop sitting on land banks, delaying build-out: the homebuyers must come first. Almost 280,000 planning permissions were issued over the last twelve months.”

Naturally, this provoked some indignation from housebuilders. “Housebuilders are still stifled by planning delays that prevent them getting on sites and delivering homes more quickly,” said Stewart Baseley, executive chairman of the Home Builders Federation. “Efforts to address this and remove some of the many barriers that new entrants face when trying make it into the industry and build new homes will undoubtedly help to boost housing output.”

Local governments have responded that there is little delay from their side. “It is important for government to recognise that planning is not a barrier to housebuilding,” said Lord Porter, Chairman of the Local Government Association. “Councils are approving nine in 10 planning applications yet our recent analysis also shows there are hundreds of thousands of homes with planning permission which are still waiting to be built.

“Tackling this growing housing backlog must be a priority and councils need more powers to encourage developers to build homes more quickly. Allowing councils to set planning fees locally would also allow them to cover costs and continue to develop a proactive planning approach for unlocking housing growth.”

Big developers including Cala Group and Barratt Homes have all made statements to the national press stating that housing supply is being stumped by a number of challenges, and that land banking makes no sense when demand is high. “We are doing whatever we can to continue to build more new homes, including efforts to boost the number and quality of the talented people we employ to overcome the skills shortage and also continuing to identify and acquire high quality sites,” said John Tutte, Chief Executive Officer at Redrow.

Smaller builders, meanwhile, were a more politically palatable sector for the government to champion. A significant portion of the £3 billion Home Builders Fund will be specifically targeted at supporting small scale developers. “The private sector clearly has an important role to play but it cannot build the homes we need on its own and government measures announced today to create a resurgence of SME builders are an important step towards increasing the private sector’s output,” said Lord Porter.

One in two local house builders cite difficulty accessing finance as a major barrier to their ability to build more homes, according to the FMB, demonstrating the latent potential of a sector that can play a much larger role in tackling the gap between supply and demand of new homes.

“The Government will need to work closely with industry to ensure that this policy is delivered in a way that is accessible and that enables both existing SMEs and new entrants to make maximum use of such a substantial fund,” said Brian Berry, Chief Executive of the FMB. “If the Government get the details of this fund right, we would hope that the anticipated building of 25,500 homes over the course of this Parliament could act as a real catalyst for a much wider revival of SME house builders.”

Where the 25,500 new homes would be built also caused some contention. “Everyone agrees we need to build more homes. But too many of us object to them being built next to us,” said Chancellor Phillip Hammond in his speech.

Matt Thomson, the Campaign to Protect Rural England’s head of planning, reminded the industry that it’s important to build in the right places. “We’d like to see much more ambition in accelerating construction on public land given the amount of such land that’s available,” said Thomson. “We’d also like to hear more about how we restrict greenfield development to drive the brownfield development that both CPRE and the Government want to encourage.”

Meanwhile, Gavin Smart, deputy chief executive of the Chartered Institute of Housing, reminded the government simply building more home is not enough – they need to build home that suit everyone. “The key now will be in the detail and the biggest challenge will be making sure that the investment supports new, affordable homes of all types,” he said. “Though boosting home ownership is something we support, many people are unable to get onto the property market and are left with no option but to rent in the private sector.”

While any focus on housebuilding is good news for the industry, the Chancellor was the first to admit that the new funds are short term measures for a long term problem. Housebuilders, meanwhile, will have to wait and see what else is in store.

“Any government policy that has the potential to continue to accelerate housebuilding is very welcome but, as ever, the devil is in the detail and we are watching closely to see how this unfolds in the run up to the Autumn Statement,” said Tutte.

PHOTO CREDIT: Ian Paterson

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