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Sector Reponds to Jeremy’s Budget

 

CEO of The Hydrogen Energy Association (HEA) Celia Greaves

“Giga has the potential to release billions in private investment in clean energy supply chains to provide products and services and will be critical for the continued development and deployment of hydrogen in the UK.

“We have been invited by the Department for Energy Security and Net Zero to facilitate input to a Call for Evidence on the funding package to support the expansion of strong, home-grown, clean energy supply chains across the country, for hydrogen and carbon capture, utilisation and storage (CCUS), as well as electricity networks, nuclear and offshore wind.

“Our input – from an association representing 120 members across the full-value chain – will help them to better understand the manufacturing project pipeline and the issues faced by the supply chain, and ultimately support DESNZ in gauging hydrogen market readiness for Giga funding, ahead of intended scheme launch in the summer of 2024.

“We are now entering a period of unprecedented growth for the UK hydrogen economy and this sort of funding could provide that valuable leap forward for the UK to continue to be a world leading place to invest in hydrogen.”

Gideon Stone, co-founder of Janine Stone & Co, the luxury residential design and build agency

 “The UK prime and super-prime residential sector is one of the few points of light amid a very difficult housing market. The sector has a strong appeal, seeing a more than 5% increase in listings over the past 12 months, with particularly pronounced growth in prime London neighbourhoods, such as Highgate, Holland Park, and Belgravia. Overall, the sector’s economic contribution is significant, generating over £36 billion across some 16,000 transactions last year.

Overseas buyers are vital to this market, accounting for 45% of purchases in Prime Central London in 2023, an increase of 6% on the previous year. As a result, Chancellor Hunt’s decision to scrap the non-dom tax regime threatens to snuff out the sector’s recovery. Too sudden or too dramatic a change in the tax system for high net wealth individuals risks transactions to grind to a halt, depriving the Exchequer of much needed revenues and the housing market of an upturn in one of its most important sectors.

Britain is blessed with a large endowment of extremely desirable luxury properties that overseas buyers wish to purchase and the Government should think carefully before jeopardizing the future of this important sector.”

Will Walker, UK Policy Lead at Ashden the climate solutions charity

“The country is crying out for bold government leadership and a credible plan to address the triple-whammy of energy security, fuel poverty and the climate crisis. This has to be done through sustainable clean growth. Any plan needs to be backed with the right powers, resources and incentives to empower communities, leverage investment, upskill and expand the workforce, and revive the economy.”

“The chancellor said he wanted to ‘build up our resilience to future shocks’. However, in reality he failed to ‘read the room’ and delivered a budget that misses the fact that citizens, by and large, care more about long-term investment in public services and getting help with their energy bills than short-term tax cuts.”

“Unfortunately, what we’ve seen over the last decade from Government is dither, delay and division on net zero. This has undermined business and investor confidence, weakened supply chains and added nearly £2.5bn to UK energy bills.

“A case in point is the home heat workforce and heat pump industry. Several net zero retreats in recent years, including the latest U-turn this week with the scrapping of the Clean Heat Market Mechanisms – sometimes given the misnomer of ‘the boiler tax’ – have meant that the industry really don’t know where they are any more. They have had their fingers burned and don’t trust government schemes, undermining the progress of a growth sector – yet again this budget neglects to provide a properly funded retrofit plan to support action that could really make a difference to the economy and help households trying to keep their costs down and homes warm.”

“Clearly the model is broken. Fundamentally, local leaders need more powers and resources devolved from Westminster, not further pressure on spending that has already been cut to the bone. Only by centering the needs of communities in the transition to net zero, reviving public services, and prioritising those most affected by it, will we get where we need to go and bring people with us.”

 

Dr Jonathan Carr-West, Chief Executive, Local Government Information Unit (LGIU), said:

“Local government was not entirely absent from today’s Budget. Headline announcements included a trailblazer devolution deal for the North East, devolution deals for Buckinghamshire, Warwickshire and Surrey, new Investment Zones and a series of funding deals to support housing. These will no doubt be welcome in those areas that receive them, but the Chancellor did not address the systemic funding issues in local government.

Our latest research found half of councils believe they could face bankruptcy within the next parliament. Council taxpayers are paying ever higher rates for fewer services, and leisure centres, SEND provision and adult social care funding are all facing deep cuts.

Now is the time for productive debate on the possible solutions to the local government funding crisis. Instead, the spending reductions required by this budget will increase all these pressures.

The Chancellor recognised market failures in children’s residential care and SEND support but councils will not feel that this is enough to counteract the cost increases they have faced in those areas. Similarly many in local government will note that the Chancellor’s emphasis on public sector productivity is not reciprocated by removing some of the onerous funding hoops that councils have to jump through.

We need a proper debate about how we fund local services and we need to reform council finances. This scattergun pattern of largesse granted or withheld will no longer suffice.”

 

Graham Harle is the CEO of Gleeds Worldwide

“As Chancellor Jeremy Hunt resumed his seat after the budget, the false bonhomie masking apprehension on colleagues’ faces spoke volumes. With an election around the corner, if it was supposed to buy the government another term of office, I would imagine many Tory MPs will be ordering the removal van. Construction and property are a bell weather industrial sector as well as big employers and our numbers make for grim reading, with construction activity recording almost flat output levels in February after five months of falls. This is the core issue that the Chancellor should have been addressing – how to inspire confidence, fan growth and improve productivity. Rather than tinker around the edges doing things like increasing the VAT registration threshold by a meagre £5K, minimal investment in housing and full lease expensing “when affordable”, the Chancellor should look at the anaemic UK economy as needing a transfusion, not a sticking plaster. GDP is only predicted to be marginally higher this year at 0.8%, for instance. This was a budget to stop us bleeding out before the election, not a long-term recovery plan.”

David Hannah, Group Chairman of Cornerstone Tax

“Multiple Dwellings Relief was first implemented as means to incentivise bulk purchases and provided developers with a suitable avenue for delivering low-cost homes. At a time when demand for affordable housing has skyrocketed, the government should look to create fresh incentives for developers, instead of abolishing old ones.”

“With inflation forecast to fall below the 2% threshold in just two months time, it’s time that the Chancellor pressure the Bank of England to urgently reassess their priorities. Economies have momentum and the unnecessary continuation of record high interest rates risks further damage to the UK’s struggling housing market.

“Our data reveals that 59% of Brits on their current salary cannot afford to save for a deposit, whilst 54% of Brits claim that their family aren’t able to provide them with enough support for their first step on the housing ladder.

“The Chancellor could have used this opportunity to reform the private rental sector, measures including the abolition of the second home surcharge from rental sector investors and reinstating full relief on mortgage interest payments would have both reduced the costs of purchase, whilst also allowing landlords to freeze, or potentially cut, rents. “

The Housing Forum responds to the Spring Budget 2024

 

The Housing Forum welcomes the £240m announced today to unlock housing in Barking and Canary Wharf, and also the second round of funding to address the nutrient neutrality issue blocking new homes. It was disappointing not to see any other significant new funding announced for housing in today’s budget.

The housing sector has been struggling with market downturn and a raft of new regulations, making it more expensive and difficult to build new homes. The government is on course to miss its own target of 300,000 new homes a year, and there was nothing today to suggest any plan to remedy this situation. The Housing Forum’s proposals for a £4bn fund for affordable housing would enable the 60,000 households currently in temporary accommodations to have a home of their own, reducing costs for local authorities’ hard-stretched budgets and helping the housing and construction sector to retain capacity to accelerate in the future.

We’re also very concerned about the funding cuts proposed to unprotected departments like the Department for Levelling Up, Housing and Communities, over the coming years. Even more worrying is the lack of support for local authorities, many of which are on the verge of issuing Section 114 notices. Well-funded local authorities are needed to develop local plans and build much needed social housing, if councils are left in the lurch then housebuilding will decline yet further.

 

 

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THE BUDGET: STAGNATION OR STABILITY

Yesterday’s budget speech revealed little of what we already knew. Critics have pointed out the lack of ‘Green Policy’ and others applauded the inference of growth through investment with the promise of the year-end seeing inflation reduced to under 3%. There was good news for the 1% of wealthy individuals who can afford to reduce their tax penalty with greater contributions to their pensions. Smaller companies that represent 65% of the whole in this country can also take advantage of tax allowances on investment. However before you can invest you must earn and with a 6% graduated corporation tax hike affecting all whose profit exceeds 50k and are already struggling with ever-rising costs and skills shortages, survival more than investment is probably the order of the day.

 

Here’s what some construction industry leaders had to say on the Spring Budgets impact on the sector.

 

Graham Harle CEO of Gleeds

“This budget was set against the backdrop of global uncertainty as well as a desire by the Chancellor to pacify the disgruntled Tory right wing. It is a bit like trying to carry a delicate Ming vase coated in olive oil across an ice rink wearing stilettos. One false move and it’s all going to end up in a hundred pieces.

We wanted three things – help to alleviate critical labour shortages, guarantees on infrastructure spending, and tax incentives to impact carbon reduction refurbishment of residential and commercial buildings. What we got was promises of more enterprise zones, investment incentives for mini nuclear power projects and tax breaks for capital expenditure investment.  These are all welcomed and admirable but long-term aspirations are not short-term fixes.

Our sector employs up to 7% of the working population, we needed clear strategic vision from Government to promote investment and grow confidence. In spite of the claim that this was a budget for growth, it was in fact a careful economic statement from a pressed Chancellor who had more headroom to invest, due to £30bn less borrowing costs, than he used. I am disappointed that there were no defined measures to assist us operating in the built environment, one of the largest and most impactful sectors in the UK.”

Cara Jenkinson, Cities Manager at climate solutions charity Ashden

“This budget was a terrible wasted opportunity. Mr Hunt referred to four Es in his budget –‘ Enterprise, Employment, Education and Everywhere’ but the two that could have helped all four were missing – ‘Energy Efficiency’.

‘This was a chance for the Chancellor to clearly set out that not only did the UK government recognise that focusing on energy efficiency would support citizens through the energy and cost of living crises, but would show the government is continuing to take action on the climate crisis too.

“Instead, this budget showed a UK government committed to investing £20bn in nuclear and carbon capture. £20bn could retrofit millions of homes and provide the government and society with huge quick wins – tackling the energy, climate and cost of living crises at the same time.

“The chancellor’s thinking needs a rapid upgrade – just like 19 million homes in the UK that need retrofitting. By laying out measures to boost retrofit demand and creating a generation of skilled retrofit workers, he could have not only generated savings for struggling households, but also given businesses the confidence needed to generate over 200,000 new energy efficiency jobs. A missed opportunity, that UK households, workers and businesses will keenly feel in years to come.”

Anne-Marie Mountifield, Director of The Solent Cluster

“The Solent Cluster team is pleased with the Chancellor’s announcement in Wednesday’s budget and as we have the potential to capture and store a third of the government’s annual ambitions for CCS, the impact of this for the Solent region and beyond is significant. It will make a large contribution to attracting significant investment into levelling up the Solent region, as well as creating new jobs and growth.”

Forty percent of all industrial CO2 ever captured has been successfully captured by one of the Cluster’s founding members ExxonMobil. The Cluster is actively developing its own CCS solution, drawing on the global expertise of ExxonMobil at its site in Fawley, Hampshire.

Anne-Marie continued: “Through new hydrogen production facilities, the Solent can lead the way in creating low carbon fuels for the maritime industries, on which much of our region’s economic prosperity depends.

“We are currently awaiting the announcement of Track-2 cluster funding from the government as it works towards its requirement of reaching net zero emissions by 2050. This will enable us to deploy our decarbonisation plans which, as well as offering the prospect of lower carbon energy for homes, businesses, public buildings and transport, will also help decarbonise industries in and beyond the Solent region by capturing, processing and storing their emissions.

Government expects that support for Track-2 clusters may include access to capital support through the CCS Infrastructure Fund and Net Zero Hydrogen Fund, and revenue support mechanisms through technology-specific business models.

David Hannah, Group Chairman of Cornerstone Tax 

“The announcement from the Chancellor of 12 new investment zones spread across the West Midlands, Greater Manchester, the North East, South & West Yorkshire, East Midlands, Teeside and Liverpool will drive property prices in these regions. There has been a concerted effort from the government to spread the wealth evenly throughout the UK and the introduction of these investment zones should increase the amount of jobs and businesses in these regions which will inevitably effect property prices.

“Not to mention providing more job opportunities for those who are currently unemployed causing a rise in wages and potential property buyers.The chancellor did outline employment as a priority in the announcement and a measure which the government introduced of having apprenticeships available in the skills trades for over 50-year-olds could positively affect the chronic undersupply of properties in the housing market.

“This is a good measure that helps address skills shortages, which are currently affecting 83% of businesses within the construction industry, according to research by recruitment specialist Search Consultancy. I think anything that they can do to expand the construction sector is welcomed – it is a supply crisis that we are seeing in the property market, not a demand crisis. They are focusing on getting workers to return back to work and that should inevitably speed up construction.

Jonathan Carr-West, Chief Executive, Local Government Information Unit (LGIU)

“There was some good news for localists in today’s budget. Multi-year finance settlements and a single budget for Greater Manchester and the West Midlands is a positive step and one that we have long called for at LGIU. We should note though, that this budget only covers devolved policy areas, so large elements of public service spending are left outside it.

There will be few tears shed in the sector over the demise of LEPs. Local government is more democratically accountable and better positioned to drive strategic economic development and to facilitate the necessary local partnerships.

Three quarters of councils in our recent State of Local Government Finance report called for a 100% business rate retention and will be pleased to see the Chancellor confirming his intention to introduce this.

But while we should welcome moves to localise growth and empower local leaders, other aspects of the budget appear to confirm the Government’s unfortunate tendency to command and control.

More competitive bid funding in the Levelling Up Fund, investment zones to be decided on by central government, even the £63 million on swimming pools will be within the Government’s gift.

On top of which we see reports that the Mayor’s in West Midlands and Greater Manchester will now be subject to scrutiny from committees of MPs. This is a move in the wrong direction when we should instead be strengthening their accountability to local people, not Westminster.

Overall this feels like a budget of a government that recognises the importance of local leadership but just can’t bear to let go.”

Subrahmaniam Krishnan-Harihara, Head of Research at Greater Manchester Chamber of Commerce

“After the market reaction to last September’s mini-budget and the rather sombre note Chancellor Jeremy Hunt struck in his Autumn Statement, it was apparent that today’s Spring Budget had to strike a balance between measures for enabling business growth and maintaining fiscal stability. Positioned as a “Budget for growth”, today’s announcements were an attempt by the Chancellor to deliver a more upbeat tone using the additional headroom in public finances. The macroeconomic environment for this Budget is best described as uncertain. The British economy displayed unexpected resilience and grew by 0.3% in January, albeit after an equally unexpected 0.5% decline in December 2022. The UK may be past peak inflation but wage inflation and input prices remain concerns for businesses. Consequently, businesses do not have the confidence to commit to capital investment projects. Business investment in the UK has lagged behind other OECD countries for nearly a decade. At the same time, the UK labour market remains tight: unemployment is low, employment increased by 0.1 percentage points in the three-month period between November 2022 and January 202 and the estimated number of open job vacancies still remains high at 1.12 million.

“For businesses, the new scheme allowing full expensing of eligible capital spend will be welcome and it encourages business investment providing there is clarity in the economic outlook and on government plans for business taxation. The numerous fiscal events since the pandemic have brought about a mix of changes, rollbacks and tweaks. That very system of constant revisions itself presents uncertainty to businesses and the ambition to unlock business investment cannot be brought about without giving clarity and certainty.

Dr David Crosthwaite, Head of Consultancy Services at BCIS (Building Cost Information Service)

The announcement that five construction occupations will be placed on the Shortage Occupation List is a beacon of hope in an otherwise underwhelming Spring Budget, that lacks a clear industrial strategy to encourage construction investment and stimulate economic growth.

The announcement of measures to boost the number of Ukrainians entering the labour market and returnerships, targeted at the over 50s – will do little to replenish construction’s dwindling workforce. We need a more concerted approach that prioritises investment in apprenticeships and training, to tackle ingrained labour shortages.

BCIS welcomes the continued commitment to capital investment programmes. But the fact that many of these have been postponed – such as parts of HS2 and Lower Thames Crossing – will inevitably push up the price of these projects in the long term, due to their budgets being eroded by inflation.

The government’s commitment to public sector investment is encouraging and we look forward to the publication of the National Infrastructure and Construction Pipeline later this year, to see how much of the £600 billion is invested in construction.

Stewart Baseley, Executive Chairman at the Home Builders Federation (HBF)

 “It is disappointing there is not more in the Budget to facilitate the delivery of much-needed new homes at a time when all indicators are predicting a fall in output caused by planning policies, the interpretation of EU laws on ‘nutrient neutrality’ and a drop in affordable mortgage availability.

“Whilst welcoming the acknowledgement of the Chancellor on the seriousness of the nutrients impact, we continue to stress the need for urgent, workable and affordable solutions that reflect the minimal contribution new homes make to the issue.

“For the first time in more than two decades there is no Government support scheme in place to assist first-time buyers to buy new build homes and the Budget represents a missed opportunity to help households onto the ladder.”

Suneeta Johal , Construction Equipment Association  Chief Executive

Although there were no great surprises from Jeremy Hunt’s Spring Statement today – as many of the announcements were ‘leaked’ earlier this week, there were some positive announcements that will boost productivity within the construction sector.

Hunt claimed that this budget was for “long-term, sustainable, healthy growth” and said the Government would deliver 12 new investment zones, which he labelled “12 potential Canary Wharfs”.

The CEA welcomes this announcement and the £80 billion funding to support a range of interventions including skills, infrastructure, tax relief, and business rates retention, particularly after the delays to HS2 announced last week. Although investment funding is subject to application, where “an area must identify a location where it can offer a bold and imaginative partnership between local government and university or research institutes in a way that catalyses new innovation clusters”, it does offer an excellent opportunity for collaboration and innovation.

Another positive announcement was the new £9 billion policy of ‘full capital expensing’ for the next three years, which is to be saluted. Although currently a welcome short-term boost for business investment as we see the end of the super deduction this month, we hope to see Hunt follow through on his aim to make it permanent to encourage investment and provide stability in the long term. Hunt says the OBR believes this will boost business tax by 3% a year.

 

Hunt said, “I can announce we will introduce a new policy of full capital expensing for the next three years with an intention to make it permanent especially can responsibly do so that means that every single pound the company invests in IT equipment plant or machinery can be deducted.”

 

A new ‘enhanced credit’ for research-intensive businesses, worth £27 for every £100 it invests is a great incentive for start-up companies investing in R&D. A qualifying small or medium-sized business must spend 40% or more of their total expenditure on R&D.

The extension of the climate change agreement scheme for two years was another welcome move to allow eligible businesses £600 million of tax relief for energy efficiency measures, particularly important as we head down the road to net zero.

The fuel duty freeze is also well received and will be of great benefit to the construction and infrastructure sectors.  Hunt said: “For a further 12 months I’m going to maintain the 5p cut and I’m going to freeze fuel duty too.”

The business tax hike was confirmed, with Hunt keeping the planned increase in corporation tax from 19 percent to 25 percent in April – despite opposition from some Tory MPs. The Chancellor’s predecessor Kwasi Kwarteng had attempted to scrap the hike at the disastrous mini-Budget in 2022 – but there was a U-turn after financial turmoil.

The Chancellor set out the four pillars of our industrial strategy – Enterprise, Employment, Education and Everywhere – Hunt said that he had already allocated nearly £4 billion in over 200 projects across the country through the first two rounds of the Levelling Up Fund and a third round will follow, another welcome announcement.

Whilst the CEA welcomes the announcement of more places on ‘skills boot camps’ to encourage over-50s who have left their jobs to return to the workplace – it is not the silver bullet we were hoping to fill the chronic skills gap in our sector – we need more tangible solutions and partnerships to tackle the shortfall.

Brendan Sharkey, head of Construction and Real Estate at MHA

“Unfortunately, the four “E’s” do not deal with one of the key issues facing the economy, namely the lack of housing, particularly affordable housing.

“Housing is basic human necessity and wherever you look there is a shortage. The growing number of homeless people, the frenzy when accommodation is made available for renting and the increasing cost of renting all bear this out.

“For housing, there is a big disconnect between the what the sector needs and government policy.

“All the major house builders are publicly saying they will build fewer houses this year than last year. What we needed from the Chancellor today was a stimulus for the housing market. Unless our housing stock increases significantly, the problem will only get worse. Stamp duty reductions and tax relief on mortgage interest for first time buyers would have really helped but the budget did not address these issues at all.

“In addition the government wants to see an improvement in the quality of housing stock. However, it is not doing anything to help with supply and the enforcement of Minimum Energy Efficiency Standards (MEES) could mean that some housing becomes unlettable. The lack of incentives for retrofitting such as VAT exemptions and grants and financial support such as soft loans is hard to understand.

“Construction, like many sectors, is struggling to find the staff it needs so hopefully the proposals to increase employment and help the economically inactive back to work will bear fruit.”

 

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Spring statement: construction industry response

This week Chancellor Philip Hammond delivered his Spring statement to the chamber. Touching on key issues such as the housing crisis, skills shortages, Brexit, apprenticeships and planning reform, the latest budget included much for the construction sector to sit up and take note of.

Housebuilding in particular, was very much high on the agenda. The Chancellor has previously promised 300,000 new homes a year by mid-2020s. Will the range of measures signalled in the latest Budget be enough to achieve that ambitious target? Are enough steps being taken to address some of the key issues facing the construction industry?

Buildingspecifier.com catches up with thought leaders from across the sector to see what they have to say in response:

More costs and more delays will hamper house building – Brian Berry, FMB

According to the Federation of Master Builders (FMB), new biodiversity measures will result in more costs and more delays for the nation’s small and medium-sized (SME) house builders, worsening the housing crisis.

In response to the statement, Brian Berry, Chief Executive of the FMB, said “The Chancellor claimed to support housing delivery but actions speak louder than words and the burdensome and poorly thought-through biodiversity targets for developers will bring yet more costs and more delays for builders. Just as the environment for SME house builders starts to improve, these measures could end up stalling our progress. The Government wants to make developers, large and small, increase the biodiversity on their sites by a whopping 110 per cent and for an average site of ten units, the additional cost could be in excess of £2,000. Needless to say, this would also create delays to projects by adding additional hurdles for builders to negotiate during the already bureaucratic planning process.”

“Rather than hampering the building of new homes, if the Government wants to be ‘more green’, it should focus instead on retrofitting the more than 24 million homes that have already been built and which account for around one fifth of the UK’s greenhouse gas emissions. This will not only help reduce the UK’s carbon footprint but will also tackle the scourge of fuel poverty.”

We are likely to see an increase of regulatory measures in the industry, aimed at encouraging homes which are fit for the future – Neil Stewart, Glen Dimplex Heating and Ventilation

CEO of Glen Dimplex Heating and Ventilation, Neil Stewart said “The introduction of the Future Homes Standard for new builds is another positive move towards achieving net zero carbon dwellings in the future and ensuring UK homes benefit now from being highly efficient. The introduction of this new standard is in response to a legal commitment to the Energy Performance of Buildings Directive.

“Along with other legal requirements, such as carbon budgets, we are likely to see an increase of regulatory measures in the industry, aimed at encouraging homes which are fit for the future. As this could cause radical change for construction, industry bodies have been spending time analysing what this actually means and where changes need to happen to our current traditional techniques and processes.

“In February 2019 the Committee on Climate Change released their latest report on UK Housing: Fit for the future?, which suggests a required overhaul of how UK homes are supplied with energy. More recently the SEA’s response to how the Buildings Mission to halve energy use by 2030 can be achieved, highlights the need to future proof todays developments in readiness for the required changes.”

“As we transition to a low carbon, low energy future, we are likely to see a change in the HVAC strategies used in building design. This indicates an increase in the specification of renewable technologies, especially where dominant energy loads can be fulfilled in a  low carbon way. Heat pump technology provides a potential solution, supplying homes with the required energy through recent innovations which are transforming how this technology can be applied.”

Now is the time to invest in our people and our places – Lord Porter, LGA

Responding to the Spring Statement, Lord Porter, Chairman of the Local Government Association, commented: “The Government acted on our calls to find extra one-off funding for councils this year in the last Autumn Budget, including for social care, potholes and high streets. With councils still facing a funding gap of more than £3 billion in 2019/20, it is disappointing that the Chancellor has missed the opportunity to use today’s Spring Statement to provide further desperately-needed funding for our under-pressure local services this year.

“The money local government has to maintain the services our communities rely on is running out fast and huge uncertainty remains about how local services will be paid for into the next decade.

“Last year’s Autumn Budget was the earliest for a number of years but was still held at the end of October. The Government’s plan to publish the Spending Review alongside the Autumn Budget this year could exacerbate the funding challenges facing councils and will severely hamper their ability to plan ahead for next year and beyond. It is vital that the Government publishes the Spending Review much earlier and ensures it genuinely secures the financial sustainability of councils.

“Now is the time to invest in our people and our places.

“Brexit cannot be a distraction from the challenges facing our public services. If we truly value our local services then we have to be prepared to pay for them. Fully funding councils is the only way councils will be able to keep providing the services which matter to people’s lives, continue to lead their local areas, improve residents’ lives, reduce demand for public services, and save money for the taxpayer.”

We welcome the Chancellor’s £3bn affordable homes guarantee scheme to support the delivery of 30,000 new homes. – Terrie Alafat, CIH

Commenting on the Chancellor’s Spring statement, Terrie Alafat, chief executive of the Chartered Institute of Housing (CIH) said “We welcome the Chancellor’s £3bn affordable homes guarantee scheme to support the delivery of 30,000 new homes. A previous scheme that allowed the government to underwrite borrowing by housing associations to fund affordable housing delivery worked well, so it’s good news that it is coming back. We have always said this would be a sensible and positive move. We need to see the details of the scheme, but the key question is whether the homes being funded are genuinely affordable, especially considering that we need 90,000 new homes per year at the lowest social rent.”

The lack of affordable housing is now pushing hundreds of thousands of working families to the brink – James Prestwich, NHF

James Prestwich, Head of Policy at the National Housing Federation said “We welcome the announcement of a £3bn guarantee scheme, which we called for in the Autumn. It will help housing associations borrow more cheaply and therefore build more homes. However, whilst this is an important contribution, we desperately need new money in the next spending review to build more social housing.

This is more crucial than ever in the midst of Brexit uncertainty – the lack of affordable housing is now pushing hundreds of thousands of working families to the brink – the number is rising year on year, many are living in debt, at threat of eviction or homeless.

We need to build 145,000 affordable homes every year to house these people – this is not a one off investment, the government must commit billions of pound every year into building more social housing. We hope, as the Comprehensive Spending Review approaches, the government will see sense and commit the significant investment needed into social housing.”

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Autumn Budget – industry overview

At 12:30 today Chancellor Philip Hammond delivered his ‘make or break’ autumn budget to the chamber. Touching on key issues such as the housing crisis, skills shortages and planning reform, the latest budget included much for the construction sector to get excited about. But with the Chancellor’s promise of 300,000 new homes a year by mid-2020s, will the range of measures signalled in today’s Budget be enough to achieve that ambitious target? Buildingspecifier.com takes a look at what the industry is saying in response:

Housebuilding increase

A lot has been made in the run-up to the budget of the Government’s expected target to build 300,000 new homes next year. Speaking about this afternoon’s announcement, Bjorn Howard, CEO of Aster Group, said “We welcome the clear-cut push to increase housing stock, but would have liked Mr Hammond to have acknowledged that variety is as much a problem as volume for the sector.
“Housing is increasingly a point of division in society. Remedying this depends on tackling affordability and choice in the market, including greater availability of alternatives to traditional rent and homeownership options, such as shared ownership. This is where housing associations, alongside local councils empowered by greater borrowing freedom, can play an important role in increasing the number of affordable homes across the UK.”

SME builders

The Chancellor Philip Hammond has clearly delivered a ‘budget for builders’ that should allow small builders to deliver more of the new homes Britain so badly needs.

Commenting on the Budget 2017, Brian Berry Chief Executive of the FMB said “The Government has set itself a new target of building 300,000 new homes a year by the mid-2020s. And today the Chancellor has put small and medium-sized builders at the heart of ambitious plans to tackle the growing housing crisis. The Chancellor appears to be putting his money where his mouth is with the announcement of £44 billion of capital funding, loans and guarantees. In particular, a further £1.5 billion for the Home Building Fund to be targeted specifically at SME housebuilders can play a significant role in channelling crucial funding to this sector. A £630 million fund to prepare small sites for development and proposals to require councils to deliver more new housing supply from faster-to-build smaller sites will provide opportunities to boost small scale development.”

David Gray, Bid Development Director at AM Bid, added “The Chancellor’s announcement of £1.5bn of new money for the Home Builders Fund will be welcome news for SME housebuilders looking to bid for construction contracts across the UK.

“Moreover, the commitment to provide at least £44bn capital funding, loans and guarantees to support the housing market over the next five years, should result in a marked increase in construction contract opportunities. These contracts will be necessary to help support the delivery of the 300,000 new homes per year the Government is aiming to deliver by the mid-2020s, which would represent the highest level of new housebuilding seen in the UK since the 1970s.”

Borrowing caps

On Housing Revenue Account borrowing caps being lifted for councils in high-demand areas, Gavin Smart, deputy chief executive at the Chartered Institute of Housing (CIH), said “We have long argued that if we are going to build the homes we need councils will have to play a major part and we welcome measures to support this. The government has made a series of announcements in recent months which lay the foundation for housing associations to commit to developing many more new homes and we must do the same for councils. Relaxing borrowing caps for councils in high demand areas is very positive – we hope to see the government build on this move so that we see a return to the levels of council house building we need.”

Modern methods of construction

As part of his budget speech, Chancellor Philip Hammonds indicated that the government would release more funding to the education sector to alleviate overall financial pressures on schools. However, the Chancellor failed to mention the potential of both offsite construction and energy efficient retrofitting practices as potential areas where savings can be made.

Commenting, Neil Smith, Chief Executive Officer at Net Zero Buildings, said “While we welcome the extra funding, the evidence shows that the government could also ease the funding pressures that schools are facing in different ways. We cannot afford to waste this new funding on inefficient new buildings that are not fit for purpose for teachers or pupils.

“As 60% of school buildings were built before 1976, many head teachers are having to consider how to fund new buildings against a tight budgetary backdrop. A new report we have commissioned with the Centre for Economics and Business Research (Cebr) has found that modern building technologies could meet the growing demand for new school buildings while saving the Department for Education (DfE) billions of pounds. It also concluded that if all schools in England were as efficient and economical to maintain as the UK’s most energy efficient school buildings it would save the DfE £2.6bn a year.

“Across the country, millions of pounds can be saved every year on school lifecycle and maintenance costs if head teachers are prepared to think differently in how we create new buildings.”

Build to Rent

The Government’s push for longer-term tenancies is very welcome news for the build to rent sector and for UK renters.

Dominic Martin, Head of Operations at Atlas Residential said “Providing the customer with greater flexibility and security through long-term tenancies is a positive step forward for the rental market and an acknowledgement that the customer should remain firmly at the heart of everything we do – these are people’s homes.”

Materials

The Brick Development Association, representing brick manufacturers in the UK, welcomed the Chancellor’s target for new homes, announced in the budget today, stating with confidence that the brick industry is ready.

The number of new homes delivered in the last financial year – at 217,350 – is 12% up on the previous year, with brick deliveries also rising at 12% over the same period, suggesting that supply and demand are in balance.

Today’s speech presented an ambition to deliver an annual total of 300,000 new homes each year by the mid-2020s – approximately eight years from now. This represents a 38% increase. Brick manufacturing output is increasing year on year with growing investment in plant and equipment. The brick industry is unusually adaptable and in the last eight years production output has risen 38.5%.

Supplying a very volatile housing market is never easy for manufacturing suppliers, but the brick industry has proved itself particularly able to scale up demand as required and is currently well able to meet demand from new house building.

“We are delighted at the focus on housebuilding in the budget” commented Tom Farmer of the BDA. “It is time for the country to face up to the economic and practical challenges and actually build enough homes for the people that live and work in the UK. I am delighted to be working in an industry that is keeping pace with this fast-moving sector and which is ready to gear up to meet increased demand.”

Skills shortage

Although the budget contained many impressive statements related to getting Britain building, it didn’t say much in the way of alleviating the skills shortage to ensure that we have the right people working within the industry to make it happen.

Brian Berry, FMB said “A major challenge to getting new homes built is the skills crisis we face. In the long run, the only real solution to chronic skills shortages will be a major increase in the training of new entrants into our industry. We are therefore pleased to hear the Chancellor has today committed extra resourcing to training for construction skills. With Brexit round the corner the next few years will bring unprecedented challenges to the construction sector. The Government will need to make sure that the sector continues to have access to skilled EU workers, but we are pleased that the Chancellor has today listened to the needs of SME builders.”

In summary

It was dubbed as Hammond’s ‘make-or-break’ budget; there were three key challenges facing the Chancellor today in a budget which was delivered against a background of Brexit and a substantial decline in growth forecasts which threatened his tenure. Housing, infrastructure and productivity announcements were the Holy Trinity designed to save his job.

Whilst the industry appears to welcome the government’s ambitious new target to deliver 300,000 new homes a year overall, concerns still remain about how we will build the right homes in the right places. And how will we ensure that they are affordable?

Abolishing stamp duty for first time buyers is welcomed, as is some form of planning reform but there was a meagre sum mentioned for training and throwing money at the housing crisis will not solve the labour shortage or skills crisis. Infrastructure investment is also welcome but we need concrete timelines rather than further hollow promises. Productivity is a complex issue and his comments on the role of digital enablement underlined that, as an industry, we need to help ourselves but again, short term improvement is linked to a guaranteed labour pool and Brexit has caused a stampede of trades out of the UK, something this government has exacerbated through their dithering. So the overall impression from the sector seems to be that it was a stalwart attempt but not enough to instil confidence as we crash out of Europe.

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Pre-Budget briefing from industry experts

Housing is set to dominate tomorrow’s Autumn Budget, but it is not yet clear what type of Budget the Chancellor will deliver. Industry experts The Housing & Finance Institute have today published their pre-Budget briefing. The Housing & Finance Institute has laid down a marker for the government in identifying six potential budget themes – and some of the key policies we should look out for in the Chancellor’s statement.

What type of budget will it be?

1. The Big Build Budget: this budget would focus on the largest peacetime building programme since Bevan/Macmillan. Key policy changes would need to open up large land holdings and financial measures would need to substantially increase direct government funding as well as unlock manufacturing at scale, boost skills and boost all tenures from social rent to home purchase.

2. Next Generation Budget: this budget would focus on quality of life, quality of renting and cost of living issues for the ‘generation rent’. It could include wealth distribution support from older to younger generations.

3. Industrial Strategy & Growth Budget: while a ‘big build’ budget would be primarily about housing and be widespread across cities and county areas alike, an industrial strategy & growth budget would be about focusing resources on specific growth areas, such as the Oxford-Cambridge corridor, the Northern Powerhouse, London and the Midlands Engine.

4. Brexit Budget: housing within the Brexit context would be a greater focus on accelerating the application of large scale manufacturing and the build up of skills to meet the needs of housebuilding. It would also need to look at materials within a post Brexit customs and trade context, as well as energy and utilities innovation.

5. ‘Steady as she goes’ Budget: this is not the budget that is expected but it is possible. There is a something to be said for carrying on with an even tiller while everything else is being decided.

6. ‘Care & Repair’ Budget: against the backdrop of the Grenfell tragedy and challenges around elderly care and supported housing for vulnerable groups together with new homelessness duties coming into force and concerns about poor quality landlords, it can be expected that there will be packages of ‘care & repair’ around affordable and social housing, supported housing and remediation, alongside big build and growth commitments.

Industry & Sectors: Winners and Winners?

There are four broad areas that the Budget and supporting documents should cover from an industry and sector perspective: National Government, Councils, Housing Associations and Housebuilders.

To help you navigate the policy announcements we’ve set out what to look out for in relation to housing and housing related infrastructure.

National Government

The main theme of national government is expected to be a strong return to government direct intervention. This has been a dominant theme since Mrs May became Prime Minister, yet it hasn’t translated to large scale intervention. This could be the fiscal event to define what that looks like.

What to look out for:

  • Direct Central Government delivery of housing on public sector land. To be delivered through a powered up Homes & Communities Agency/ Homes England.
  • Immediately before the Budget government action has seen the Communities Secretary start to intervene directly in local plans. A more muscular state has been in the making since the Housing White Paper. This latest move is the first serious flexing of those state muscles, and more of this is expected.
  • One area where the state and local communities could find themselves in direct conflict is the role of a beefed-up Homes England using its dormant new towns powers for land assembly and to grant itself planning for large settlements.
  • In addition, we can expect announcements on measures to speed up the planning process and reduce post approval conditions. This could include a review on substantial changes within the current planning system, for example around assumed development rights and revised guidance on height, tenure mix, affordable housing definitions or density.

All of this will need a lot more money. The adjustment of housing associations out of the public accounts again gives a one-shot multi-billion pound room for manoeuvre for housing. The big question: will it see large central borrowing for a national housing & infrastructure fund to underpin the new muscular state or a huge extension of existing programmes delivered by housebuilders, councils and housing associations.

The runes say that this will be a ‘something for everyone’ budget – that could either be a crowd pleaser or fail to meet expectations that have seen the stakes raised around the £50 billion mark. Certainly, significant new funding in housing and related infrastructure is expected.

Councils

The Councils have made their strongest play for serious investment and a loosening of controls than for many years. In recent days, one reading of Lord Gary Porter’s media rounds suggests that the battle has been in full cry right up to the final clang of the Budget Red Box. Will councils be the victors – with off balance sheet treatment of council funding, billions of pounds of extra investment and extended borrowing and other powers?

What to look out for:

  • More help for those councils who can and are delivering homes and growth with individual deals and extended powers and money for the councils that have housing growth opportunities and that can deliver homes. Perhaps an extended role for Local Enterprise Partnerships too. However, with the tragedy of Grenfell looming large, social care and welfare changes, supported housing, housing market based deprivation and new homelessness laws coming into force, councils may see a more dominant focus on financial support for those areas within their ‘Care & Repair’ responsibilities.
  • The one area where councils may well see a greater housing delivery focus is around new obligations to meet local housing demand. It remains to be seen whether that will be matched by new housing and infrastructure investment and additional powers to allow councils, regions and others to plan, finance and delivery their own local homes and local infrastructure.

Housebuilders

For the housebuilders, this may be a budget of sticks as well as carrots. The Communities Secretary has land banking firmly in his sights.

What to look out for:

  • First and foremost we should expect to see the Government more fully utilising public sector body land. The Land Value capture approach has been tempting Government for many months, but these are not easy ideas to put into practice without causing other market distortions. Even so, it should be expected that a preferred option for capturing more value from the development of public sector land will be announced soon. The thrust of policy is likely to be one of collaborative working across public, private and third sectors together with community engagement for planning, local building trusts and regeneration.
  • In the private sector there are a range of possible policy measures. Some of these include build out directions, planning powers and forms of compulsory acquisition.
  • One effective way to encourage land into use is incentivising the market to use the land more quickly and gain earlier profits from it. This could include tax breaks for purchasers (such as stamp duty holidays), tax breaks for business (such as REITS or large landlords/ investors), short dated additional funding support for infrastructure and off take guarantees for sales or rent.
  • With an industrial strategy focus there is a sharp need to increase skills, Small and Medium Sized (SME) builders, so something around skills, innovation hubs, innovation funds and a step-change in support for manufactured housing are all areas to look out for.

Housing Associations

Housing Associations have had so much praise in recent days from the Government that either there is a great big deal about to be announced or the warmth of the words reflects a view that Housing Associations have what they need to deliver more homes.

Recent days have seen a change in emphasis in the role of the Housing Association not simply as a good manager of homes but as a substantial builder and developer of new homes for rent and for sale. This does indeed go back to the very re-birth of the Housing Associations under Sir Keith Joseph where Housing Associations built housing for low cost ownership as well as houses for rent.

What to look out for:

    • A number of the settlements for Housing Associations have already been announced: rent certainty, extra freedoms and flexibilities, extra affordable housing programme funding. Is there more to come? Probably around supported housing, perhaps on low cost home ownership, shared ownership and rent to buy, perhaps on social rent.
    • But from a Treasury perspective the advantage that the Housing Associations have is that they can leverage their balance sheets using private finance. With the new freedoms and rent certainty, perhaps together with changes of treatment for historic grants, the Housing Associations have a tremendous opportunity to unlock billions extra from their own balance sheets. Perhaps that will be some of the £50 Billion that the Communities Secretary is looking for.

Commenting in advance of the Budget, HFI chief executive Natalie Elphicke said “Housing is a political hot topic. There is an opportunity to capture the public mood and deliver the housing that the public want and need. We can therefore expect housing to dominate the budget, but the tone is vitally important. This budget needs to address ‘care & repair’ issues for housing, such as tower block safety and homelessness, as well as simply building more homes.

“The Chancellor can choose one of six options, or a mix of them. What is clear is that this is an opportunity for the Chancellor to be radical.

“The expectation is that this will be a ‘something for everyone’ housing budget – that could either be a crowd pleaser or fail to meet expectations. The stakes have been raised for housing commitments to be at an all-time high at around the £50 billion mark. With more than £20 billion already committed to housing over this Parliament, it is certain that we should see significant funding commitments for housing and related infrastructure.”

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Chancellor must improve access to finance for small builders

The Chancellor must take bold action in the forthcoming Budget to improve access to finance for SME builders if he wants to tackle the housing crisis, according to the Federation of Master Builders (FMB).

Brian Berry, Chief Executive of the FMB said “If the Government wants to solve the housing crisis, it must address the access to finance issue that local housebuilders continue to face. The Chancellor needs to commit to underwriting loans from banks to small house builders to get finance flowing into our sector once more. Nearly a decade after the financial crisis, difficulty in accessing finance remains a major barrier to small house builders increasing their delivery of new homes. Indeed, the FMB’s 2017 House Builders’ Survey showed little signs of improvement in this picture and if anything suggested slight deterioration in lending conditions. Assessments of lending conditions to SME developers were down slightly from 2016, the first fall in this measure since 2013. These difficulties make it much harder for existing SME house builders to flourish and grow and deter new firms from entering the market. This has resulted in a less dynamic house building sector that is less able to expand to build the homes we need.”

“If local housebuilders are to build Britain out of the housing crisis, the Chancellor must use the Budget to pull as many levers as possible in order to enable more finance to reach SMEs. One thing the Government can do is act to reduce the capital costs of lending to this sector for smaller specialist lenders. The initiative announced last week by the British Business Bank to extend its ENABLE Guarantee to house building by striking a deal with United Trust Bank is welcome. This type of Government action, because it pushes down the capital costs of lending to SME builders, will allow lenders to do much more of this. The Chancellor needs to back this initiative, encourage its expansion and explore all other options to reduce the risk and costs to banks of lending into this sector. If the Government wants to meet the ambitious housing targets it has set itself, it will need to ensure the long-constrained SME housing sector can once again access the finance it needs to meet the challenge of tackling Britain’s housing crisis.”

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Autumn statement: Something feels different

Statements from the Chancellor of the Exchequer aren’t always cause for celebration, but this one has left us feeling cautiously optimistic. Chris Coxon, Head of Marketing at Eurocell plc, takes a view.

Wrapped up as the National Productivity Investment Fund – £23bn between 2017 and 2021 – Chancellor Phillip Hammond’s Autumn Statement outlines investments in housing, transport, digital communications and R&D. Within that there’s a £2.3bn housing infrastructure fund, £1.4bn for affordable housing and £1.7m for accelerated construction to speed up house building on public land. This is obviously welcome because of the pressing issue of housing affordability.

If the Government can pump-prime supply then it would be hoped eventually that the improvements in meeting demand would reduce prices – at least at the ‘bottom’ end – and enable the next generation of home ownership.

(As an aside, one topic rarely discussed in respect of housing affordability is how much money large mortgage payments and high rents take out of the real economy, such payments vanishing into institutions and funds and not into the high street).

We will have to wait for the detail of policy in the expected Housing White Paper, to be published ‘shortly’, according to the Treasury. There have been strong hints that offsite construction will feature strongly.

Admittedly, we’ve been here before: construction is a cyclical affair. When skills shortages threaten, thoughts turn to factory-based production; call it prefab, offsite, modern methods of construction, pre-manufacture or flying factories. This would represent a radical departure from how building products currently arrive on site, and caution needs to be maintained if whole sectors of manufacture are not to be detrimentally impacted by this.

The difference this time – maybe – is that this Government understands that its ambitious housing targets will not be met without a sea-change in how housing is delivered and – here’s the important bit – that policy must drive a change. To achieve its targets of 200,00 builds (some say 250,000 to 300,000 are needed) per year, the current methodology has to be challenged and the regime appears to at least be mindful of that, if not quite yet offering solutions.

The exciting bit, for us, was news of the creation of industrial strategy challenge fund – loosely based on the US’s DARPA programme. The areas which the fund will focus on will be decided in due course, yet let’s hope it doesn’t get too hung up on ‘funky’ tech, and encompasses more prosaic sectors such as ours.

Chris Coxon

And there’s something for innovators in the tax regime too. As the statement said: “To ensure the UK tax system is strongly pro-innovation, the government will review the tax environment for R&D to look at ways to build on the introduction of the ‘above the line’ R&D tax credit to make the UK an even more competitive place to do R&D”.

Depending on how both these initiatives play out, it sounds like good news at the moment and the right words and actions from Government provide some reassurance that our investment in innovation today will bear fruit tomorrow.

 

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Good news for construction in Autumn Statement

The extra resources announced by the Chancellor in today’s Autumn Statement for social housing and infrastructure investment will be welcomed by the construction industry.

The promised additional funding should help to address the need for more affordable homes and tackle the shortfalls in the UK’s transport infrastructure. It will also help to offset the impact of faltering in private sector investment on industry workloads.

Social housing providers already have a strong development pipeline, but the realisation of planned projects has been frustrated by recent changes in Government policy. It is vital that the measures announced in today’s statement are implement as soon as possible to enable projects to be quickly brought to site.

The provision of an additional £1.3 billion of additional funds for local and national road projects should help Highways England and councils to accelerate small scale improvements to address ‘pinch points’ in the road network. These schemes can potentially help tackle congestion and improve the UK’s competitive position.

Glenigan data reveals a firm pipeline of projects that have cleared the planning hurdles and could potentially be quickly brought on to site.

The Government’s commitment to supporting a sustained increase in investment in built environment is also encouraging. The new National Productivity Investment Fund promises to add £23 billion in high-value investment from 2017-18 to 2021-22, with the government target this spending at areas that are critical for productivity: housing, research and development and economic infrastructure.

Increasing productivity – put your money where your mouth is

Whilst the budget was a largely positive message for the construction industry, some are understandably weary of whether was has been promised will come into fruition and make Britain productive once more.

Paul Dossett, Partner at Grant Thornton, UK LLP, thinks that building roads and bridges will not solve the UK’s productivity problem. In response to the Chancellor’s announcements around boosting infrastructure, said “Our research with the CEBR has found that if UK productivity reached that of the G7 it would boost GDP by £382bn by 2025. While the government’s focus on infrastructure is welcome, building houses, roads and broadband networks is not the sole answer to addressing the productivity gap between the capital and the rest of the UK. Our Vibrant Economy Index shows the challenges faced by many places in the UK is cultural. Infrastructure is important but building roads and bridges will not solve the productivity problem alone. Instead, we need to start at school, build aspirations and community involvement, and focus on measures that will improve not only economic prosperity but increase the health, happiness and wellbeing of the population.”

Chairman Richard Steer of Gleeds Worldwide commented “The new productivity fund sounds good but we have heard this type of thing before and, whilst it is argued that it will be funded by increased borrowing, the main issue is confidence in the UK and this was not a budget that is going to help enhance the value in the sterling which effects costs, or persuade private sector funders to invest. It was an inward looking budget that appeared to deliver opportunities via raised borrowing. The increased profile of housebuilding initiatives is to be welcomed but until we know answers to questions like whether or not we will have free access to skilled labour, one feels it was more of a wish list than a reliable fiscal forecast.”

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Autumn Statement: The industry response

In the wake of today’s statement, the industry is currently abuzz with chatter about whether Osborne’s plans will affect the housing sectors for better or worse. Here is what some of the big names in housing are saying regarding the latest spending review.

Skills shortage threatens 400,000 home target

The construction skills shortage could scupper the Chancellor’s vision for 400,000 new affordable homes, warns the Federation of Master Builders (FMB) in response to today’s announcements in the Spending Review.

Brian Berry, Chief Executive of the FMB, said “Faced with some difficult decisions regarding public spending cuts, today the Chancellor was right to ‘choose housing’ by prioritising investment in new affordable homes. The Government has confirmed plans to build 200,000 starter homes with 20% discounts for under-40s, 135,000 shared ownership homes, 10,000 rent-to-buy homes and 8,000 specialist properties for the elderly and disabled. This amounts to a £7bn public investment in new homes – a concerted effort to give aspirational home owners a helping hand onto the housing ladder.”

“Nevertheless, ‘George the Builder’ will need a new generation of ‘real’ builders to make his vision for housing a reality. We’re already seeing housing developments starting to stall because the cost of hiring skilled tradespeople is threatening to make some sites simply unviable. Unless we see a massive uplift in apprenticeship training in our industry, there won’t be enough pairs of hands to deliver more housing on this scale. That’s why we’re keen for the Government to tread carefully when applying the new proposed Apprenticeship Levy to the construction industry.”

“The Chancellor clearly recognises that the crisis of home ownership is inextricably linked to a crisis in house building. We therefore hope that in order to address both, the Government will do everything it can to increase house building capacity. SME developers will have an important role to play in delivering the smaller scale sites across the country. The last time we built in excess of 200,000 homes in one year was in the late 1980s when two-thirds of all homes were built by small developers. SME house builders now only build little over one quarter of all new homes which points to another serious capacity issue – we need more small house builders to enter the market and also for SME house builders to crank up their delivery of new homes in order to build the Chancellors 400,000 new affordable homes.”

Planning reform is needed

Greg Hill, Strategy and Change Management Director at Hill, said “Extra funding for starter homes is great news for prospective homebuyers, and will undoubtedly help to get more first time buyers and young families on to the housing ladder. Shared ownership properties too are a great way for young people to buy a home without a large deposit. It is certainly the case that the size of deposit required to buy a home acts as a major barrier to first time buyers entering the housing market and these initiatives will go some way to addressing the problem.”

“However, it still remains that a crucial issue over the coming years will be whether the UK housing industry is structurally able to supply the volume of homes needed to meet government targets. Planning reform, as well as greater investment in skills and training for careers in construction, are essential if the industry is to deliver the extra homes in the timeframes that Britain needs. We have a rapidly ageing workforce, with many tradesmen and skilled professionals due to retire in the next few years – the industry may struggle to deliver these 400,000 new homes if the gap in capacity is not filled.”

“If the industry is to build more homes, we also need to ensure that council planning departments have enough resources to make quick decisions on planning applications. The budget cuts that have also been announced today as part of the spending review could have an impact on local authorities’ ability to make decisions quickly.”

Lack of confidence in conservatives

Steve Sanham, development director at HUB Residential, said “With the government promising to subsidise homeownership for the masses, the Chancellor has effectively admitted that it can’t get the housing market under control. It appears that the housing policies of the past few decades have been an utter failure.”

“The problem hasn’t been a lack of ‘affordable housing’, rather a lack of affordability in general. Investment in infrastructure to bring new areas on line for development, and freeing up the bureaucracy of the planning system, are the only ways to bring ‘market homes’ within the reach of first time buyers. New headline grabbing affordable housing initiatives smack of more short-termism, and an inability or unwillingness of the government to grasp the big issues.”

‘Crisis Brewing For Social Housing’

Matthew Hyam, partner at BLM said “While targeting housing benefit directly might drive down the welfare bill in the short term, it will inevitably intensify the problems facing social landlords in building new affordable homes.”

“Although the Chancellor has made a huge £7bn commitment to affordable housing in this Statement, the impact of cuts on the social sector has already been immense. In the face of further financial difficulties, there will inevitably need to be a clearer focus on tenant support and arrears enforcement in order to ensure financial viability.”

“The social housing sector has been learning to cope with the effects of welfare reform for some time now and, with the dust barely settled on rent reductions and universal credit, social housing providers are in a more precarious position than ever.”

Positivity on housebuilding

Stewart Baseley, executive chairman of the Home Builders Federation said “The Government is clearly committed to increasing both housing supply and home ownership. Measures introduced in recent years have led to a big increase in house building levels but the scale of the challenge requires further action to close the gap between demand and supply. The Chancellor’s announcements today will provide extra impetus to deliver further increases in housing supply.”

Peter Quinn, Lovell director of business development said “We welcome any stimulus that will increase the supply of housing in this country. There are many parts of the country where we see great housing need and these measures will undoubtedly assist people onto the housing ladder, ‘Starter Homes’ will especially help the firs- time buyers wanting to purchase a Lovell home. However, we remain concerned that even this initiative will remain out of reach for those that cannot afford home ownership, and we need to continue to develop affordable rented housing especially in high value areas.”

Greg Hill, Strategy and Change Management Director at Hill, said “Extra funding for starter homes is great news for prospective homebuyers, and will undoubtedly help to get more first time buyers and young families on to the housing ladder. Shared ownership properties too are a great way for young people to buy a home without a large deposit. It is certainly the case that the size of deposit required to buy a home acts as a major barrier to first time buyers entering the housing market and these initiatives will go some way to addressing the problem.”

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