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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.”

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.

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.”

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.”

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.

 

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.”

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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