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New Minister for Construction

Following the creation of the new Department for Business, Energy and Industrial Strategy (BEIS) the full list of ministerial responsibilities within the department has now been confirmed and Jesse Norman, Hereford MP has been given government responsibility for construction and infrastructure.

Norman, who was elected as the MP for Hereford and South Herefordshire in May 2010, is one of several MPs brought into the new Department for Business, Energy and Industrial Strategy, led by business secretary Greg Clark.

His responsibilities include:

  • infrastructure/construction
  • rail supply chain
  • industrial policy (supporting the Minister for Climate Change and Industry)
  • professional services
  • technology
  • aerospace
  • energy policy (supporting the Minister for Energy and Intellectual Property)
  • nuclear
  • oil and gas, including shale gas

His role will also include ministerial responsibility for rail supply chains, technology, and assisting the energy minister Baroness Neville-Rolfe with nuclear policy.

On Twitter the MP said “very sad to be leaving @CommonsCMS, but honoured and delighted that I have been appointed as a Minister at the new DBEIS.”

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HS2 will still go ahead, pledges new transport secretary

The new Secretary of State for transport, pledged to continue backing HS2, following uncertainty around the project post-Brexit.

On a BBC Radio 4 interview, Chris Grayling promised not to scrap plans for high speed 2, despite suggestions having been made that HS2 is under threat of being cancelled by David Cameron and industry experts. Grayling said “I have no plans to back away from the HS2 project.”

Before the Referendum, in June, Prime Minister David Cameron addressed Yorkshire residents at the Yorkshire Post’s offices in Leeds, and warned of uncertainty for the project if Britain left the EU.

“If we stay in [the EU] all our plans are fully intact and that includes HS2, and what we have said about HS3, and the overall rail investment programme,” he said.

“If we come out, of course I’m sure we will want to try and maintain these important investments. But when you hear nine out of ten economists, the Bank of England, the Treasury, the IMF and now the National Institute [of Economic and Social Research] all saying our economy will be smaller and will generate less tax revenue, obviously that does threaten potentially some public spending programmes.”

In the interview, which took place on the BBC radio program “The World This Weekend”, the Transport Secretary explained that the importance of HS2 is two-fold; not only will it speed up transport links between the North and South, but it will also help meet an increasing infrastructural demand and ease congestion on overcrowded roads and trains.

Grayling said: “The thing that’s important for people to understand is that HS2 is not simply a speed project, it’s a capacity project. We have lines at the moment which have seen huge increases in the number of passengers, the amount of freight in recent years.”

“The west coast mainline, for example, is becoming really congested. It’s limiting the capacity of services to places like Northampton and Milton Keynes.

“Of course it makes sense, if we’re going to build a new railway line, for it to be a fast railway line, to reduce travel times from north to south. That’s logical.

“But actually we need a better transport system for the 21st century, and HS2 is part of increasing the capacity of our transport system.”

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Weak information clouds construction bosses referendum decision

A survey carried out by the Federation of Master Builders (FMB) has revealed that 80% of construction bosses of SME’s will vote in the upcoming European Union referendum according to their own personal beliefs rather than casting a wider business interest-based vote overall.

The poll results indicate that more than 50% of small construction company owners feel like they haven’t received enough relevant information on the issues that might affect their businesses should we stay or leave come referendum time.

40% of respondents said that the main appeal to leave the EU would be the ability to “freely legislate” to meet the demands of British business. The argument to remain seemed largely based on the economic stability provided by the EU.

Only 17% of respondents said that they would put their business interests first when it came to deciding on the issue.

Brian Berry, Chief Executive of the FMB said “The outcome of June’s referendum on Britain’s membership of the EU will have significant ramifications for construction SMEs, regardless of the outcome. That’s why it’s fascinating that more than 80% of our members have indicated that their vote will be determined by their personal beliefs ahead of anything else. It just goes to show that although it’s important to explore the business case for leaving or remaining within the EU, for many people their decision will be based first and foremost on other drivers. These could include the desire to be part of the wider European community or a compulsion to reclaim British national sovereignty.

“However, a recent survey by Ipsos MORI revealed that the public want to hear the perspective of SMEs more than any other type of business. Unfortunately our research shows that the people who run small construction firms feel that the ongoing debate over Brexit has done little to enlighten them on the issues that really matter, with 52% stating they do not feel well informed on the issues that might affect their businesses. This is perhaps a reflection of how few of the impartial facts that are so widely craved have actually been offered by either side. No wonder then, that the vast majority of builders will be opting to vote based on their wider personal beliefs, when the economic and business case of each argument remain so unclear.

“What’s clear is that few sectors are more sensitive to uncertainty than construction. Already, there are signs that the unpredictability surrounding the outcome is beginning to sag on industry confidence as investment is deferred and home owner confidence wanes. This explains why continued economic stability has been cited as the best reason to remain in the EU. On the other hand, 40% of SMEs identified the potential freedom that Brexit could grant the Government to set legislation that truly meets the needs of British business as the biggest potential positive of Brexit.”

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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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