Plans to devolve more powers to city councils and to promote home ownership were cornerstones of the new Conservative government’s legislative programme unveiled in the Queen’s Speech yesterday. Other government measures announced by Her Majesty at the state opening of Parliament are designed to promote business and encourage the development of apprenticeships.
A raft of construction industry organisations were moved to issue their thoughts on the programme, broadly supporting the government’s plans although not unreservedly. In particular, there is concern that re-introducing the Right To Buy for housing association tenants could backfire.
Melanie Leech, chief executive of the British Property Federation, said: “It is welcome to see the announcement of a Housing Bill. The government has a huge task on its hands if it is to deliver enough new homes to house future generations, and must focus on supply-side solutions to meet demand. The devil will be in the detail, and there is an opportunity for innovative suggestions to drive forward supply.
“The Starter Homes initiative holds potential, but we have several questions around the realities of delivery and whether there will be sufficient infrastructure provision on the allocated sites.
“The focus on brownfield land is similarly positive, but we have doubts about how much suitable land will come to market. Local Development Orders are not the silver bullet and experience shows that they are costly for local authorities to produce.
“Neighbourhood planning changes are to be welcomed, particularly if they enable pro-growth, business-led neighbourhood plans to come forward with greater speed.”
She continued: “The announcement of the Cities and Local Government Devolution Bill is a welcome step forward, and is something that holds enormous potential for the real estate industry. The BPF has long advocated the role that devolution can play in unlocking regeneration and growth around the country, and the potential it has for the creation of jobs, homes and infrastructure.
“We would like to see the government take this forward by appraising government initiatives and build on those growth and city deals that are already in place such as City Deals and Local Enterprise Partnerships, and to focus on devolution across the whole country, not just in relation to the Northern Powerhouse. We urge government to allow all areas of the UK, not just those with a mayor, to be able to benefit from these new, devolved powers.”
Steve Errington, chief executive of house-builder Story Homes, commented on the Housing Bill outlined in the Queen’s speech. He said: “Story Homes welcomes the government’s plans for Starter Homes which will help to provide more houses for first-time buyers – who are the lifeblood of the housing market. How these homes are restricted to specific housing schemes needs to be looked at carefully however. Too many restrictions may see too few sites being developed to meet the criteria for Starter Homes. If not enough properties are developed they will obviously make a limited impact on the housing market.
“The government needs to make sure that these schemes are viable in terms of the market value homes available for sale, and the development sites which can be used for these properties, to make sure developers come on board to build them.
“The plans announced to increase the housing supply, through making development on brownfield land, easier are very welcome. The question mark over brownfield sites is always one of viability because of the sometimes onerous planning and clean-up costs involved.
“A streamlined planning process through the Local Development Order process is welcome, as is the potential to work in partnership with local authorities to ensure the identified sites work from a developer’s point of view. Unlocking brownfield land is a very positive move. However the shortfall of new housing supply will not be fulfilled with brownfield land alone.”
Eddie Tuttle, public affairs manager at the Chartered Institute of Building, said: “Whilst the CIOB welcomes efforts to simplify the neighbourhood planning system and increase the supply of starter homes through the Housing Bill, it is vitally important that there is an added emphasis on building design and quality.
“Although an extension of Right to Buy may provide real hope to individuals wishing to secure a place on the property ladder, the issue for policy makers is the number of annual new-builds. Our figures suggest that 200,000 starter homes are needed annually – in order to meet rising demand.
“Additionally the CIOB is pleased to see the government’s commitment to devolve more powers to local authorities; helping work towards full employment. This is positive news for the construction industry and with over 17,000 managers needed in the sector over the next four years; a career in the industry has the potential to deliver on the government’s aspirations.”
Institution of Civil Engineers (ICE) director general Nick Baveystock said: “Devolution of powers can lead to greater investment and better decision making. I welcome the government’s invitation to give city regions the political tools to start shaping their own futures. Devolution can help drive productivity in areas often overlooked by Whitehall, helping to rebalance growth throughout the UK. There is no ‘one-size fits all’ model and government should devolve powers according to the needs, ambition and capacity of each area. Local government may also need help in driving through the changes so that they make best use of powers for their own communities.
“Along with the Cities and Local Government Devolution Bill, I welcome the commitments to improve transport capacity and connectivity. The decision to create three million apprenticeships by 2020 can only help our economic wellbeing.”
Sarah McMonagle, head of external affairs at the Federation of Master Builders (FMB), said: “The new government is right to bring forward legislation on both apprenticeships and housing in its first Queen’s Speech as one cannot succeed without the other. The 200,000 starter homes the government wants built over the next five years quite simply won’t get off the ground unless we tackle the construction skills crisis. Our latest research shows that 50% of small local builders are struggling to hire bricklayers and this is a stark reminder of how the government’s ambitions to build more new homes could be scuppered by a lack of skilled workers.”
Ms McMonagle continued: “We are pleased to see that the Full Employment and Welfare Bill will allow for fuller scrutiny of how the government is performing against its ambitious target of creating three million apprenticeships over the next five years. As the construction industry accounts for around 7% of GDP, it means our sector should conceivably be delivering 210,000 of these apprenticeships – or 42,000 a year which is a big ask, especially given that we only achieved 16,000 apprenticeship starts in our sector in 2013/2014. At the end of the last Parliament, the government announced a new voucher model for apprenticeship funding and we’re keen to make sure this is suitable for small construction firms – if it’s not developed with small firms in mind, it could threaten their desire and ability to train apprentices.”
She concluded: “From a construction SME perspective, we’re also keen to ensure the Enterprise Bill succeeds where others have failed and finally puts a nail in the coffin of late payment. Poor payment practices have plagued the construction industry for too long and we’re hopeful that widening the powers for representative bodies to act on behalf of their members to challenge grossly unfair payment terms will go some way to address this.”
Jon White, UK managing director of the construction consultancy Turner & Townsend, said of the Housing Bill: “This turbocharging of the Right to Buy scheme could dramatically boost levels of home ownership in Britain. But how much it will do to solve the housing crisis is another matter. Its success will hang on its ability to spur the construction of new homes. The government has responded to its critics by insisting that for every housing association property sold, an additional affordable home will be built. But with construction costs steadily rising – and with demand already outstripping capacity in many parts of the UK – the housing associations are likely to have to borrow to meet the cost of building this new stock.
“The construction industry has responded well to the surge in demand for housebuilding, but it has some lasting capacity issues and property price inflation is a real risk. Housebuilders will be relieved to see some supply-side stimulus after so much boosting of the demand side, but if this scheme is to realise its full potential the government will have to work closely with the construction industry to ensure its promises are deliverable.”
More sceptical was Mark Oliver, managing director of building materials manufacturer H+H. He reckoned that neither the Cities Devolution Bill not the government’s housing policies would have any significantly positive impact on house-building numbers in the next five years.
“Back in 2010 the coalition introduced the New Homes Bonus. It was supposed to incentivise local councils to increase the number of new homes built by giving them a financial reward, which they could then spend on more services or use it to reduce local council tax bills. It was hailed as the policy that would break down the local authority barriers to development, but we don’t hear much about it now and on the face of it not much has changed,” Mark Oliver said.
He continued: “Many local authorities are inherently against development of any kind – shops, railways, airports and houses. Often, local politicians are elected on the promise to actually prevent development. On this basis I don’t think that the Cities Devolution Bill will have much impact on house building levels over the next five years.”
He was also sceptical about the Right to Buy housing policy, saying: “Instead of using tax payers’ money to build new council houses, the government has decided to use it to increase private home ownership within the existing housing stock.
“Since 2012 around 30,000 council houses have been transferred into private ownership with a taxpayer subsidy. They were supposed to have been replaced on a one for one basis, but only around 3,000 new council houses have been built during this time. That’s a ratio of 1 in 10, so why should we believe that it will be any different this time around?”
Brick Development Association chief executive Simon Hay also voiced concerns about the pledge to re-introduce the Right To Buy for housing association tenants. He said it could scupper plans for a much-needed expansion in public sector housing. “The government has stated that we need to build around 200,000 new houses each year to meet demand. We desperately need our Housing Associations to be contributing to this total, but extending the Right to Buy will have a huge impact on the funding available for them to do so. Investing in building new social housing, with a stable return of around 4-6% over the long term is a potentially an attractive investment proposition for organisations such as pension funds. But this model is blown apart if the assets must be sold at below market rate on demand.”
Mr Hay said: “We really think this is one proposed policy whose consequence is likely to be exactly the opposite of what was intended: its most likely consequence is to prevent rather than encourage the provision of much needed housing the focus should now be on how we deliver the housing promises outlined by the Conservative government, ensuring at least 200,000 new homes a year are started in the UK to meet the growing demand from increasing household creation and migration. With stock levels increasing and production rising, we are confident that the brick industry’s growing capacity will keep pace with demand.”
Construction union Ucatt was also not thrilled by the new government’s housing policies. National secretary Brian Rye said: “Housing is already in crisis with ever increasing numbers of families denied a decent home. This policy is going to further reduce the supply of socially rented accommodation. The government should be looking at every way to increase its housing stock rather than sell it off. The big winners will be the spivs and the speculators looking to make a quick profit and the losers will be the most vulnerable in society who need a decent roof over their heads.”
In similar vein, GMB general secretary Paul Kenny said: “This Queen’s Speech gives no hope for the millions on zero hours contracts or those struggling to get by on low pay. It is just more dogma from the Tory class warriors representing the rich and powerful.”
