If the government wants to solve the housing crisis, it must address the barriers to output that local housebuilders continue to face.
In his Budget, Mr Hammond addressed the issues smaller housebuilders face. He has also set in motion actions that will help mitigate the skills crisis that is plaguing the construction sector.
The government has set itself an increased target to build 300,000 new homes a year in England by the mid-2020s. In the Federation of Master Builders’ 2017 Home Builders’ Survey, over half of SME housebuilders said that accessing finance was a major barrier to their ability to build more homes.
The announcement is timely given that almost a decade after the financial crisis, access to finance for small housebuilders is getting worse instead of better. Assessments of lending conditions to SME developers were down slightly from 2016 – the first fall in this measure since 2013.
The commitment of £44bn of capital funding, loans and guarantees will help make the government’s target more achievable. The FMB is pleased a further £1.5bn is being invested in the Home Building Fund. Indeed, it was announced there is to be £8bn of new financial guarantees to support private housebuilding and the purpose-built private rented sector. The FMB’s understanding is that a significant amount of this will be channelled towards SMEs.
With Brexit looming, the construction skills crisis threatens to be a major challenge to increasing levels of housebuilding over the next few years.
“If the government wants to build homes and infrastructure projects,construction will need to continue to have access to a significant number of EU workers”
The long-term solution to the skills shortage will be an increase in the training of homegrown talent. It is positive that the chancellor has committed extra resources to training for construction skills.
The chancellor re-announced his target to deliver three million apprenticeships by 2020 through the apprenticeship levy and a further £20m will support further education colleges to prepare for the introduction of T-levels. Having said that, if the government wants to build the required number of homes and infrastructure projects, the UK construction sector will need to continue to have access to a significant number of EU workers.
A final barrier to output, which has been tackled in the Budget, is the lack of available and viable land for smaller housebuilders.
FMB research shows that nearly two-thirds of SMEs say that the lack of available and viable land is a major barrier. The housing white paper emphasised the need to diversify the sector so it is less reliant on a small number of large housebuilders. The government needed to make good on proposals to improve the availability of small sites and speed up the planning process. It is pleasing to see proposals that require councils to deliver new housing via faster-to-build smaller sites.
Putting small builders at the heart of the Budget means they will be able to deliver the new homes Britain badly needs. It was indeed a ‘Budget for builders’.
Brian Berry is chief executive of the Federation of Master Builders