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Builders test parties’ foundations

Housebuilders are understandably anxious. Firms today face demanding sustainability targets, and potentially a huge overhaul in planning if the Tories are elected.

The industry has been described as “on life support”. Companies are also being warned that “fundamental changes” are required if the sector is to fully recover from the worst recession since the second world war.

Tory planning policy in particular is causing concern, amid fears it might stifle rather than encourage development.
Conservative shadow housing minister Grant Shapps claimed the new policy, published late last month, would create “a nation of homebuilders”.

But the green paper has been received with some trepidation by the housing industry, with fears that plans to scrap regional housebuilding targets and introduce a third party right of appeal could lead to fewer homes being built.

At a debate held last week hosted by the Home Builders Federation, Taylor Wimpey’s eastern divisional managing director Lee Bishop said: “I stand here as a nervous housebuilder.

“We are starting to invest in land again, but we are facing a change in system, which makes me anxious.”

The Conservatives contend that more community involvement with planning and council tax incentives will boost development. Mr Shapps argues the policy will provide “bottom-up” incentives so significant that councils, and communities, would see that it was in their interest to have new homes built in their area.

Success test

But not all are convinced. “What I would really like to know is what will indicate that the plan has been successful, or unsuccessful?” asked Mr Bishop.

Mr Shapps, speaking at the same debate, offered this in his defence: “I can understand from a Taylor Wimpey point of view that the change is frightening, and [past Government] comments about building three million
homes by 2020 are heart-warming.

“But there are fewer homes being built now than anyone can remember… and the simple way we will know [our policy] has been successful is that we will outbuild the current Government.”

Labour has warned, however, that the plan would cause “chaos” in the council tax system.

Housing minister John Healey, also speaking at the same debate, said: “Just because there are criticisms
of the current system, doesn’t mean any other alternative system is better”.

Redrow group planning director Stuart Milligan says a significant challenge for the next Government would be to drive up housing completions to meet housing requirements.

According to the HBF, 250,000 new properties are needed each year to satisfy demand.

Just 118,000 homes were completed during 2009, according to the Department of Communities and Local Government.

Mr Milligan said: “The next Government needs to put in place a planning system that will help them deliver many more homes. He warned: “Would local people put forward developments in their own backyard that they do not
want just because of tax incentives? People do not generally want development near them.”

While the parties do not agree on what the industry needs to do to recover, both agree change is necessary.
Mr Shapps admitted recent government initiatives to buoy housing starts had been important.

“But what do you do going forward?” he said. “We need to make some fundamental changes.”

Predicting the right time to phase out support initiatives would be a key argument at the upcoming election, Mr Healey said, adding: “We now have to be able to design, plan and fund differently from the way we have before.

“It can’t be the case where we look and wait for the point when things are like they were in 2007.

“The planning system is overspecified, that will have to be dealt with, as will the commitment of public funds.”
Professor of housing economics at the London School of Economics Christine Whitehead said the situation
is worrying: “Housebuilders are certainly on life support.”

However she described the Tory planning policy as “an act of hope over practicality”.

“It may work in some areas, and not in others,” she said. “If I was a housebuilder, I would be terrified. But equally I’m fed up with the national targets approach.”

Mr Healey defended the Government’s record, saying that the steps taken to support the industry were unprecedented.

He said that the fact that £900 million had been diverted to housing from areas such as health and transport demonstrated the Government’s commitment to build more homes.

Crest Nicholson chief executive office Stephen Stone insists the current situation is dire nevertheless. “At the peak of the market we would have been delivering 3,500 homes. That figure today would be [down] 50 per cent.”

Planning is expected to be one of the hot topics between housebuilders and politicians in the lead up to, and after, the general election.

Travis Perkins finance director Paul Hampden-Smith described current planning laws as a “real hindrance” to new build. “They need reform,” he said. “Building houses has to be made easier.”

Barriers to employment Planning, apart from anything else, affects employment. Persimmon finance director
Mike Killoran told CN: “We are recruiting again, but it is all about bringing new sites through planning. If we are seeing prospective sites being blocked, that is creating barriers for us to increase employment.”

According to estimates by the Home Builders Federation, every new home built creates about two full-time and four supply chain jobs - a point CN has been actively raising with prospective parliamentary candidates following the launch of our Vote for Construction campaign earlier this month.

Backing the campaign, Mr Killoran said: “A key element of my conversation with an MP [right now] would be focused on employment levels.

“If you bring together housebuilders, contractors and major developers, we are very important for the UK’s employment levels.”

Mr Milligan added: “As an MP, it should be in their interest to create jobs. The housebuilding industry can be a catalyst in the wider economy.

“We had John Lewis just last week pointing out how their sales relate to the housing market. It isn’t just about building housing and back gardens, it is about creating jobs. Perhaps we don’t stress that enough at times.”