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Industry reacts to chancellor's speech

Leading figures from across construction give their views on the chancellor’s 2016 Autumn Statement.

Arcadis head of residential and regeneration Richard Jones said: “Government needs to stop paying lip service to the housing emergency. What we need is a co-ordinated approach to the problem rather than just rolling out initiative after initiative.

“We need to look at what building 200,000 homes a year would look like from a need perspective and ensure that any new policy helps deliver this. It will invariably show that a large proportion of new housing will need to be intermediate or private rent, so government policy should help to support this through the prioritising of public sector land to certain tenure groups, buy-as-you-rent initiatives, planning amendments and a supportive tax regime.

“With rental products being counter-cyclical, this should create an environment that encourages investment in ‘smart homes’, which will ease the skills shortage as well as drive efficiency into a sector which has historically been very inefficient. This, combined with the welcome increase in spending around essential infrastructure to unlock unviable sites, will begin to address the blight of insufficient housing numbers.”

Cast Consultancy chief executive Mark Farmer said: “It is good to see new housing and infrastructure receiving the focus so desperately needed in the Autumn Statement. It is particularly pleasing to see the increased commitment to the National Affordable Homes Programme, which is a specific recommendation of my recently published government review of the construction market.

“A tenure diverse housing market including affordable rent and shared ownership is crucial to underpinning more stable long-term demand in construction and also can act as a catalyst for investment in innovation in housebuilding which ultimately will reduce delivery costs. 

“While I also welcome the government prioritising large infrastructure projects, such as Heathrow’s third runway, there are still major issues with how these major projects will be physically delivered as I suspect we are about to experience at Hinkley Point. We ultimately require a construction industry that is modern, dynamic and much more productive so we can deliver all of these built assets with constrained resources.

“Any large public sector commitments involving construction or civil engineering that aren’t linked to a comprehensive overhaul of skills and training, more investment in new technology and a better alignment of interests across the supply chain, clients and government, risks perpetuating the industry’s longstanding structural problems and will ultimately mean poor value for money for the taxpayer.”

Sir John Armitt, deputy chair of the National Infrastructure Commission, said: “The government’s acceptance of the National Infrastructure Commission’s recommendations for the Cambridge-Milton Keynes-Oxford corridor is most welcome.

“The growth corridor between Cambridge, Milton Keynes and Oxford could help fire the British economy, but only if we back it with the homes and infrastructure it needs to thrive. Last week the NIC presented the compelling case for investment in East West rail and the Oxford Cambridge Expressway, as part of a wider joined up plan to help this region succeed. This is a once in a generation opportunity and the government is absolutely right to accept those recommendations.”

Mayor of London Sadiq Khan said: “I’m delighted that we today took the first steps towards a major new devolution deal for London. London has a bigger population than Scotland, Wales and Northern Ireland combined, but we have far less control over how our city is run.

“Today marks the first step in our journey to give the capital a greater voice so we can protect jobs, wealth and prosperity and provide an extra incentive for economic growth. The record-breaking affordable housing settlement means we can get on with the hard slog of building new genuinely affordable homes, but it won’t happen overnight – fixing the housing crisis will be a marathon and not a sprint.

“Of course we didn’t get everything we asked for today – securing more control for London will not happen overnight. I’m disappointed, for example, that the chancellor didn’t devolve control of suburban railways in London. Commuters who rely on Southern, South-West and South-Eastern services are currently being ripped off with a terrible service. I hope the government will move on rail devolution sooner rather than later.”

Labour London Assembly housing spokesperson Tom Copley said: “The move to funding affordable rent as well as shared ownership is a welcome recognition from government that their failed Starter Homes policy was neither affordable nor fit for purpose in the capital. London needs genuinely affordable homes, and we now need an assurance that a significant number of these homes will be pegged at the social rent level London needs most acutely.

“If the government is really serious about tackling the housing crisis, this money needs to be followed by far greater powers over housing and planning for London. Most importantly we need a lift on council borrowing restrictions to allow them to build more new council housing, and ‘use it or lose it’ powers for the mayor to wield when developers have planning permission but don’t build the homes.”

Moda Living managing director Johnny Caddick said: “To create the Northern Powerhouse or Midlands Engine, agglomeration to help achieve scale is critical, and that means investing in cross-country and inter-city transport beyond HS2.

“Theresa May has made rebalancing the economy away from London a top priority, and that requires for genuine counter-weights to the capital to emerge, so we need to see more projects like HS3 for the North and elsewhere.”

Clyde & Co real estate partner Adam Smith-Taylor said: “As with any major construction there is likely to be lengthy delays before shovels can hit the ground. Planning approval is a complex process, especially for 40,000 new homes. It will be interesting to see whether the Government attaches any planning law ‘by-passes’ to these homes.

“In order to deliver more housing there must be more reforms in the planning system and, including in areas like the South East, the release of Green Belt.”

Julie Hirigoyen, chief executive at the UK Green Building Council, commented on sustainability: “If the government is serious about delivering ‘a housing market that works for everyone’, new homes must be built to higher energy efficiency standards, to prevent us having to retrofit them in the future. The government must also do more to support energy efficiency measures in existing homes, making them cheaper to heat and healthier to live in.

“The chancellor’s focus on R&D and productivity is also welcome; low-carbon technologies are the ultimate ‘disruptive technology’ and there are clear economic opportunities for the UK to position itself as a global market leader. High-quality, sustainable buildings can also improve the productivity of the organisations that work in them.”

Nick Roberts, Atkins’ UK and Europe chief executive officer, said: “The chancellor has placed economic growth and quality of life at the heart of his infrastructure decisions. Being clear on these outcomes means that our most pressing needs around housing, roads, railways and digital networks feature at the top of the priority list, and the government can borrow a sensible amount of money to fund the improvements with a high degree of confidence that they will get a good return on their investments.

“I welcome the Autumn Statement recognising the interdependencies between different types of infrastructure. The new £2.3bn fund focusing on the link between housing and local infrastructure will help unlock valuable public land whilst ensuring local communities can cope with growing populations.

“And the commitment to become a world leader in fibre and 5G digital networks will not only make a difference to businesses and consumers in their everyday lives, it will also help enable the more technology-enabled infrastructure, such as a digital signalling and connected and autonomous vehicles, which will form a key part of our future.”

Bill Price, WSP | Parsons Brinckerhoff property director, said: “Housing remains high on the agenda in terms of both rhetoric and some new measures to back it up. With affordable housing at record lows and a focus on the JAMs (just about managing), new funding here is a sensible and much needed policy.

”The concern is that governments are judged solely on the number of houses built. Therefore it is really encouraging to see the chancellor make the direct connection between housing and infrastructure. If underutilised public land or even transport corridors around stations can be used for housing or other development that would align well with the needs of the sector.

“That’s why announcements on regional rail, roads and even broadband are just as important victories for the property market. Our sector is suffering from a lack of confidence, not cash. This new public sector investment will play a part in kick-starting the levels of property construction we need to see.”

Civil Engineering Contractors Association head of external affairs Marie-Claude Hemming said: “CECA is delighted that the chancellor has committed to driving growth through infrastructure, and particularly welcomes his focus on innovation.

“Today’s Autumn Statement shows that the government is committed to driving economic growth through investment in innovative, world-class infrastructure, and that it will do so in a manner that rebalances the economy.

“This can only be in the best interests of securing the long-term economic health of UK plc, to the benefits of businesses and taxpayers alike.”

Miles Barnard, managing director of Mouchel, said: “First, having such a strong advocate for infrastructure as the chancellor is a real boost for the industry. The new figures for infrastructure funding should be rightly celebrated.

“Many of the key roads announcements were trailed prior to the statement, so there were no real surprises. Nonetheless it is reassuring that this extra money is going to be deliberately targeted in the most important areas. In the same vein I’d also like to see the significant new funding in science and technology targeted in areas that most influence the modernisation of infrastructure including driverless vehicles and big data.

“We still await measures on how we can increase the number of young people into STEM subjects, but committing to mega-projects, and getting them ‘shovel-ready’ quickly, will help make our industry an attractive destination for graduates and apprenticeships and retain existing talent.”

Stephen Stone, chief executive of housebuilder Crest Nicholson, said: “Crest Nicholson welcomes Philip Hammond’s commitment to double annual capital spending on housing, investing £1.4bn in affordable housing in order to deliver 40,000 new homes, alongside a £2.3 billion investment in infrastructure around new housing developments.

”The UK continues to be challenged by a short supply of suitable, affordable housing stock in addition to ambitious targets to reach in order to meet a growing population. Ultimately this investment should help to make the dream of owning a house a reality for a significant number of people.

“The investment is another reminder of how the housebuilding industry must pull together and address its growing skills gap in order to continue to deliver quality housing across the UK. A highly trained workforce is vital to our industry’s future growth, and the attractions of a career in housebuilding must be made clear to the next generation of our workforce.”

Richard Threlfall, head of infrastructure, building and construction at KPMG UK, said: “One number matters more than any other in what the chancellor said on infrastructure investment in the autumn statement: 1.2 per cent. It is, as a percentage of GDP, the guidance to the National Infrastructure Commission on UK spending on economic infrastructure from 2020 to 2050.

The chancellor was proud to explain that it represents an increase on the current 0.8 per cent. Whilst that may be true, it is still low by international standards, and the continued focus on economic infrastructure in isolation, ignoring both social infrastructure and housing, is another missed opportunity to grasp the bigger picture. Overall, the UK spends about 2.7 per cent of GDP on infrastructure today. Canada spends more than 4 per cent and China at least double that.

“Today’s Autumn Statement felt fairly business-as-usual with lots of small initiatives, all welcome, but nothing transformational.”

Melanie Leech, CEO of the British Property Federation, said: “This Budget’s hidden gem is the spending on infrastructure to help bring forward housing sites. Infrastructure spending is housing delivery’s silver bullet and the considerable commitment to invest about £2bn a year is therefore very welcome. The £1.7bn for accelerated construction on public land will also help upscale the modular construction sector, meaning a more efficient industry and the faster delivery of homes.

“We are also looking forward to the housing white paper and the policies that government is working on. We desperately need far more homes and the build-to-rent sector is there to support government meet that objective.

“It’s also great to see a further £1.8bn will be allocated to Local Enterprise Partnerships across the country, as many are working hard to deliver growth and employment in their areas and this will help unlock land for housing, boost skills and improve transport connections. While we would like to see greater consistency in LEPs’ approach and transparency, this funding coupled with the promise of further devolution deals shows a real commitment from Government to inclusive regional growth.

“One big disappointment is the continued stamp duty surcharge on institutional build-to-rent housing, which sends out the wrong signals when those institutions are willing to invest billions of pounds on the new homes that we need.

“We also remain concerned that the proposals to restrict tax relief on interest costs and reform the loss relief rules will inadvertently hinder investment in real estate and infrastructure, even where no tax avoidance is taking place. We are disappointed that the government is going ahead with implementation in April 2017.”

Matthew Jones, head of construction and engineering at international law firm Taylor Wessing, commented: “In the immediate aftermath of Brexit, construction output is estimated by the Office of National Statistics to have decreased by 1.1 per cent.

“Although there has been a slight increase in construction output of 0.3 per cent in September 2016, the government’s announcement of a £1.1bn investment programme in local road improvements to bypasses and roundabouts to tackle traffic congestion is good news for the construction industry.

“At a time of uncertainty about opportunities and investment post-Brexit, and following on from the recent announcements on Heathrow and HS2, this will boost the confidence of employers to commit to capital expenditure and resources.”

Al Watson, head of planning and environment at international law firm Taylor Wessing, said: “Spreading the money more widely and more thinly is perhaps inevitable. It is also better for the greater good across the country.

“Politically, the government knows it needs to retain votes or win more votes and promoting economic growth by way of some improvement in infrastructure in the regions looks to be a good idea. The big kit – like HS2 and Heathrow – will take a long time to deliver – indeed to pick up any speed at all – so in the meantime, the government needs to look to other areas of the country for short sharp improvements.”

Carl Dyer, head of planning at law firm Irwin Mitchell, said: “Once again we see a chancellor targeting the wrong end of the housing market and promising to spend a lot of money to little purpose.

”The government set a target of building 1 million new homes over the five years of this parliament. A present rate of construction, they will be at least 300,000 homes short of the target. Even if this cash injection delivered an extra 140,000 homes, it would not bridge the shortfall from the target the government is already missing.

”Disappointingly, there was no mention at all of retirement housing. Mr Hammond could have had a far greater effect on supply of housing if he had incentivised the construction of retirement living and care homes. If just half of the elderly people who say they want to downsize their property were to do so, that would release 3.5m homes onto the market. That is something like five parliaments’ supply at current rates of construction.”

Terrie Alafat, chief executive of the Chartered Institute of Housing, said: “Given the scale of our housing crisis the central focus on housing in the government’s Autumn Statement today is a significant step in the right direction.”

“The measures announced today demonstrate this is a government which recognises housing is a key part of our infrastructure and that it brings economic benefits. It also shows this is a government which is serious about its commitment to help the many thousands of people struggling to get access to a decent, affordable home.

“The extra investment to support the building of 40,000 new affordable homes and the greater flexibility in funding for housing providers to build homes of all tenures, both of which we had asked for, are particularly welcome. It is also pleasing to see largescale investment in infrastructure to support new housebuilding.”

Dan Harvey, executive director at Ramboll, said: ”Infrastructure spending is crucial in supporting wealth distribution, promoting economic development and environmental performance, and improving the livelihoods of people across the UK. Its prioritisation in the Autumn Statement will provide a boost for the industry, but must be backed up by an effort to ensure such spending is done efficiently and effectively.

“The focus needs to be on smaller projects and shorter delivery times, which ensure a faster boost to the economy and support further infrastructure improvements across the country, while involving more tangible benefits for the population.”

“We welcome the £2.3bn investment unlocking local land for housing, and the connection between housing and infrastructure will enable investment to build communities as well as homes.”

Manish Gupta, head of infrastructure corporate finance at EY, commented: “The £450m for digital signalling will transform how the railway operates and will enhance capacity across the UK network. At peak times and in key bottlenecks, the network is full and unable to keep up with growing demand from passengers.

“Digitising the signalling system will allow more trains onto the track and also provide a platform for closer co-operation between Network Rail, train operators and rolling stock providers. Passengers will also benefit from improvements in the quality of real-time travel information.

Also: “Extending the UK Guarantee Scheme to 2026 is a welcome move given the uncertainty surrounding the future role of the European Investment Bank as Brexit negotiations unfold. The government and private sector will now be able to fill the gap that might be left by any reduction in the EIB’s commitment to UK infrastructure.

“The scheme will encourage investment by UK pension and insurance investors who require support for greenfield projects. To realise the full benefit of the scheme, however, government should bring forward well-structured, commercial projects.”

Trevor Ivory, planning partner with law firm DLA Piper, said: “It is very good news that the government continues to recognise the importance of investing in infrastructure.

Renewing existing infrastructure and providing new capacity is fundamental to the long-term prosperity of the UK. As ever, the challenge will be getting infrastructure projects underway quickly and so it is important that the government ensures that the Planning Inspectorate has the resources it needs to determine development consent order applications within the statutory time periods without compromising its performance in other areas.

“It is also important that projects are not bogged down in by political wrangling in the way that some projects have been.”

Philip Paget, employment law partner at Gordons, commented on the increase to the National Minimum Wage, eight months after it was introduced: “Many employers spent those first few months assessing the impact of increased staff costs and although there has been an element of restructuring, the general feeling was that the new National Living Wage was still only a small increase on the National Minimum Wage that was already in place. Now they are faced with another 30p increase from April and only time will tell the impact this will have on employers.

“Of course, critics will argue it’s still not enough. It is worth noting that the National Minimum Wage increased every year and it was to be expected that National Living Wage would do the same. In fact, the new figure is less than the £7.64 that had been already been suggested by the Low Pay Commission.

Shraga Stern, director at construction company Decorean, said: “With people scrambling for homes and what appears to be survival of the richest, Philip Hammond’s encouragement to alleviate the current housing crisis and provide housing for everyone is a welcome sight. However, for there to be a real change, the government must enforce changes to the planning system and regulations, which act as a stumbling block for many smaller developers.

”As the UK’s population continues to grow, we echo Mr Hammond’s thoughts that for many ‘the goal of home ownership is out of reach’. However, we have heard this all before and hope that this Autumn Statement acts as a stepping stone to providing a shelter over people’s heads and somewhere comfortable and affordable to call home.”

Michael Thirkettle, chief executive of  construction and property consultancy McBains Cooper, said: “This provides some good news regarding the government’s commitment to spend on social and economic infrastructure, in particular the £1.4bn aimed at delivering 40,000 new affordable homes in England, £2.3bn housing infrastructure fund to help provide 100,000 new homes in high-demand areas and £3.15bn for London as its share of the national affordable housing funding to deliver over 90,000 homes. For years successive governments have announced ambitious house building targets which are never met.

“We are disappointed that there was no announcement to streamline the planning process or free up land on the greenbelt – much of which is derelict land rather than areas of beauty – as that would also help the shortage of land.

“We were also disappointed not to see further investments in training and apprenticeships in the UK construction industry, as we will need to train and re-train UK people in readiness for any restrictions in the supply of skilled foreign workers following Brexit.”

Sarah McMonagle, director of external affairs at the Federation of Master Builders, said: “The chancellor’s commitment to double annual capital spending on housing by 2020 demonstrates that he understands that housebuilding and economic growth are intrinsically linked. For every £1 invested in construction, £2.84 is generated in the wider economy and therefore the best way to protect ourselves from an economic wobble as we leave the EU is to invest in our built environment.

For that reason, the £1.4bn announced for 40,000 affordable homes is welcome, as is the £1.3bn for roads – the latter will help improve the UK’s infrastructure and make our economy more competitive.”

”The £2.3 billion Housing Infrastructure Fund is welcome and could go some way to solving the housing crisis. The burden of funding local infrastructure for new homes should not fall entirely on private housebuilders – however, as council budgets have been stripped back, local authorities have increasingly looked to developers, including even the very smallest developers, to plug these funding gaps.

”Heavy demands for Section 106 and Community Infrastructure Levy can make many small developments unviable. Key to the fund’s success will be to ensure that it focuses on unlocking large numbers of small sites and not just small numbers of large sites. The chancellor wants a ‘housing market that works for everyone’ and central to this is empowering small local housebuilders.”

Stephen Radley, director of policy at CITB, said:  “Today’s announcements offer more certainty for the pipeline of work ahead, not just nationally but at a regional and local level in infrastructure and housing.

“This will help to boost business confidence following the uncertainties thrown up by Brexit. The local and regional investment should help bring more small firms into the supply chain, where much of the training takes place.”

Nick Baveystock, director general of the Institution of Civil Engineers commented: “The chancellor is right to make infrastructure’s ability to enable economic growth and thriving communities the main feature of the Autumn Statement. Following the recommendation made in the ICE-led National Needs Assessment, the chancellor announced that he will provide infrastructure targeted at unlocking new private housebuilding in the areas where housing need is greatest. This links social and economic infrastructure together enables an integrated approach to infrastructure delivery that will provide places where people will want to live and work.

“Borrowing powers for regions to finance new infrastructure projects also heralds the start of a rebalanced economy. Infrastructure is the cornerstone of strong and growing economy and the way to generate prosperity for our everyday way of lives – whether it is through housing, transport or 5G broadband, it transforms lives and strengthens communities.”

Jeremy Blackburn, Royal Institution of Chartered Surveyors head of policy, said: “Philip Hammond is something of a political novelty - he is a chancellor who listens. Our ‘listening chancellor’ consulted widely with industry in the build-up to today’s statement, as I’m sure he will as Britain moves closer towards Brexit.  

“While he has delivered something of a wait-and-see statement, where the detail won’t be revealed until the publication of the Housing White Paper, and we haven’t yet seen him pictured in a hard hat, he clearly understands the housing sector better than his predecessors. It seems that through the relaxation on grants to deliver a wider range of housing types, Mr Hammond will drive an affordable rental agenda and can get Britain building in a way that benefits a cross-section of society, not just the fortunate few.

“In a recent survey, a quarter of our members told us that providing better infrastructure in Britain’s most remote areas was key to regional growth and delivering more affordable housing. The chancellor’s £23bn National Productivity Investment Fund and Northern Plan for road investment will undoubtedly help to plug this gap, delivering the connectivity needed to power the North and our Midlands Engine.”

Joe Sarling, associate director at NLP, said: “It is very welcome news that the chancellor has committed to further transport infrastructure investment, particularly for roads but also rail.

“The UK frequently spends less - as a proportion of GDP - than countries such as Canada, France and Switzerland; a recent survey put the UK at 27th place in the world for perceived infrastructure quality. To remain competitive during uncertain times ahead, investing in infrastructure as one of the core pillars of the economy will provide a welcome boost.”

“The government investing in transport infrastructure is certainly welcome – it is a most vital foundation from which economies can thrive. But again, where it is invested is key. In recent years, transport spending has focused more investment in London, the South East and the East of England which received £6.4bn in 2014/15.

“This was 2.5 times more than in the Northern Powerhouse regions (the North East, the North West and Yorkshire and the Humber) and 3.7 times that in the Midlands (West and East). If growing local economies are to successfully underpin growth, investment in transport infrastructure should be a catalyst across the UK.”

Eleanor Deeley, partner, residential at Cushman & Wakefield, said: “The government’s new £1.4bn to fund 40,000 new affordable homes (£35,000 per home) is a very welcome contribution to the affordable market.

“There are many ways in which this could be utilised and whether it is through the direct purchase of land, or whether it is through gap funding across more sites it will certainly go a long way to delivering affordable housing . However what we need now is further detail on how this can be accessed and utilised by developers in order to deliver more housing.”

 

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