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MPs probe housebuilding sector's capacity to meet demand amid housing crisis

MPs are to “cast a critical eye” over housebuilders’ capacity to meet demand for new homes.

A parliamentary inquiry by the communities and local government committee is expected to ask chief executives of major developers to give evidence in the autumn.

Committee chair, Labour’s Clive Betts, said: “The capacity of the homebuilding industry is a key factor in housing supply, which is simply not keeping up with demand and has left us in the midst of a crisis.

“The committee will cast a critical eye over the major homebuilders, examine the decline of small and medium-sized developers and look closely at the skills shortages, planning delays and finance issues hampering the industry.”

MPs will probe the housebuilding industry’s structure and the role of smaller firms – whose number Mr Betts said had declined over 25 years from more than 12,000 to fewer than 3,000.

Planning issues will also form part of the inquiry, with MPs trying to determine why fewer homes are being started and completed than the number of planning permissions being granted, and the extent to which the planning system cause delays.

Mr Betts noted that Local Government Association research showed the number of homes granted planning permission but not yet built increased from 381,390 in 2012/13 to 475,647 in 2014/15.

The length of time between planning permission being granted to homes being completed also increased from 21 months in 2008/09 to 32 months in 2014/15, the LGA found.

Construction workforce sustainability, size and skills will also from part of the inquiry, following evidence last winter from construction consultant Arcadis that delivering the government’s target of 230,000 news homes per year would require an additional 120,000 workers.

Arcadis’ work has led to a separate government-commissioned review of the sector’s labour model, being conducted by the Construction Leadership Council and Cast Consultancy chief executive Mark Farmer.

Meanwhile, the LGA has said councils should be freed to build homes to help fill the gap between demand for affordable housing and private housebuilders’ capacity.

It said some four million working people would need affordable housing by 2024 even if the country were to achieve full employment.

But economic uncertainty facing housebuilders after last week’s referendum vote would make it even more difficult for them to build rapidly enough to meet this demand.

The LGA said councils should allowed to reinvest a greater proportion of Right to Buy receipts in building.

Its housing spokesman Peter Box, leader of Wakefield City Council, said: “Bold new action is needed and in the wake of the UK’s decision to leave the European Union.

“The private sector clearly plays a crucial role but it cannot build the homes we need on its own, and will likely be further restricted by uncertainties in the months and years ahead.”

 

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