The government will create a £7.1bn National Homebuilding Fund to unlock the development of 860,000 new homes.
The news came as Chancellor Rishi Sunak unveiled his spending review for 2021/22, in which he warned of the largest fall in output in 300 years – a drop of 11.3% – as a result of the covid-19 pandemic. The economy is set to grow by 5.5% next year and 6.6% in 2022 as restrictions ease.
The new fund sets aside money for land remediation, investment in infrastructure, help to deliver the brownfield fund, and loan support for housebuilders across the country.
It was one of a number of spending pledges from the Chancellor to help kickstart the post-covid economy, which also included a £4bn ‘levelling up’ fund which will allow local authorities across England to compete for investment in a range of schemes up to £20m to improve the local area.
And the government renewed its commitment to build or rebuild 500 schools across the UK over the next five years, as well as to build 40 new hospitals over the next 10 years.
Meanwhile the government has published its delayed National Infrastructure Strategy, entitled ‘Fairer, faster, greener’, which aims to deliver improvements to UK infrastructure while putting the UK on the path to net zero emissions by 2050.
Within the document, the government pledged to accelerate and improve delivery of projects through reforms to the planning system, as well as improvements to the way projects are procured, and the greater use of construction technology.
Commenting on the spending review and launch of the National Infrastructure Strategy, Patricia Moore, UK managing director at Turner & Townsend said: “The message from government is that infrastructure is to take a central role in narrowing the north-south divide. However, investment must be made in the right way if we are to successfully build back better from covid-19.
“The National Infrastructure Strategy focuses on connectivity – we now need central and devolved governments to align this plan with improved social and economic infrastructure too.
“The aim should be to ‘level up’ by ‘linking up’ – connecting communities in a way that supports jobs. In many regions there is not enough joined-up planning across highways, rail, energy and residential development. Recognising housing as a key part of our national infrastructure is paramount to achieving more balanced economic growth.
“Government has placed its faith in infrastructure, but the industry is fragile. Investment needs to be made in a way that delivers economic, social and environmental value for communities, at the same time as building capacity and skills capability within the sector itself.”
Nick Baveystock, Institution of Civil Engineers (ICE) director general, said: “Today’s announcements could genuinely be a game-changer in delivering an infrastructure system that works better for the public. An infrastructure strategy gives clarity on the direction of travel for investment, and an infrastructure bank will help lower the cost of greener technologies and projects needed to ramp up decarbonisation. The Green Book now lives up to its name, with a bright green thread running through it to better weigh environmental costs and benefits alongside social and economic needs.”
Commenting on the launch of the National Homebuilding Fund, Andrew Shepherd, managing director at TopHat, said: “We welcome the government’s announcement of a new £7.1bn National Home Building Fund. However, to truly realise the benefits of this new investment, ministers must continue to encourage the uptake of modern methods of construction as, at the moment, traditional housebuilders do not have the capacity to deliver on the 300,000 new homes a year target.
“By encouraging more investors, developers, councils and housing associations to deliver more homes using innovative, technology-led methods, the government can begin addressing the historic supply and demand imbalances in UK housebuilding.”
