This week’s reshuffle and measures to kick-start house building are important political announcements for the sector. Here’s what experts made of them…
The reshuffle
Graham Watts, chief executive of the Construction Industry Council
“I don’t think we have a single minister that we were previously dealing with still in post!
“Obviously the biggest changes for us are housing minister Grant Shapps going upwards [to become chairman] and being replaced by Mark Prisk, [former minister in BIS and with the construction portfolio] who is replaced by Michael Fallon.
“I think that Shapps was a good ‘ideas’ man but he seemed light on delivery and I expect that Prisk will be a good choice for housing. He was a decent business minister and gave a fair bit of time to construction. Fallon guided a Private Members Bill through parliament as an opposition MP in 2008 to become the Planning & Energy Act and he is known to believe that climate change is a major concern so I suspect that he will remain supportive of green construction.
“I’m a bit surprised that Paul Deighton is being elevated to the peerage to become the new infrastructure minister in the Treasury (responsible for economic delivery) since all the reasoning I have heard for that is that he did a good job building the Olympic stadia, but of course that was ODA and not LOCOG. I would have been a lot happier with Lord Armitt (or even Lord Higgins) going to the Treasury!”
Simon Nathan, head of policy, UK Contractors’ Group
“John Hayes leaving [to become energy minister] is a shame, he’d been in post for two years and really knew his brief. We had been working with him quite constructively in recent months [Hayes convened a mini-summit on construction apprenticeships in late June]. We know very little about Matthew Hancock [new parliamentary undersecretary of state in BIS and DfE] except that he’s one of the 2010 intake so clearly he’s one of the rising stars. We’ll be looking to make early contact with him and build a relationship.”
On measures to kick-start house building
Iain Hutchinson, developer and founder of the London Rental Housing Company
“The planning system and specifically the unrealistic Section 106 and Community Infrastructure Levy expectations of most local authorities need radical reforms to stimulate the delivery of housing of all types. We need less attention to types of tenure to suit a changing demographic, the fact that it is a changing demographic indicates we are wasting time chasing it, we need to take a longer term view.
“We hope that the recommendations of the Montague report are acted upon quickly by central government and suitable effective measures are put in place.
Liz Peace, chief executive of the British Property Federation
“Taken together these measures will certainly provide a shot in the arm for house building. However, they will only solve housing issues if accompanied by a significant package of other measures.
“House builders are not on strike; they are simply not building because there are few people in a position to buy, or seeking to move. We are therefore pleased to see support to access home ownership and measures to encourage renting are also seen as important parts of this package. Simply building homes for non-existent buyers has been tried before, in Spain and Ireland, with disastrous consequences.
“We’re pleased to see the government throw its weight behind the Montague review. But this will only be a success if local authorities get behind it. They remain in the box seat in accepting build-to-let and how affordable housing requirements should be dealt with on build-to-let developments. There is also important and inclusive support via government guarantees for building build-to-let stock. House builders, construction firms and housing associations will all have access to this. We hope many will consider it as something they want to get into.”
Jon Neale, director, residential research at Jones Lang LaSalle
“It is clear that the government is now introducing more radical measures aimed at increasing the supply of new housing and providing a much-needed stimulus for the wider economy. The supply chain for new homes is almost entirely domestic and therefore any increase in construction provides huge ‘multiplier effects’ for the rest of the economy.
“Particularly startling and welcome is the government’s rapid and unconditional acceptance of the recommendations of the Montague review. With significant resource devoted to unlocking stalled sites and promoting institutional investment, this sector should – finally – begin to emerge as an important part of the British housing system.
“Montague suggests that planning authorities earmark land for private rented for a set period of time, meaning that such units would become valued on their rental income rather than open market sales value. In other words, it would be an asset much closer to commercial property, allowing institutions to overcome some of their reservations.”
“The funding of additional affordable homes – probably through the new affordable rent product – and an extended programme for the FirstBuy schemes will provide more direct stimulation for the housing and house building industries.”
“There is also no doubt that, in some instances, heavy affordable housing requirements are holding back development. However, while this is an issue on some sites, I would question the extent to which it is preventing much higher levels of new build activity – although relaxation of s106 requirements might have a positive effect on the value of house builders’ landholdings.
On changes to planning
Christopher Bowes, partner and Manchester head of planning, DLA Piper LLP
“The proposals look like great news for developers, but it will be important that the Planning Inspectorate is given the resources to handle the ensuing rush of planning appeals: it will be no help to anyone if the development log-jam simply moves from local authorities to the Planning Inspectorate. There is also a clear conflict between the coalition’s support for ‘locally led’ development and decisions that will now be made by the Planning Inspectorate under the fast-track appeal route, rather than local politicians. These reforms will be hugely controversial in some areas.”
On the proposed Infrastructure Bill
Nelson Ogunshakin OBE, chief executive of the Association of Consulting Engineers
“The Infrastructure (Financial Assistance) Bill is a promising step in the right direction. But the Association for Consultancy and Engineering has warned that it may take time to get significant projects underway, and it may not achieve best value for money.
“The reactive nature of the scheme, which hopes to trigger £40bn of infrastructure investment, will provide government financial support for nationally significant projects. However, this will only happen once a development has secured much of the needed finance through private investors and it is just 12 months from starting work. This means that financing costs will reflect the high political, economic and planning risks attached for private investors before government steps in. “
