Get Britain Building – Is the 10 Point Programme the Way Forward?

Today (10 February) a number of building trades bodies (the Federation of Master Builders, the Builders Merchants Federation, British Pre-Cast and the Modern Masonry Alliance) are launching the “Get Britain Building” campaign.  They are setting out a 10 point agenda of issues to be addressed by the Government to enable the construction industry to survive the coming months.  Some are short-term measures including an adjustment to VAT rates on building repair and maintenance work, ensuring “responsible lending” for those anxious to get on the property ladder, expedited planning decisions to release land for 150,000 new social homes by the end of 2010, and a timetable of spending on schools and hospitals to ensure that projects are completed in the next 2 years and reintroducing empty property rate relief to avoid the pointless demolition of empty buildings. Others are longer term reforms needed to free up the property market generally, including measures to make better use of Britain’s existing housing stock and increase its energy efficiency, simplifying the planning system, relaxing the regime under Section 106 agreements and abandoning Community Infrastructure Levy (CIL), reducing the regulatory burden generally on the industry and reforming Stamp Duty Land Tax.

An industry-wide campaign to stimulate the property and construction industry has to be welcomed.  However, the Home Builders Federation (HBF), whilst welcoming the campaign generally, has expressed its reservation regarding some of the measures, partly because they do not particularly assist the house-building industry and partly because they are contrary to the HBF’s own current stance. 

Even if all these measures were adopted, it is difficult to see that they will have much impact in the short term.  It is probably not realistic to expect the planning system or the health or education system to produce schemes which have not yet been started which will be completed within just under 2 years, unless these are schemes which are already planned and designed but are only waiting for funds to be available.  Nonetheless, the initiative is to be welcomed.  When the market turns, there will be a backlog of demand and we will revert to the situation we were in prior to the financial collapse of the last 18 months, with demand exceeding supply, and the planning system and other arms of Government unable to ensure the delivery of the homes that the country needs within a reasonable timescale, fuelling the next “boom and bust” cycle.  At a strategic level, the problem is compounded by the current sharp downturn, which has left the development industry with insufficient resources to promote sites adequately through the emerging Local Development Framework process which is proceeding in local authorities throughout the country.  Many developers are struggling to find the resources to ensure that long term sites in which they have invested are properly promoted for designation in local site allocation policies, and the HBF is struggling with reduced resources to ensure that the procedure takes proper account of the demand for housing throughout the country.

What can the Government do?  For both short-term relief and long-term reform, we would advocate the following:-

1. Abandon CIL.  Notwithstanding the stance taken by HBF, our view is that the proposals will prove bureaucratic and burdensome both for local planning authorities and for developers.  Any new imposition will only increase the financial burden to be discharged when bringing sites forward for development, and further hinder the process of “getting Britain building”. 
2. The Government should undertake an urgent review of the way in which it procures major investment in land and buildings in the education and health sectors.  Both sectors have suffered nearly 2 decades of “balkanisation” – our health and education services have been increasingly broken down into a number of notionally self-governing bodies, hamstrung by complex finance regulations, but with limited financial resources.  For major investment or new buildings, they are usually dependant upon finding surplus land which can be promoted for private-sector development (so called “enabling development”) which has to be sold or made the subject of a development agreement to fund replacement of obsolete buildings and facilities.  Even in a buoyant market, this makes for complicated procurement, but now that the property market has suffered a steep reversal, many schemes are simply not viable because the value of the “enabling development” is no longer sufficient to fund the new building that is required.  The Government should urgently look at steps of breaking this vicious circle, funding the necessary new building from Central Government resources in return for either taking into central ownership any surplus land so that it can be sold on the market in an orderly manner for the benefit of the tax payer when market conditions improve, or sold now on favourable terms to help stimulate the property market.
3. The Government also needs to take a long hard look at the procurement policies for such projects.  All too often, health and education bodies obtain planning permissions which do not maximise value or do not suit current market conditions.  Closer working with developers and their established advisers might solve some of these problems.
4. Reverse the reduction in the duration of planning permissions introduced by the Planning Compulsory Purchase Act 2004 – The current adverse market conditions demonstrate the foolishness of this so called reform.  Remember the Government inspired a campaign against “land banking”?  We now have involuntary land banking – sites are being put on hold or not developed due to shortage of cash.  Inevitably some will not be implemented in the requisite 3 year period, and then the planning system will be overloaded with applications for renewals of permission when conditions improve.  The Government should act now and reverse this move to save us from this situation.
5. Simplifying the planning system – This has to be looked at seriously.  In particular, the Government should take steps to uncouple matters which ought properly to be the subject of the Building Act and the Building Regulations, such as the energy efficiency of homes from the planning regime itself.  Planning should ultimately be about spatial planning.  Building regulations approval is the appropriate mechanism for ensuring energy efficiency.
6. Investment in non-fossil fuel infrastructure and upgrading existing building – We should bear in mind that even in a good year, we are unlikely to build 200,000 new homes, when there are some 22 million households in the country, and the number seems to be growing.  Very little of the existing housing stock is being replaced, so the campaigns for greater energy efficiency measures to be incorporated in the existing housing stock must be helpful.  If, however, the Government was really serious about reducing our dependence on fossil fuel, there is a much quicker (although not necessarily cheaper) way of achieving this.  In the last 3 decades the French have achieved 77% of their electricity generation from nuclear power.  If there were a major campaign to invest in new non-fossil fuel energy projects, it would both provide a stimulus to the construction industry and deal far more quickly and effectively with the reduction of our carbon emissions than concentrating only on achieving target energy saving ratings on new housing.

This article is written by Neil Bucknell, a partner in our National Property team and head of the Land Development team.  If you would like to speak to Neil about any of the issues covered in this article please click here for his details.

For further information on the Get Britain Building Campaign please click here.  To find out more about how our Land Development team can help you please click here.

For a pdf version of this Press Release please click here.