Autumn statement: The industry reacts
The industry has responded to chancellor George Osborne’s autumn statement, which included boosts to housebuilding and infrastructure
Stephen Hodder, RIBA president
‘I welcome the news that the Chancellor is introducing further measures to tackle the UK’s ongoing housing crisis. Past efforts to stimulate the housing market through Help to Buy have failed to address chronic under-supply.
Radical action is needed if we are going to address the housing crisis
‘But I’m concerned the package of announcements on housing in today’s Autumn Statement don’t go far enough. Radical action is needed if we are going to address the housing crisis. So instead of merely raising the amount councils can borrow to invest in new housing, the Chancellor should have scrapped the borrowing cap on Housing Revenue Account proceeds. And we hope that as part of the Review of the role of local government in housing supply announced today, the Government will further explore RIBA’s Future Homes Commission’s proposal for a new Local Housing Development Fund to kick-start major investment in private rented and shared ownership housing and work with Local Government Pension Funds and other institutions to remove the barriers that are currently limiting this investment.
‘We would also like to see Government provide greater incentives for councils to bring forward development forward themselves on public land and change rules on the disposal of public land to the private sector to ensure that developers increasingly bid for land based on quality rather than merely on cost. By fully exploiting the assets and powers government has at its disposal, we can ensure that we don’t just build more homes, but build the right type of homes.’
Allan Wilén, economics director, Glenigan
‘The Chancellor’s Autumn Statement presents a brighter picture for the UK economy and construction. The official forecast from the Office for Budget Responsibility (OBR) has upgraded UK economic growth for next year from 1.8 per cent to 2.4 per cent. The stronger economic performance will be especially welcomed by the construction industry, with economic growth of 2 per cent or more usually a prerequisite for higher construction output. Glenigan is forecasting a 4 per cent rise in project starts next year.
‘The Chancellor’s commitment to support new housing supply is encouraging. While noting the latest Glenigan data showing a 35 per cent rise in residential planning approval, the Chancellor has pledged addition measures to increase housing supply, including a £1 billion, six-year infrastructure investment programme to unlock new large housing sites. This is expected to support the delivery of around 250,000 homes in Manchester, Leeds and other parts of the country.
‘In addition, the £1,000 business rate discount on small retail premises and the halving of the rates for new occupants may boost the flow if retail and leisure refurbishment and fit-out projects.
Cuts to the ECO threaten the flow of home energy efficiency work
‘The cuts to the Energy Companies Obligation (ECO) programme are disappointing and threaten to depress the flow of home energy efficiency work at a time when the Green Deal has yet to gain traction.
‘In addition, the prospects for the many onshore windfarms being tracked by Glenigan became more uncertain following the strike prices announced in the National Infrastructure Plan yesterday. The Chancellor confirmed that the government was prioritising off shore wind projects, many of which are at a very early stage of development.’
Paul King, chief executive, UK Green Building Council
‘The Chancellor is right to say ‘going green doesn’t have to cost the earth’ - if only he practised what he preached. Tax cuts for shale gas are a stark comparison to the butchering of ECO we’ve seen this week, a scheme which was helping many households with the cost of living crisis through lower energy bills.
‘The emphasis on housing and infrastructure is welcome, but he’s missed an open goal by not recognising the potential for construction to deliver green growth.’
Ian Liddell, head of development, WSP
‘The reality is that you can’t have houses without roads, water and energy supplies, so it’s extremely good news that the government will be funding infrastructure to unlock stalled developments. This is something that in the past has been a major barrier. However, as ever the devil is in the detail and what we really need is infrastructure investment to be aligned to development and the planning system to reflect the need to accelerate progress.
‘There is a real crisis looming; we still have a massive shortfall to make up across the UK. In London alone we need the equivalent of 30 Shards or two Hyde Park’s worth of development every year until 2020 to keep pace with predicted demand.’
Simon Rubinsohn, chief economist, RICS
‘As we’ve been saying for a long time, the lack of housing supply is crippling the property market. If Help to Buy is to remain, Right to Buy extended, and expensive social housing sold off then the Government’s commitment to building houses simply must be extended.
Increasing the local authority borrowing cap will only make a very minor dent in the housing deficit
‘The £1 billion of loans to unblock housing development across the country will contribute towards housing need and will drive construction jobs. However, we still believe housing is not at the centre of a coordinated property-led growth that supports a balanced regional recovery where all can access the market. The increase in the local authority borrowing cap will only make a very minor dent in the housing deficit.
‘It was also disappointing to see long overdue changes to stamp duty have been ignored, particularly as the amount of revenue generated from this is rising sharply. The government plans to collect more than £60bn over the next five years in stamp duty receipts from British householders. Moving away from stamp duty brackets to a marginal system would be a boost to those struggling with the cost of living and help boost the number of property transactions. This will remove the so-called ‘dead zone’ created by the previous structure which saw a dearth of properties on the market between £250,000 and £270,000.
‘Business rates are currently imposing a very heavy burden on SMEs and today’s measures provide real support for business growth. The reoccupation relief will go some way to regenerate the high street at time when the latest RICS Commercial Survey shows an upturn in interest in retail space.’
Mike Quinton, chief executive, NHBC
‘We welcome today’s Autumn Statement highlighting measures to support house-building in the UK.
‘As our new home registration statistics show, the number of new homes being registered continues to improve on last year’s figures with an overall 24 per cent increase for the rolling quarter August to October compared to the same period in 2012, but this recovery has been from a very low base.
‘It is therefore crucial that the Government delivers these policies, such as the £1 billion loans to unblock stalled housing developments and continued support of Help to Buy, to help the UK get back to producing the volumes required to meet the demand for quality, new homes.’
David Orr, chief executive, National Housing Federation
‘The Chancellor’s acknowledgement that in order to have a stable housing market we need to focus on building more homes and regenerate economically stalled areas is welcome.
‘A number of measures he announced in the Autumn Statement are steps in the right direction. The next step will be to put housing at the heart of long-term Government plans for economic recovery.
Homes sold through Right to Buy are not being properly replaced
‘Right to Buy already gives hundreds of thousands of people the rare opportunity to own their own home. But the homes sold through Right to Buy are not being properly replaced.
‘While we support the aim to help more social housing tenants own their home, it is questionable whether providing mortgage finance, in addition to the currently available property discounts, is the most effective use of government funding. This risks increasing the number of affordable homes being sold, at a time when England faces a severe housing crisis and funding for affordable housing has been drastically cut.
“If the Government is serious about increasing the number of homes, it urgently needs a plan to replace homes sold through Right to Buy and deliver the commitment for one-to-one replacements.
‘It’s important that people and communities support local developments, but the Community Infrastructure Levy was designed to make developments acceptable by delivering necessary infrastructure. We are concerned that further attempts to dilute CIL by passing a portion to individuals will prevent necessary infrastructure being delivered or increase CIL charges at the expense of affordable housing.
Developers would be able to get on site quicker and build homes faster
‘We support incentives to encourage local authorities to grant planning permission in a sensible time-frame. Developers would be able to get on site quicker and build homes faster in communities that really need them.
‘However, we would not support the reintroduction of thresholds for section 106 affordable housing contributions. All developments, irrespective of size, should include a contribution to affordable housing given the desperate need for these types of homes around the country.
‘We welcome the announcement to raise the borrowing limits for local authorities by £300 million over two years from 2015/16. Allowing local authorities to use their assets to raise additional finance will help provide much needed local investment in new homes. We also welcome the expectation that delivery will be achieved through closer partnerships between local authorities and housing associations.
‘While £300 million is a modest step in the right direction and could provide a much needed short-term boost to housing supply, the 10,000 new affordable homes it aims to deliver must not undermined by the disposal of high-value stock and increased Right to Buy sales. We also need to see more detail on how the funding will be devolved and administered. Much more needs to be done in the long-term to realise the full potential of local authority housing finance reforms.
The renewed focus on the regeneration of housing estates is a positive step
‘The renewed focus on the regeneration of housing estates is a positive step. These economically stalled areas are in desperate need of investment and the loans proposed in the Autumn Statement could help kick-start regeneration, but details on the terms that these are available will be crucial.
‘However, to really regenerate these communities and turn these neighbourhoods around, we need to think more strategically and creatively about the future role and impact of housing in these areas.’
John Cridland, director-general, CBI
‘It was a missed opportunity not to support our hard-pressed energy intensive businesses which are also struggling with rising costs, and the package on housing supply could have been more ambitious.
‘As we enter the festive season, positive news on growth is clearly welcome but much remains to be done if the benefits of economic recovery are to reach every home in every corner of the UK.’
Merrick Cockell, chairman, Local Government Association
‘At a time when local authorities are contending with the biggest cuts in living memory, there are signs in this Autumn Statement that local government is being listened to. Councils have consistently been calling for the Treasury to remove the housing borrowing cap which hampers our ability to build new homes. The easing of restrictions on housing investment announced today does not go as far as we would like, but it does show that our call for more local flexibility to drive economic growth has been recognised. Our concerns about potentially costly changes to the New Homes Bonus have been taken on board in the revised proposals announced today. This is good news for local services which otherwise would have taken an additional £400 million cut.’
Steve Bullock, executive member for housing, London Councils
‘By 2021, over 800,000 new homes will need to be built in London, but the government’s latest attempt to address this crisis through increasing council borrowing capacity does not go far enough and has too many strings attached.
‘In order to qualify for extra borrowing capacity, councils will have to sell off high value vacant housing stock. This unfairly prejudices London, which has both the most acute housing need and the highest value stock in the country.’
‘London Councils will continue to call for the complete removal of the artificial housing borrowing cap, among a raft of other measures, so that boroughs can properly address London’s housing crisis.’