The construction industry has welcomed the Government’s investment in house building announced by the Chancellor today, but there are concerns that it is insufficient.
In his first Autumn Statement, Philip Hammond announced a £2.3 billion Housing Infrastructure Fund to support projects such as road and water connections, which will in turn support the construction of up to 100,000 new homes in areas deemed to be most in need.
In addition, £1.4 billion will be spent to build 40,000 new “affordable” homes, and another £1.7 billion will be spent to expedite the construction of new homes on public-sector land.
The Housing Infrastructure Fund is good news for merchants because it will “help to invigorate the market by encouraging house building,” according to John Newcombe, managing director of the Builders Merchants Federation, while also creating jobs and growth in construction and the wider economy.
The Chancellor was correct to double housing spending, according to the Federation of Master Builders (FMB), who also welcomed the relaxation of the deficit reduction timeline as the best way to boost economic growth.
According to Sarah McMonagle, the FMB’s director of external affairs, the investment demonstrates that Hammond understands that house building and economic growth are inextricably linked.
“For every £1 invested in construction, £2.84 is generated in the wider economy,” she said. “Investing in our built environment is therefore the best way to protect ourselves from an economic wobble as we leave the UK.”
She welcomed the Housing Infrastructure Fund, saying that the burden of local infrastructure for new housing should not be entirely borne by private house builders, and that the key to the fund’s success will be ensuring that it focuses on unlocking a large number of small sites rather than just large sites.
McMonagle anticipates additional interventions to boost housing delivery through SME house builders in the Housing White Paper, including a preference for smaller scale developments.
“It is good to see new housing and infrastructure receiving the focus so desperately needed in the Autumn Statement,” said Mark Farmer, chief executive of construction and real estate consultancy Cast and author of the recent ‘Modernise or Die’ report into the construction labour shortage. It is especially encouraging to see the increased commitment to the National Affordable Homes Programme, which is a specific recommendation of my recently published government construction market review.
“A tenure diverse housing market, including affordable rent and shared ownership, is critical to underpinning more stable long-term demand in construction, and it can also act as a catalyst for investment in house building innovation, which will ultimately reduce delivery costs.”
According to Frank Pennal, CEO of Close Brothers’ property division, the measures in the Autumn Statement will be welcomed by small house builders as they struggle to overcome the challenges of the current planning system, skills shortages, and uncertainty over how Brexit negotiations will impact their business. They will “help accelerate construction and remove some of the hurdles faced by smaller house builders, allowing them to unlock their potential and contribute to the economy.”
However, Russell Gardner, head of real estate at EY, stated that while the measures to address the UK’s housing supply crisis are welcome, the funding is insufficient, and the investment must represent the beginning of a major commitment to building significantly more homes across the UK.
“The headline figures are eye-catching, but it takes a leap of faith to believe that new home supply can be unlocked for £23,000 per unit or an affordable house can be built for £35,000.” “We eagerly await the Housing White Paper, which we hope will include more radical structural proposals,” he said.
Ramboll’s executive director of buildings, Matt McNab, welcomed the additional funding but expressed concern about timetables and delivery methods. According to him, the practical impact of the funds will not be seen until the Housing White Paper is released.
“We need to do more than simply increase funding,” said Tom Shaw, director of buildings at Ramboll. “We need to encourage the industry to explore methods of building and construction that will allow homes to be built at a lower cost and in shorter periods of time.”
While Kate Bailey, chair of the Landscape Institute’s Policy and Communications Committee, applauded the cash boost, she stated that housing quantity cannot be separated from housing quality.
“People want to live in nice places,” she says. “Committing to high-quality landscape in every new development is one way to overcome public opposition to new house construction.” If we increase housing density as the government intends, and one result is the provision of generous and appealing green spaces and amenities, then this new housing should be more acceptable to existing communities.”
Keith Aldis, CEO of the Brick Development Association, agrees that the emphasis must be on quality, sustainable housing rather than cheaper, higher-density housing, and says the Chancellor must make his promises a reality in order to breathe new life into a troubled sector.