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2017: Uncertain times

19th December 2017

Richard McCarthy, Strategic Director, featured in Building Magazine reflecting on 2017, the uncertainty of Brexit and what this means for the construction industry.

We have ended the year much as we began it, with much talk about housing supply and planning, peppered by the persistent uncertainty felt in the wider construction and property market and the recently announced reduced growth forecasts.

No matter where you sit on the Brexit debate and whatever the nature of any forthcoming deal with the European Union, as is often the case, it is uncertainty that breeds caution and reduces activity. This in turn can lead to inertia. It is, therefore, imperative that all of us in the industry reflect and determine where we can maintain confidence and get on with doing what we can to maintain and grow our activity, rather than waiting for someone else to take the lead.

It is not all doom and gloom. There is a strong programme of infrastructure investment, six elected metro mayors across Combined Authorities and the offer of new devolution deals in these areas and beyond (although not on all places that have requested one). Meanwhile, the Capital remains an economic powerhouse and the Mayor’s London Plan represents a positive move towards getting more homes built whilst protecting key areas of green space - no matter what may be happening to house prices. The government’s industrial strategy has also announced a Sector Deal for construction, providing £170 million of investment to support innovation and productivity.

This needs to be seen as a vote of confidence in the construction industry and a recognition of its importance to the economy, both through its scale and the projects and buildings it provides. It should also be seen as an encouragement to maintain the development and implementation of modern methods of construction and new modular housing.

Across the construction sector, 2017 will be remembered as the year that housing dominated domestic, political and media attention with the Prime Minster taking personal leadership on this issue towards the end of the year. More resources have been found to alleviate the situation, for example, the £2bn identified for new affordable ‘council’ housing and the HCA (Homes England) has been granted new resources and opportunities to intervene more proactively in the market to bring land forward for development and remove barriers.

Nick Walkley and his team at the HCA face huge expectations and they are going to need to move quickly. It, therefore, has to be in all our interests to help make the new arrangements and funding streams work and that the HCA is able to attract the new resources it needs to strengthen and deepen its capability, which is now a critical challenge.

As always, there is much talk about the need for more reform in the planning system balanced by the need to maintain key protections and continuing the push, particularly in London, for the development of brownfield sites.

Whilst recognising that capacity is key, we must consider what further beneficial impact planning reform may bring. So often we find that the real focus needs to be on the operation of the planning system and its interface with national policy.

It may not be sexy, but the combination of local leadership, adequate skilled resources, efficient systems and the simplification of policy mechanisms - such as the community infrastructure levy - are the areas where all focus needs to be directed.

Those who own land identified for future housing development, with or without planning approval, need to debunk the myths about land banking and take on the challenge of excessively slow development of approved projects. However, a prolonged debate about who holds the land and why it’s not being developed is not going to get more homes built. Clarity, consistence and a commitment to building at a greater rate will change the narrative and drive up delivery. You might not always get some of the longer-term house price growth that might be wanted but a renewed respect and popular acknowledgement will bring more activity and longer-term rewards.

I would like to see the new money for affordable housing and some of the release of public sector land help break an overreliance on Section 106 deals. And when these deals are required let’s have more initiatives like the one on offer from the Mayor of London , where a fast track route to planning consent is being promised in return for a minimum of 35% affordable homes.

There needs to be a greater flow of small and medium sized housing developments, including in London where there has been an over-reliance and focus on large sites and developers. These are all important, but we know that the route to getting more homes built is to have many more sites under construction.

The Mayor of London, for example, believes there is capacity for 24,500 new homes a year on small sites and has asked Boroughs to approve applications for small developments that meet his design standards. And now, with housing associations once again returning to their original classification as private sector bodies, it is time for the government to lift its unnecessary and unhelpful housing borrowing caps.

The Prime Minister says she wants more council housing. This is very welcome and not a threat to housing associations who continue essential providers of new affordable homes. So let’s celebrate this opportunity to build more council homes and make the final push to lift all housing revenue account borrowing caps whose only (unnecessary) purpose is retain some measure of Whitehall control.

2017 has been a year of mixed fortunes, but with housing supply numbers up let’s make 2018 the year that we work hard to secure and enhance the success and growth of our much-valued construction, development and house building industries. It is time for us to take the lead. Our Country needs us!

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