Thank you, Imtiaz, for your introduction.
• I am delighted to see so many people here for this, our third Housebuilding conference, the largest and most comprehensive we have held.
• The programme promises a “two-day extravaganza of ideas, innovation and information”. I expect nothing less, and hope you find it both highly informative and, of course, extremely enjoyable.
• I am delighted, as well, that Yvette Cooper, the Minister for Housing and Planning, will be addressing us today.
• No-one can claim that the Minister has been anything other than an extremely persuasive and effective exponent of the need for increased home building in the UK.
• It is worth reflecting on how far the debate has moved since Ms Cooper took on the brief - first as a Parliamentary Secretary - in 2003. Just three years ago, the industry and Government seemed isolated in articulating the case for more homes.
• We now find ourselves at the centre of a widespread consensus, and I think the Minister – along perhaps with the HBF - can take substantial credit for that.
• We should remember, as well, just why it is so important that this consensus for more homes achieves its aims.
• Last month, the Joseph Rowntree Foundation published a report into housing affordability. It revealed another sobering demographic snapshot. A third of all working households under 40 cannot afford to buy a home, even at the lowest end of the market. In the south of England, this figure rises to one half of households under 40.
• Let’s get this right. In this so-called age of aspiration, the greatest single asset to which people aspire – their own home – is not only unobtainable for a generation of young people, but also out of reach to many millions of hard-working families.
• It makes you pause for thought.
Policy crunch time
• Just yesterday, Parliament returned from its summer recess. It is now policy crunch-time as we await crucial developments on both the Government’s draft Planning Policy Statement 3, the proposed Planning-gain Supplement and the cross-cutting infrastructure review.
• It is, in fact, difficult to think of a more critical period in the history of our industry. The events and developments of the next few months will, I believe, profoundly shape the home building industry of the future.
• Our overall approach remains a comparatively simple one. We support the Government’s objectives to increase the rate of home building, but we measure policy against whether it will bring more land forward for development, and whether it will simplify and speed up the planning process.
• Today I will be looking at the challenges facing the home building industry, focusing in particular on the environment, sustainability, and what this new agenda means for our industry.
Political engagement
• In my ten months as Executive Chairman of the HBF, I have seen the importance of our role as a conduit to the best industry ideas and talent. It also didn’t take me long to see that the HBF is an unparalleled repository of industry knowledge and information.
• Making use of this unique position, I therefore want the HBF to be both a think tank and a “do” thank.
• I want us to be exploring new concepts, drawing on industry innovations, developing new policy ideas. Above all, we need to be providing Government with workable, practical answers to the gritty policy problems it – and we - face.
• In short, we want to be crafting solutions, not creating obstacles.
• That is why the HBF now has a high-level working group looking into PGS, looking to find a way forward.
• That is why we have created another special expert group to look into affordable housing policy.
• In terms of finding policy answers, affordable housing is the elephant in the room. It’s a big elephant…and at the densities to which we are being pushed to deliver, it’s a small room.
• I want the HBF to be in on this early. Again, finding solutions, shaping outcomes.
• At our AGM last April, I spoke of the need for us as an industry to have a place at the table, being close to Government, and making our views count.
• This is not just in the industry’s best interests. I believe it is in the Government’s best interests, and generally it seems to me that our interests are aligned.
• House builders hold the key to delivering the vast majority of the 200,000-plus homes needed each year in England. We share a common objective with the Government.
• And there is a natural common interest in working closely and effectively together. Ministers and their civil servants draft policy, but at the end of the day, it is house builders who are the best judges of what will work – and what won’t work on the ground in seeking to achieve policy objectives. Therefore it is absolutely essential that we play a central role in helping the Government frame policy.
• We have, I believe, a stronger engagement with Government than ever before.
• I value our relationship with Government at all levels, from meetings with Ministers to day-to-day contact with officials in the DCLG, the Treasury and other departments.
• Just last month, I was delighted to accompany Yvette Cooper on a fact-finding mission of the Netherlands and Scandinavia.
• In the past, I sensed that the HBF and the Government resented actually being on the same continent, let alone teaming up to visit it.
• Being heard matters. I cannot stress this enough. Hollering from the sidelines achieves nothing. Knee-jerk negativity gets us nowhere. We need to be on the pitch, playing up front.
“It’s the environment, stupid”
• I want today to focus on an issue, the importance of which is hard to over-state or exaggerate.
• The Government’s Chief Scientific Advisor, Professor Dave King, calls it – and I quote – “the biggest problem that civilisation has had to face in five thousand years.” Al Gore dubs it an “impending planetary emergency".
• It is, of course, climate change.
• Within this context, I want to put one fact in front of you that we all know and recognise. The energy consumed constructing and using buildings accounts for roughly half of all greenhouse gas emissions in the UK.
• It should come as no surprise that we are facing new water efficiency standards for new and existing homes, a PPS3 that further enshrines sustainable building policies, a tougher Code for Sustainable Homes and a special new climate change Planning Policy Statement.
• To adapt the phrase that secured Clinton his 1992 election victory: “it’s the environment, stupid”.
• And Yvette Cooper has already laid down the marker. She has called for us to build to Scandinavian standards – and better them – within ten years.
Taking on the industry critics
• Now I know the traditional industry arguments. “New stock is a side-issue. New homes add to the overall stock of homes by less than one per cent a year.” If the Government is serious, so the argument goes, it should be focusing on old stock.
• I agree. Much more should be done to improve the efficiency of existing stock. This is where big wins could be made.
• However, this does not remove us from our responsibilities. In thirty years’ time, “new” stock will represent nearly a third of all housing. So what we build will, over time, bring large cumulative benefits.
• Others say that customers don’t actually really care. I think, however, that this is changing. The struggle between the three main parties to champion the environment is not just about intellectual leadership and political altruism. There are votes to be won and awareness is rapidly rising.
• So where do we stand? Yes, we have made important progress in this area, but we need to do more – much more. We have a role to play. We have a responsibility to deliver.
So where now?
• So where do we go? What do we do?
• I have a personal vision - a radical vision - of how we can and should do it.
• Yvette Cooper has set down a ten-year marker. While I do not know whether that is achievable as yet, I have no problem with the principle.
• But if we are to deliver, we need a policy framework, set out by the Government in consultation with the house building industry, that spells out exactly where the industry should be at the end of that period.
• It must also be a wide, holistic framework, encompassing all stakeholders, from the National Housing Federation to the National Grid.
• This policy framework, I believe, requires three critical elements:
1) Firstly, we need to know precisely what needs to be achieved. Are we measuring energy efficiency or are we assessing the carbon footprint of new homes? We all need to be on the same page, signed up to the same targets.
• And the targets need to be expressed as clearly and simply as possible – so that industry and consumers can understand them and so that we can find the best means of delivering them in partnership with the supply chain, energy providers and our customers.
• In proposing this approach, I also make a straightforward appeal to all political parties: be wary of allowing a free-for-all of target-making, of letting every local authority devise its own policies to save the planet. There are well over 350 local authorities in England and Wales. Our capacity to deliver increased output and real quality improvements will be seriously undermined if we have to conform to a multitude of targets and policies.
2) Secondly, once the framework has been agreed, its success will rest on the ability of the Government to step back and allow the industry to do what it does best – change, adapt and innovate.
• The Government can monitor progress, and call us to regular account through interim targets, but it has to agree not to tinker, not to interfere, not to intervene, and not to shift the goal posts. It is also critical that public policy avoids any temptation to pick technology or product winners.
• Above all, this will allow certainty and predictability to guide the decisions made in the board rooms of home building companies and their suppliers throughout the country.
• This, more than anything else, will transform the industry’s relationship with Government. If certainty and predictability are the watchwords of the new framework, then trust will soon follow. We will have a real partnership with Government.
3) Thirdly, of course, our customers need to be with us.
• Changes and innovations need to be practical and desirable. While we know that consumer opinions are steadily shifting, we must retain the same customer focus that has been delivering high customer satisfaction levels in our recent HBF / NHBC survey.
• We can, of course, work with the Government to help lead customer opinion, but we daren’t run against it.
Why do it?
• I have today put forward a vision for how we can best deliver the environmental standards that I believe we have to provide; how we can indeed match and eventually beat the standards set in Scandinavia.
• Why do it? Why change? Why not batten down the hatches and ignore the reality of what’s happening?
1) The first reason is because we have a moral imperative to act. No industry, no individual, can simply look the other way.
2) The second reason is because there is a compelling business rationale behind change. The environmental agenda is here and it’s here to stay. We can choose to embrace it, lead it, and shape a regulatory environment that is both effective and business-friendly…
• … or we can chose to cover our heads with our hands and await the crude, blunt strikes of regulation and Government action.
• I know which one I prefer, and I know which one I believe builds greater shareholder value and leads to future and sustained commercial success.
• I will soon be writing to all the main stakeholders in this debate – house builders, RSLs, environmental NGOs, building products suppliers, consumer groups and utilities – to come together for a high-level environmental roundtable to take this idea forward.
• Equally, if we, as stakeholders, are to stay united in this approach, we require the main political parties to place the environment above party politics and resist the temptation to notch up points. It is too important for that.
Conclusion
• Let us remember what is at stake. If we can implement this vision, 200,000 new homes each year will be a fundamental part of the solution to the environmental challenge, not part of the problem.
• If addressing the current housing shortage was not reason enough, our role in delivering a more sustainable Britain will place a further premium on getting volumes right.
• This means, of course, sorting out the planning system, dealing with unnecessary regulation and bringing more land forward for development. The industry, let us not forget, is best placed to know what customers want and how to provide it.
• However, I believe that if we can all fulfil our obligations within this vision, then we and our stakeholders will be in a very new and different position.
• The Government will be able to make significant progress in delivering its environmental objectives.
• The industry will be able to grow shareholder value by delivering higher volumes to higher standards.
• Customers will be able to live in better homes that meet their increasing environmental expectations.
• And the people of Britain will see the steady amelioration of the social and economic consequences of the current housing crisis.
• This, I hope you will all agree, is an outcome to which we can all aspire.
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