This letter is the last of 2006 after, what I am sure we can all agree, has been an extraordinarily busy year. As I write, we are in the midst of the anticipated policy crunch-time. The new Planning Policy Statement on Housing has been announced and we have also just had the Barker Report on Land-use Planning. The Pre-Budget Report contains a range of challenges for the industry including the proposed Planning-gain Supplement and the announcement of a 10-year timeline for all new homes to be zero carbon. Next week we expect a draft PPS on Climate Change and the Code for Sustainable Homes to add further detail to this. Let me update you on where we are:
Key policy news
Planning Policy Statement 3 (PPS3)
The recently-published PPS3 contains many welcome policies, responding to HBF concerns. In particular, it reveals that the Barker Review has had a major impact on policy thinking. Many of the new policies also reflect HBF representations to Barker, the DCLG and Treasury over the last three years.
PPS3 contains a raft of policies to ensure local planning authorities provide sufficient deliverable land to meet housing need and demand and to improve affordability. They must take account of market information, develop policies “informed by a robust, shared evidence base”, and “work closely with the private sector, particularly developers and housebuilders”.
Above all, policies must deliver. In line with one of HBF’s key lobbying points Local Authorities must “identify and maintain a rolling 5-year supply of deliverable land for housing”. They should also “identify a further supply of specific, developable sites for years 6-10 and, where possible, for years 11-15”.
As well as providing for Affordable Housing, local authorities “should take account of the need to deliver low-cost market housing as part of the housing mix”. Unfortunately low-cost market housing, as in the draft PPS3, is excluded from the definition of Affordable Housing.
One of the key measures in the PPS is that LPA’s will not be able to refuse applications solely on the grounds of pre-maturity. This should avoid any possibility of proposals being held back just because the authority have not done the necessary work to comply with the PPS.
Another significant improvement on PPG3 is the requirement for local authorities to plan, monitor and manage. They must assess the risks of failing to deliver, look at options, identify obstacles and constraints, indicate “management actions”. Added to this, the one-size-fits-all national density and parking policies of PPG3 have been removed. Instead local authorities are to develop their own policies, as recommended by HBF, possibly setting out a range of densities across the plan area.
However one big question mark over PPS3 is the risk that local planning authorities will use PPS3 to justify prescribing mix. There is frequent reference in the statement not just to a “mix of households”, but to a “mix of housing”. An added concern is that local planning authorities, in deciding planning applications, must have regard to “ensuring developments achieve a good mix of housing reflecting the accommodation requirements of specific groups, in particular, families and older people”. This suggests house builders may face an uphill struggle justifying apartment schemes. However, for development control purposes, the PPS will not apply until 1st April 2007. Thus proposals currently in the system for determination cannot be refused on the back of an LPA desire for “family homes”.
Overall it is difficult to deny that PPS3 represents a serious commitment on the part of the Government to address a number of the industry’s concerns and ensure that land is released to facilitate additional building. The key to whether this policy is successful will be Local Authorities’ willingness to embrace it positively to help deliver more new homes.
Pre-Budget Report 6 December
The Pre-Budget Report (PBR) contains many policy announcements that will have wide-ranging implications for the industry:
Zero-carbon new homes
The PBR says the Code for Sustainable Homes will be published shortly by the DCLG. It also mentions that the Government will be setting out a consultative timetable for progressively strengthening the Building Regulations in England and Wales to reflect the energy efficiency levels set out in the Code. The Government’s ambition is that, as a result of this strengthening, by 2016 all new homes will be zero-carbon, meeting the highest levels set out in the Code. The PBR also says a time-limited stamp duty exemption for the vast majority of new zero-carbon homes will be introduced in 2007, with full details to be published in the 2007 Budget.
In HBF discussions with DCLG ministers and officials, we have argued very strongly that whilst the industry is generally supportive of initiatives that will help cut carbon emissions, we need a well-considered framework to determine how to achieve this. We are therefore pleased that the PBR has indicated a time frame of ten years and we will jointly be hosting, with the DCLG, a summit of key stakeholders early in the New Year entitled “setting a timetable to deliver carbon neutral homes”.
As you will know from my previous reports, I have been advocating a new framework to enable the industry to deliver climate change improvements in a business-friendly manner. This approach seems to have gained support within Government and I was particularly pleased that the Chancellor set a 10 year timeframe as many others had argued for a significantly shorter period. The key now is to agree through the consultation period that interim targets are not too onerous and that Government agrees to allow the industry sufficient time to prepare, research and introduce new products and gain consumer acceptance of them. It is also vital that Local Authorities refrain from wanting to move at a faster pace than the National Framework.
I was also pleased by the Chancellor’s announcement that from 2007 most new zero carbon homes will be exempt from Stamp Duty. We shall of course attempt to persuade the Treasury that this should not be too short lived and that other incentives may also be appropriate to provide impetus to home builders and consumers.
Planning-gain Supplement
HBF’s PGS working Group, chaired by Berkeley chairman Roger Lewis, has examined whether a workable PGS can be devised on the assumption the Treasury will introduce some form of infrastructure levy. Members of the working group met officials from HM Treasury and the DCLG in early November to discuss our emerging thinking and to find out more about Government thinking.
With the Pre-Budget Report on the 6 December, the Government published three consultation documents on the PGS: Valuing Planning Gain; Paying PGS; and Changes to Planning Obligations. The deadline for consultations is 28 February and we will be consulting with members as we prepare submissions. A further HBF meeting with Treasury and DCLG is scheduled before Christmas.
HBF’s approach to the PGS has, I believe, been most effective. You will remember we accepted the objectives of the levy, questioned whether a workable PGS could be devised, but offered to work with the Government and other stakeholders to try to achieve a solution which met both the Government’s and the industry’s needs. We know our approach has been very well received within the Treasury and DCLG. This has helped establish our current strong position with the Government, not just in the context of the PGS. It has also enabled us to maintain an ongoing PGS dialogue with officials from both departments.
The results of this dialogue are evident in a number of the proposals in the PGS consultation documents.
To quote just one very important example, in our discussions with Treasury and DCLG we have stressed that transition arrangements are absolutely critical. The PBR says: “Transitional arrangements will aim to ensure that development already formally in the planning process would not be subject to PGS. The Government proposes that for development where planning permission was granted before an appropriate appointed day in the future, including outline planning permissions, PGS would not apply. There will be dialogue with stakeholders on transitional arrangements before further announcements are made.” This very important commitment from the Chancellor, well before many of the details of the PGS have been confirmed, is a clear response to our concerns.
More generally, the Government’s extension of the implementation date to no earlier than 2009, rather than 2008, its acceptance of the need for further consultation, and its acknowledgement that the final levy must be deemed “workable and effective”, are all very welcome. This will give HBF and the industry more time to influence Government thinking. It also suggests that if a workable and effective levy cannot be devised, the Government will be prepared to abandon the PGS.
Barker Report II
Kate Barker’s second review, this time into land-use planning generally, is a formidable document and we will need time to assess the implications of its 32 recommendations. Many are sensible and reflect concerns we have raised over the last three years with Barker and with the DCLG and Treasury. Some of her recommendations cover areas already being examined by the DCLG, but others go beyond current thinking.
In response to the Barker Report on Land-use Planning and the Eddington Transport Study, the Government will set out in a White Paper in spring 2007 “its proposals in response to the recommendations for improving the speed, responsiveness and efficiency of land use planning, and for taking forward Kate Barker’s and Rod Eddington’s proposals for reform of major infrastructure projects”.
Although Barker does not propose a radically new planning system, it has to be said that her reforms, if all implemented, would amount to a major overhaul of a system which was itself only recently introduced. This will have to be kept in mind as we try to assess the implications of her proposals and make representations to Government in advance of its White Paper.
Other housing and planning proposals
The Government will introduce a new Housing and Planning Delivery Grant. The new independent National Housing and Planning Advice Unit will begin work early in the new year advising central and regional government. The CSR Policy Review into Supporting Housing Growth, looking at infrastructure provision, is under way. A report of the Shared Equity Task Force was released with the Pre-Budget Report. A DCLG taskforce examining options for releasing surplus public sector land recommends a number of actions to accelerate the release of this land for housing, including an increased ambition of 130,000 new homes to be delivered from existing and new sites over the next ten years, further measures to support the work of EP, an enhanced Register of Surplus Public Sector Land and increased incentives for housing delivery. These recommendations will be considered as part of the 2007 CSR.
The Queen's Speech also announced a number of legislative proposals in which we will have an interest in the coming year. In terms of current priorities the proposed Climate Change Bill to introduce binding targets for carbon reduction was notable. There will also be a Local Government Bill and a Greater London Authority Bill, introducing enhanced powers for the Mayor (on which consultation has previously taken place). In addition, the Government has said it may bring forward a further Planning Bill. If introduced, this could provide powers enabling the Government to establish a faster process for bringing forward major infrastructure projects.
Utilities
Last week HBF had a private meeting with OFFGEM, the gas and electricity regulator, to review the situation surrounding the time taken for home builders to get utility connections. The results of HBF’s recent survey, undertaken with our members, appear to have had an effect and HBF has been assured that this, along with our consultation reply on the recent ‘Review of Competition in Gas and Electricity’, will be seriously considered. The results of this review are due out in the first quarter of 2007, with HBF continuing discussions with regulators on the results of our survey and other member evidence.
Thames Basin Heaths and Dorset Heathlands Special Protection Areas (SPAs)
Consideration of the evidence base relating to the possible effects of new residential development on the Thames Basin Heaths commenced with the technical sessions of the Examination In Public (EIP) on the South East Regional Spatial Strategy held on 21-23 November. HBF's research, which raised significant doubts about the mitigation requirements proposed by Natural England, has been presented and it is clear that our expert representation during the relevant evidence sessions is important. Natural England and the RSPB have both criticised our research and there looks set to be a keenly argued debate throughout these technical sessions which run on into the new year. Meanwhile HBF has also sought a written legal opinion from counsel on the interpretation and application of the Habitats Directive and Regulations. We will submit this opinion to the EIP as soon as it is available.
We have also met the Government Office for the South West, Natural England and the South West Regional Assembly to discuss the position in Dorset. Our aim in Dorset is to bolster the pragmatic approach that has been adopted so far, while seeking to ensure that any mitigation measures proposed are proportionate to the actual needs.
Customer satisfaction & OFT
A draft of model contract terms meeting the Unfair Terms in Consumer Contracts Regulations was produced in consultation with relevant members’ legal representatives. This was submitted to the OFT in late September and we subsequently met officials on 31 October. Members’ legal representatives then finalised the model terms in the light of the OFT’s comments. HBF Board gave its approval to this document on 1 December and the agreed model terms were sent to the OFT. The terms have now been verbally accepted by the OFT and will be circulated shortly to HBF members. Adoption will be entirely voluntary, but members using them will have the reassurance that the model terms comply with the regulations and have been accepted by the OFT.
Home Information Packs (HIPs)
The six initial English regional trials were launched in November by the Association of Home Information Pack Providers (AHIPP) with support from the DCLG who are providing £4 million towards their running. Some of this money is initially being used to subsidise the cost of packs.
Our members' meeting with AHIPP and DCLG went ahead as planned on 16 November. Members raised a wide range of issues about HIPs requirements for home builders, including the need for greater clarity on the process and form of the new Energy Performance Certificate. DCLG has agreed to consider all the issues raised further and have arranged a follow-up meeting with them this month. Meanwhile initial details of a further twelve regional trials have been announced by AHIPP.
Economic Affairs
Can house builders hit the 200,000 new homes target?
At a recent meeting with Yvette Cooper, HBF agreed to work with DCLG officials to prepare an important paper looking at this issue and trying to allay Ministers’ concerns. The paper will particularly seek to address Government concerns about the industry’s ‘business model,’ and its ability to hit the 200,000 per year target for new homes. The paper will be circulated to members for comment in due course. It will be discussed at for the next meeting of the DCLG Property Consultative Group on 25 January, a Group chaired by Housing and Planning Minister, Yvette Cooper.
An important message I am keen to get across to the Government is that house builders are quite capable of delivering the required step-change in house building. Indeed the industry has already gone some way towards making up the shortfall between supply and demand. Between 2001, when housing completions fell to their lowest peacetime level since 1924, and 2005, total housing completions in Great Britain rose 19%. In England, which faces the most acute housing shortages, completions rose 23% over this period. However this was achieved entirely by higher densities – largely the shift out of detached houses into apartments. The quantity of land for house building is actually falling. The next step in closing the supply/demand gap can only be achieved by increasing the supply of land with planning permission.
Affordable housing
The HBF Affordable Housing Policy Group (AHPG), chaired by Redrow Executive Deputy Chairman Paul Pedley, has made good progress on developing practical policy ideas. As with the PGS Working Group, in due course we will circulate the AHPG’s ideas to HBF members.
It is notable that one of the PGS consultation documents, Changes to Planning Obligations, contains proposals for further significant changes to the treatment of affordable housing within the proposed scaled-back S106 agreement that would be introduced alongside the PGS. We will need to consider our own Working Group’s proposals in the light of the DCLG’s new thinking before reaching any firm policy conclusions. We will be consulting members in due course.
Barker 33 – MMC
Barker Recommendation 33 asked HBF to develop a strategy to remove the barriers to wider adoption of MMC. One of the recommendations of the Barker 33 Cross-industry Group, which was set up in response to this recommendation and reported in early 2006, was to set up a “legacy body” to carry forward its recommendations. Progress with this body is well advanced and an announcement will be made soon.
Planning affairs
Planning timeline
This month we published our analysis of the planning timeline information that members were kind enough to provide for us. We had a good response to our request for the detailed breakdown of actual dates for each stage of the planning process on real sites. Overall we received returns for 581 individual sites from 24 HBF members. My thanks go to all of you who participated, especially those of you who actually had to dig through filing cabinets to provide the level of detail needed by the survey.
The exercise aimed to identify the parts of the process that took an unwarranted amount of time and to then go on and examine why that was the case, it was not aimed at Local Planning Authority inefficiencies.
Thus, the fact that, on average, decisions took 35 weeks compared to the Government’s target of 13 weeks lends support to HBF suggestions for a more collaborative process, currently being examined through pilot projects for planning delivery agreements.
The fact that the discharge of all of the conditions on a consent takes, on average, 7 months may well be because there is no formal timetable for their consideration by the LPA.
We will be using these statistics in our ongoing discussions with DCLG about the planning process to seek changes where the greatest efficiency benefits can be achieved.
Technical affairs
National Technical Conference
This was a very successful event in Nottingham that considered the Building Regulations and a possible future framework and the imminent Code for Sustainable Homes.
Waste
The HBF’s Contaminated Land Sub Group has put forward ideas for the industry response to the joint DCLG and Defra consultation on Planning and Pollution Control and a final draft has been circulated to the group members. We will also be responding to Defra’s second consultation on an Environmental Permitting Programme.
Building Regulations
The consultation on water conservation is still expected before the end of this year, with HBF continuing its dialogue with interested parties on improving the regulatory system.
Innovate for Homes
A second round of successful applications was reviewed by the Housebuilder Panel. Details of the products submitted in both rounds are available - please contact Dave Mitchell if you are interested. Members are particularly urged to propose products that address the current priorities of energy and water conservation.
Health and Safety
We are talking to HSE about how to publicise the changes to the CDM regulations, which are due to be implemented in April 2006. The trial of the electronic Design Forum will finish this week.
Finally, after such a full year, my thanks to you: our members. HBF is most effective when it acts as a conduit to that large repository of expertise and experience that you collectively represent. I am hugely grateful for your readiness to bring that talent to bear – whether through informal advice on the phone, taking up positions on Task Forces and policy groups, providing data and information or attending meetings.
My apologies that this month’s report is longer than usual and a little later in the month than normal. I wanted to report to you fully on the range of important announcements on PGS and PPS3, hence the length and delay.
As ever, do call me or members of the Senior Management Team at any time with anything you would like to raise. My next update will be sent out at the beginning of February; meanwhile my very best wishes to you and your families for a happy festive period and a successful 2007.
Stewart Baseley
Executive Chairman