<b>The politics of housing - lots done, lots to do</b> Housing supply has not been such a high political priority since the early 1950s when housing minister Harold Macmillan met the Conservatives' commitment to build 300,000 homes in a single year with his "grand strategy for housing".
In announcing new Housing and Planning Bills in the 2007/8 legislative programme and publishing a comprehensive Housing Green Paper, Gordon Brown has put housing affordability and housing supply at the top of his early political agenda.
This is a welcome development. HBF can legitimately claim to have played an important part in focusing public and political attention on housing supply as an issue. We have campaigned for years about the need to significantly improve housing supply and improve the efficiency of the planning system. More recently, we have focused on the critical need for a better supply of land with implementable planning permissions.
The Prime Minister's most striking announcement was that the previous target of 200,000 additional homes per year in England by 2016 had been lifted to 240,000. Brown also set targets of 2 million extra homes by 2016 and 3 million - 250,000 higher than the previous target - by 2020. We have of course argued for over a year that the target needed to be further increased.
It is important to understand that this figure refers to 'net additions' to the stock, made up of new build plus conversions minus demolitions, and it refers only to England. It is not a new build target, although new housing has for many years contributed in excess of 90% annually to 'net additions'.
The most recent net additions figure was 185,000 in 2005/06, leaving a gap of some 55,000 to close by 2016.
HBF's case has also been listened to on the Planning-gain Supplement (PGS). While it is true that Brown has challenged the industry to come up with an alternative to the proposed PGS in time for the Pre-Budget Report in October, Treasury officials have told us it wants an open and constructive discussion on alternatives - as summarised in the Green Paper. The PGS Bill is therefore provisional, and will be deferred until the next session of Parliament if "a better way is identified of ensuring local communities receive significantly more of the benefit planning gain to invest in necessary infrastructure including transport - and it is demonstrated that these are a better alternative".
The grammar may be a little clumsy, but the threat is obvious: the Government wants to find a solution and is willing to discuss what this should be with HBF and others, but it will impose the PGS if a viable alternative cannot be devised. The HBF Board has resolved that we should enter into discussions with Treasury and CLG to seek to find an alternative, having first identified our preferred option. I will of course be consulting members about this difficult issue.
From recent HBF discussions with HMRC, it is clear that technical preparations for the introduction of the PGS have continued, so the Government will be ready to introduce the PGS if we cannot devise a viable alternative.
The PM also announced plans to introduce a Planning Bill and a Housing Bill in the next Queen's Speech in November.
Brown added that over 550 sites owned by central government are being examined, with potential for 100,000 new homes, while there is an estimated brownfield potential on sites owned by local authorities for another 60,000 homes. While this is most welcome, we should keep these figures in perspective. They would contribute only 5% - about 8 months of housing supply - to the 3 million target.
Following the Prime Minister's statement on 11 July raising the housing target to 240,000 net additions a year from 2016, we have had two further significant sets of announcements in the run up to Parliament's summer recess.
Ministers have launched a new Review of Sub-national Economic Development and Regeneration, at the heart of which are proposals to phase out Regional Assemblies and implement new integrated regional economic and planning strategies, including housing growth, under the auspices of the Regional Development Agencies. There is much detail to be worked out, not least how the RDAs and local authorities are going to agree regional and local housing numbers, but in theory the proposals offer some hope of a more streamlined process for adopting regional plans which support housing growth with necessary infrastructure and other provisions.
This announcement is therefore consistent with our message to Government that we need to find more efficient ways of establishing effective plans for housing provision.
Indications that our case for improved land supply to meet housing requirements has been heard were then provided on 23 July by the publication of the Government's Housing Green Paper - "Homes for the future: more affordable, more sustainable".
The Green Paper contains some interesting new proposals in this regard. A key element will be a new Housing and Planning Delivery Grant to direct extra resources to those councils that are delivering high levels of housing and to those who have identified at least five years worth of sites ready for development. We have of course argued for suitable incentives for housing supply as part of the solution ever since our submissions to the original Barker Review. In addition, the Government has launched the guidance for conducting Strategic Housing Land Availability Assessments, an essential tool for ensuring sufficient land is available for housing, and one of our key Barker recommendations.
The Green Paper confirms the 2016 target for a zero carbon performance standard for new homes, with carbon reductions in line with Code Levels three and four in 2010 and 2013 respectively and - while not resolving all our concerns - has sought to respond to the problems we have raised connected with individual local policies and standards in this field. In addition, the Government is inviting bids from local authorities and developers for at least five new eco-towns of 5,000 to 20,000 homes.
There is a strong emphasis on affordable solutions, including from the private sector. English Partnerships standards will require a minimum of 50% affordable homes on its sites and will set development start and completion dates "to prevent landbanking".
Consistent with other indications in recent months, the Government also says it will consider whether further measures are needed to incentivise developers to build out major development sites more quickly through the development control process and help ensure infrastructure is put in place up front. Clearly we will need to be closely involved to represent the industry position in discussion of these issues.
Overall, while there are clearly areas of concern that remain, there is much in the recent package of announcements to vindicate HBF's strategy of constructive engagement with Government. We will continue to build on our current dialogue as we tackle the issues ahead.
HBF's response to the Green Paper can be found here.
HEADLINE ISSUES
Meeting with Yvette Cooper
Prior to the PM's announcement on 11 July, I wrote to Housing Minister Yvette Cooper requesting an urgent meeting on a number of issues, notably the proliferation of local authority sustainability policies, EP proposals on zero-carbon and space standards, and the OFT Market Study. Subsequently, we were invited to a meeting on the morning of 11 July at which we were briefed in advance about the Prime Minister's announcements later in the day. We were alerted to the forthcoming publication of a Housing Green Paper, and I was able to explain the industry's concerns frankly and constructively.
OFT Study
We held a further meeting with OFT officials on 23 July to clarify their expectations of HBF and the industry and to learn more about the content of the Market Study, although it should be stressed it is still very early days and the OFT are in the process of refining their thinking. As part of this process they shared with us an early draft of a questionnaire they intend to issue to trade associations, government departments and semi-official bodies to help collate information and further their understanding of the key issues.
Part of the next step for us will be to write to the OFT by their deadline of 17 August, suggesting areas where we believe they should focus their attention in order to form sensible answers to the main areas of their study. We understand the OFT will also send out detailed questionnaires to house builders and local authorities, possibly in September. We have asked if we could see an advance copy of this questionnaire, but at the moment no details are available.
We are also looking at our ongoing Customer Satisfaction Strategy, and in particular how we might amend our Customer Charter and Code, introduced in Spring 2006, so that it becomes an OFT fully compliant Code. We have also been in discussion with Council of Mortgage Lenders for some months about including within our existing Code additional guidance on ensuring adequate and accurate disclosure about sales incentives is made available to buyers of new homes.
Overall it is clear that OFT sees HBF as a primary source for information and therefore this is clearly going to be a major area of work for HBF over the next year or so. I shall of course keep you fully informed throughout. Rest assured we will allocate sufficient resources to ensure we manage this very important matter to help OFT gain answers to their questions and report as quickly as possible.
Press contacts
The PM's statement and Housing Green Paper created a whirlwind of media interest in housing supply, planning and the industry - further stoked up in recent days by the floods crisis. To try to help journalists understand what are quite complex issues, we held a very successful press briefing on 18 July, attracting journalists from the FT, Economist, Times and BBC. Within a couple of days the FT published a major article on housing and planning and the Economist ran a news story, both of which made extensive use of our analysis.
EXTERNAL AND ECONOMIC ISSUES
Affordable Housing
We have now published the report of the specially convened HBF Affordable Housing Policy Group, sending copies to key ministers and officials, with a press release to the media. The report is on HBF's web site here.
Its primary messages are that S106 Affordable Housing provision is only one element in a much wider range of sources of affordable housing, and that the private sector has a major role to play, in particular providing low-cost market housing without any need for public subsidy.
Given the new targets for affordable housing set out in the Green Paper we believe our approach has even more relevance, and we will continue to press the case that the definition of affordable housing within PPS3 is too narrow and should be expanded to include low-cost market housing.
Production Barriers
Our specially convened Production Barriers Group, with representatives from the house building industry and other key stakeholders (Government, EP, Housing Forum, Construction Products Association), is developing its work programme. The focus is on identifying production barriers to achieving the Government's target of 200,000 - now 240,000 - zero-carbon homes by 2016, and proposing ways to lower or remove these barriers. Early areas of study are site process planning and the implications of trying to achieve higher levels of housing output, the costs of achieving the Government's sustainability objectives, the definition and measurement of zero carbon, definitions of 'quality', and the provision of information to central and local government on the production impacts of planning and other policies.
Meetings with the Welsh Assembly Government
We held an intensive programme of meetings with Assembly Government Ministers responsible for housing, planning and sustainability, and the housing spokesmen of the main parties in Wales on 10 and 11 July.
It is clear that housing issues are now becoming much more important politically in Wales and delivery is seen as a priority by the new Government. The Welsh Government's target of a zero carbon standard for construction by 2011 is a major concern on which we need to continue to engage. However, our meetings were constructive overall, and officials and Ministers have indicated their wish to work closely with HBF and the industry. We are working with officials to draw up a programme for further discussions on the main issues identified in our meetings.
PLANNING ISSUES
Pre-application Discussions Guidance
In association with the Government sponsored Planning Advisory Service, we have just completed a series of regional seminars promoting the jointly published guidance regarding good practice for pre-application discussions. Entitled "Constructive Talk - investing in pre-application discussions" the guide is aimed jointly at both local planning authorities and developers. I hope that those of you who took part found the seminars both useful and "constructive".
Copies of the guide were sent out to all HBF members with the last Quarterly Newsletter but it can also be downloaded from the HBF website here.
The new planning system is clearly moving away from the previous allocation/application approach to land release to a more inclusive, partnership approach between LPAs and developers. As pre-application discussion becomes a key element of the new process there are many issues that need to be addressed such as charging for pre apps and the involvement of local councillors in such discussions. We will continue to raise these important issues at government level both independently and in partnership with the Local Government Association and PAS.
Planning White Paper Responses
Members are reminded that responses to the Planning White Paper and associated consultation papers published in May should be submitted by 17 August.
The HBF draft responses have been discussed by the National Planning Committee and are available to download from the website here. Any member comments on the drafts should be made to Andrew Whitaker, Head of Planning, before the closing date. Members are encouraged to make their own responses to the consultations as well since, despite refuting such allegations, CLG have a habit of merely counting the number of respondents for or against proposals rather than weighting the responses based on the depth of representation of organisations.
An overarching theme running through the proposals is a call for a cease-fire from government reform to process and a sharper focus on delivery and outputs in terms of housing numbers.
Thames Basin Heaths SPA
We have now reached agreement in principle on a Statement of Common Ground endorsed by Government, English Nature and the Regional Assembly on the implementation of the Technical Assessor's recommendations pending adoption of a revised delivery plan and suitable local authority plans. I hope this will shortly be circulated to all affected councils and others involved to assist the removal of current blocks to new development.
Flooding
Recent events have underlined that flooding is another issue that we are likely to have to look at further. While the new PPS 25 sets out a clear and rational approach to assessing and dealing with flood risk in relation to development, the debate may not stop there. Flooding has already been seized on as a stick that can be used to attack Government plans for increased housing supply. We need to be alive to this issue and engage in further discussions as necessary.
TECHNICAL ISSUES
Building Regulations
The formal consultation on proposals to amend the Building Regulations and their enforcement is expected towards the end of the year. HBF has had many meetings with CLG to discuss this topic and will continue to do so.
We are expecting a new Building Regulation on water conservation which could come into force as early as 2008.
The Government announced that a consultation on proposed amendments to Part G (Hygiene) will be issue late autumn with a probable implementation date in 2009.
Zero carbon
HBF is talking to members about practical ways of reaching Code Levels three and four. HBF and the Modern Masonry Alliance have formed a Futures Group which is investigating options for improving thermal performance. This work will link to the research conducted by the National Centre for Excellence in Housing.
Code for Sustainable Homes
HBF has commented on the proposal to make assessment mandatory from April 2008 and has reiterated concerns about the proliferation of additional 'sustainability' specifications by Local Authorities. HBF has suggested that developers not wishing to use the Code should be able to say so without undergoing a formal assessment.
We understand that the revised Green Guide will now be available later this year.
Home Information Packs/Energy Performance Certificates
The current situation is that EPCs on sale and HIPs will be phased in for four bed and larger homes after 1 August 2007. From January next year EPCs will be required on all newly completed dwellings. There is, however, a possibility that smaller houses may be included prior to that date if enough people qualify as assessors in the interim.
They have also dropped the requirement for an Interim Energy Assessment but the Predicted Energy Assessment (PEA) is still mandatory.
Innovate for Homes
The next Housebuilder Panel is being set up. Details of the scheme can be found on the HBF website and the successful products will be featured on new web pages shortly.
PPS25
HBF has asked for feedback from members to ensure that they are happy with the content of the new guidance, which accompanies the PPS.
Site Waste Management Licenses
HBF has responded to the Defra consultation. We were of the opinion that regulation would be ineffective if it applied only to larger housing sites, which would already have site waste management systems.
The HBF consultation can be downloaded from the website here.
Water efficiency
As part of the Green Paper package, the Government has published its final proposals for new provisions on water efficiency to be included in Building Regulations. The Government has opted for a whole house approach based on a consumption standard of 125 litres per person per day. The Approved Document will now need to be agreed and our current expectation is that this would come into force in April 2008.
I am sorry that the report this month is so long but as I am sure you can appreciate that on the back of the arrival of the new Prime Minister and the heightened importance he has given housing it has been an extraordinarily busy few weeks. I do not intend to send out a report at the end of August, but will include all relevant news and information in the next Chairman's Monthly Report at the end of September.
As ever, please do not hesitate to get in touch with me or the senior management team here at St James's Street if we can help further.
Yours sincerely