I am absolutely delighted to be welcoming you all here today to the HBF’s Annual General Meeting Lunch at the Hyatt Regency Hotel in Portman Square.
Portman Square was, of course, home to the great Portman Estate that owned and managed a great swathe of the finest real estate in central London.
At the end of the nineteenth century, the grand aristocratic mansions of Mayfair that dominated this square and its surrounding area slowly began to be broken up, under the pressure of a teeming, evolving, expanding London. Like now, there was great pressure in the city for new homes.
It is fascinating to note that, at the time, there was a high-profile local campaign to prevent change – attracting the likes of E.M. Foster, the celebrated novelist - as influential families fought to preserve the status quo and, in effect, prevent others from sharing in the wealth of the area.
The unique character of the area would undoubtedly change, they argued, while there were other parts of city where people could live and work - Not Mayfair; Not now.
It proved impossible, of course, to resist change, and Portman Square is what it is today. The prescience of this short historical anecdote - I am sure – will not have been lost on any of you…
In mentioning this historical predecessor of modern-day NIMBY-ism, I am delighted that, Yvette Cooper, the Housing and Planning Minister, will be addressing us after lunch. As we all know, the Minister has been a powerful advocate for increased homebuilding, effectively and consistently arguing the case in Parliament and across the country.
The newfound political consensus on the need for more homes can in large part be attributed to the hard work of the Minister over the four years she has been at Eland House. She should certainly receive substantial credit for her role in shifting the terms of the debate.
A critical friend
This last year marks my first full year as the HBF’s Executive Chairman. It has been, without doubt, an extraordinarily busy year for the Federation, and a highly formative period for the industry.
I have long held that the HBF is a unique repository of experience and expertise, an invaluable organisation to help shape policy making and the regulatory environment precisely because it serves as a conduit to the finest industry ideas and talent.
Many of you will remember that when I took up my current role at St James’s Street, I outlined how I believed the
HBF could pack the biggest punch, how it could best represent your interests to Government, Parliament, the broader policy community and the public.
I pointed out that knee-jerk reactionism and intransigent stances may play well to a section of the media, but did little to advance our interests. The comfort provided by a headline alone is truly short-lived.
I said that our position of optimum influence is achieved when we have a place at the table; that we need not just to be heard, but – most critically of all – to be listened to. It means being consulted at the beginning of the policy process, not informed at the end.
I also said that we should drill deeper into the experience and expertise we have. Our arguments will have most credence when we are able to move beyond highlighting policy problems to actually proposing policy solutions. I affirmed that we wanted to be as much a think tank as a pressure group.
It means, I believe, being a critical friend of Government. When it is wrong, we have to be prepared to say so robustly, making sure that our concerns are fully understood and that our alternative proposals and solutions are taken on board
When it is right, we need to feel comfortable saying so.
As we have recast the way we conduct our relations with political stakeholders and re-orientated the way we operate at the HBF, I believe that there has been a transformation in the way the Federation and the industry is perceived.
The dividend is a clear one: I believe that we have moved from simply representing the industry’s interests, to actually effectively advancing them.
In this context, it is worth a brief look at some of these issues over the past year.
PPS3
As you know, our submission on a proposed Planning Policy Statement on Housing was exhaustive and detailed. Our consultation with members alone lasted for a number of months.
The publication of a PPS3 on Housing last November may not have been – as some critics have dubbed it – “a developer’s charter”, but it did achieve a number of our key objectives, including the re-introduction of requirements for all local planning authorities to have an identifiable rolling five-year land supply, alongside more flexibility on car-parking standards and flexibility on density targets
Planning-gain Supplement
On the Government’s proposed Planning-gain Supplement, the HBF quickly set up a working group, under the able chairmanship of Roger Lewis, and commissioned independent research with other partners.
The group’s conclusions, backed by the research we had undertaken, showed that the complexity of the levy may not help bring more land forward for development, nor speed up the planning process. As a result, we took the position that PGS would be unworkable and that we could not support it.
The HBF has offered to work with the Government to develop a workable route forward.
Utility connection
Many members have pointed out to me the frustrations of delayed utility connections.
The HBF carried out a detailed industry survey which revealed the alarming statistic that connection takes an average of almost six months - 25 weeks - from application to the actual provision of utility services.
On the back of an HBF campaign to highlight the scale of the issue, including a direct appeal to Yvette Cooper,
Ofgem announced proposals in February to speed up the connection of new housing to local energy networks.
Thames Basin SPA
The moratorium imposed on all new housing around the Thames Basin Heaths Special Protection Area because of perceived risks to the local bird population has caused significant frustration to many home builders in the region, directly threatening the viability of a number of local developers.
The HBF has worked fast to commission detailed ecological research and acquire expert legal opinion on the issue as part of a sustained campaign targeting the media and political stakeholders to relax the planning freeze.
A recent official assessment has concluded that the measures undertaken to freeze home building in the area are fundamentally unsound. We are now urgently engaging the relevant national, regional and local authorities to make sure that this is translated into action.
HIPs
On HIPs, the HBF has worked closely with members over several months to clarify operational issues.
In particular, we have sought business-friendly solutions for the provision of Energy Performance Certificates for the sale of newbuild properties, taking into account the specific assessment methodology for the new Part L regulations.
As a result, a simple and suitable interim certificate can now be provided by developers marketing properties before completion.
As you can see, our approach has been one of constructive engagement, commissioning research and analysis, drawing on the work of third parties and providing Government and others with workable, practical solutions.
In all these examples, we have clearly demonstrated the ability to successfully frame the terms of the debate, to marshal and win arguments, but we need the Government or relevant authorities to act.
This involves keeping not just keeping to the letter of the agreement or decision, but also to its spirit. We need to keep the Government’s feet to the fire:
to make sure PPS3 is used to facilitate development - not frustrate it;
to ensure that a planning-gain levy does not deter land from being brought forward;
to make sure Ofgem uses its full clout to guarantee faster utility connections;
to translate the recent official decision on the Thames Basin SPA into an urgent lifting of the planning freeze
to make sure the Government does not increase the burden of regulation to the level that it becomes a further barrier to growth
It is about keeping up the pressure; it is about upping the ante, and again, we will seek to ensure that our improved relationship with Government turns decisions into results.
Beyond Barker
The fact is, of course, that we have now moved beyond Barker. The critical change in the perception of our industry is down not only to the more effective approach we have taken to public policy issues, but also because to the way we have addressed the Barker agenda.
We now have a comprehensive customer satisfaction strategy; part of which, of course, is our annual survey with NHBC. The results published last month show that the industry has either maintained or improved the levels of customer satisfaction achieved in 2006.
I do not pretend that there is not room for significant improvement, but I do believe that customer satisfaction is now at the heart of the operating culture of home builders across the industry, and that we will continue to see steady improvement in the years ahead.
On modern methods of construction, we have recently announced the creation of the Housing Production Barriers Group, under the chairmanship of Rod MacEachrane, to take forward the excellent work of the cross-industry Steering Group set up to examine the issue.
On skills, we have developed an industry skills strategy – Skills for Homes - through which we are promoting the Qualified Workforce Initiative, are working to improve the structure of qualifications for residential site management, and have been in consultation with CITB to help develop new forms of apprenticeship to increase the numbers entering the industry.
On design, we are continuing to promote good practice both through the Building for Life initiative and the new partnership with the Prince’s Foundation for the Built Environment.
Three years on, we can see that the Barker Review laid the foundations for a raft of new policy approaches, and a new approach to policy thinking. While we need to build on the developments and successes to date, we have, I believe, moved into a post-Barker period.
The environmental agenda
Nothing more encapsulates the new era and context in which we need to operate than the environmental agenda.
Whereas climate change was in practice a peripheral issue for us and the general public eighteen months ago, it has assumed a newfound primacy in today’s political narrative. It is now, I believe, the prism through which all public policy is being judged.
Just last month, the EU pledged to secure at least a 20 per cent cut in CO2 emissions by 2020 and a new Climate Change Bill was published that promises to make Britain the first country in the world to set legally binding limits on its carbon pollution.
“March 2007”, the Guardian proudly trumpets “will be seen to be the month during which the politics of climate change finally began to get serious”.
As we look to a new political period defined around Brownite and Cameroonian axes, I see no reason for this to change. In fact, I think we will see the further entrenchment of environmental politics.
For our industry, it is symbolised by the transition of the Barker Review to the Callcutt Agenda to – and I quote – “improve housebuilding delivery in a low carbon environment”
We have just this week made our submission to the Callcutt Review. We should be in no doubt as to the profound impact the Review could have for our industry. Again, the HBF is working to get our arguments across, to offer our expertise, to ensure that John’s recommendations are most effective by being positive and business-friendly.
HBF leadership
As you know, last September I was invited along with John Callcutt and Paul King of the WWF to visit Scandinavia with Yvette Cooper – something of a first for the industry.
On return, she called for the industry to “meet and beat” Scandinavian sustainability standards within ten years.
Having been engaged by Government at the very beginning of this process, we were able to argue for the adoption of key principles to create an effective framework within which the industry can deliver both higher environmental standards and increase output.
A few weeks later, the Chancellor committed us to becoming the first country in the world to build all new homes to zero-carbon performance standards by 2016.
Based on the sensible ten-year timeframe we had been arguing for, we felt able to welcome the Chancellor’s challenge.
As I said publicly when I shared a platform with the Secretary of State for Communities and Local Government, Ruth Kelly, during the announcement of the 2016 target, the principles around which the framework is created are of fundamental importance to its effectiveness and success.
The most basic one, of course, is the need to have all stakeholders on board. No one sector can deliver this alone.
We also require a simple and definitive target, with – if necessary – a clear timetable of interim targets over the course of a realistic timeframe.
Very importantly, as well, we stated that as we are a mass retail industry our customers need to be with us. It ill-behoves any home builder to ignore the tastes and wishes of customers – not least ones who can always invest in the second hand market.
We also stressed from the very outset the need to avoid a free for all of target making – to avoid allowing every local authority to devise its own way of saving the planet.
These are of course other issues – such as creating greater fiscal incentives to encourage progress – but we have been clear in articulating the critical, basic principles that must underpin the framework if our industry is to deliver.
Forging progress
Three months on, I think we have collectively made a good start – with one major concern to which I will return in a moment.
We welcomed the Government’s consultation – Building a greener future – that sets out a clear end target with identifiable Code Level targets at regular intervals on the way.
The HBF has convened a stakeholder roundtable summit, bringing together everyone who has a stake in the debate.
The HBF and the Government have established a Task Force bringing together a number of bodies, co-chaired by Yvette Cooper, to work out responsibilities and take the agenda forward.
Our task is, of course, to sustain the forward momentum within the parameters set out in our framework which is so central to our ability to deliver.
The challenge
With such a strong start, there is now an emerging issue that I think could threaten our industry’s ability to deliver the standards we want at the volumes we need.
As you know, we are already seeing different nations, regions and local authorities proposing their own different standards and timetables for delivering zero-carbon homes.
While no-one can criticise their enthusiasm for the job, with nine Government Office Regions and over 350 different local authorities, we have a recipe for unprecedented complexity and chaos.
Having to conform to a multiplicity of targets in different locations, I believe, will pose a very real risk to our ability to increase housing output - and indeed to provide the number of environmentally-friendly new homes that environmentalists must also wish to see. In fact, it would likely lead to output declining in the short term.
It will also hinder manufacturers and the supply chain identifying and proving the right products and solutions and complicate the provision of the new skills that many will require.
The fundamental point is that we do not currently know how to achieve zero-carbon standards in any kind of meaningful volume. A proliferation of targets will harm our ability to innovate, test, prove and deliver in the numbers that we need to.
It risks product and housing design failure, raising serious issues around warranties and insurance. In turn, it risks harming consumer confidence in both the process and the homes we deliver.
Let us not forget that customers are always able to choose to buy in the second-hand market. It serves no-one’s interests for customers to be focusing on homes that may be difficult to retro-fit rather than the zero-carbon homes of the future.
We need the Government, and of course local authorities, to keep to the Code Level timetable that we have agreed. This is something we are urgently taking up with the Secretary of State, the Minister and senior officials.
Conclusion
The fact is that the Government’s and industry’s interests are closely aligned.
We have both signed up to:
Significantly increasing housing output
Continuing to increase the quality of what we build
Attaining the highest environmental standards
The benefits of realising these ambitions are difficult to quantify they are so significant.
It is about addressing the chronic shortage of housing that is having such serious implications for the economy and society, it is about delivering value in the single most important asset people purchase; it is about creating a sustainable future for the country.
In short, it is about a better country and a more successful industry.
We have, I believe, begun the journey. With this alignment of interests, it is critical that we remain focused on the scale of the opportunity and, above all, ignore the distractions – however politically attractive they may seem - on the way.