HBF Parliamentary Newsletter

Tue 18 July, 2023

Introduction

In this Parliamentary Newsletter, we update you on work to progress the many ongoing and new challenges affecting the home building industry.

We hope you find it a useful update on the home building industry’s activities and priorities but if you have any questions or would like to discuss an issue in more detail, please get in touch.

David O’Leary, Executive Director: david.oleary@hbf.co.uk
Emma Ramell, Head of Policy and External Affairs: emma.ramell@hbf.co.uk
Laura Markus, Policy and External Affairs Manager, laura.markus@hbf.co.uk
Laurence Thompson, Policy and Campaigns Assistant, laurence.thompson@hbf.co.uk

About HBF

The Home Builders Federation (HBF) is the representative body of the home building industry in England and Wales. Our members are responsible for providing around 80% of all new private homes built in England and Wales and the membership are mostly small or medium-sized enterprises.

Letter delivered to Downing Street warns of several existential threats to the survival of SME developers

A joint letter signed by almost 200 small- and medium-sized developers has been delivered to Downing Street and warns of several existential threats to the survival of SME house builders. The letter, addressed to Prime Minister Rishi Sunak, makes clear that “it has never been more difficult to be an SME developer than it has at the present time” due to a combination of government action and the broader economic environment.

The letter was delivered to Downing Street on the 6 of July by representatives of our SME member companies. It calls on the Government to change course in several key areas where its actions are threatening the viability of small- and medium-sized developers, including:

The planning process – The signatories highlight that under-resourced local authority planning departments can take years to process planning applications. This ties up capital, preventing SMEs from operating elsewhere.
Planning reforms – The letter criticises the Government’s proposed planning reforms, including the removal of mandatory housing targets and a softening of the Five-Year Land Supply Requirement.
Natural England requirements – The letter also calls for action on interventions by Government quango Natural England, which are delaying an estimated 180,000 homes.
Growing number of new taxes, regulations, and policies – These costs are collectively adding at least £20,000 to the cost of building a new home, impacting the financial viability of developments.

A survey of over 200 businesses conducted alongside the letter revealed that 78% are considering scaling back their residential construction activities, while 87% are contemplating a change in business direction, therefore cutting investment in the sector. The signatories to the letter state that “the sheer number and complexity of the challenges facing developers means that for many of us, difficult decisions will need to be made with regards to investment, delivery and employment.”

The new survey reinforces the findings of HBF’s 2023 State of Play report, released in March, which outlined the key challenges faced by SME developers. The report revealed that 92% of SMEs are unhappy with the Government’s current approach on housing, and 93% view securing and processing planning permission as a major barrier to growth.

Smaller builders are a critical part of the house building industry and, amidst a growing housing crisis, are key to its ability to deliver the homes the country needs. Often regionally based, SME firms tend to focus on smaller sites and play an active role in local communities and their economies, investing in infrastructure and supporting employment through recruitment and training schemes. It is estimated that there are now 85% fewer small house builders than there were a generation ago.

Stewart Baseley, Executive Chairman of the Home Builders Federation said:

“SMEs are the lifeblood of all industries, but in house building we are seeing them being driven out by an increasingly anti-development, antibusiness policy environment. The planning process is grinding to a halt and regulatory costs are rocketing, whilst the nutrient issue has put the brakes on sites across a quarter of the country.

“The impact of this policy approach is devastating for SMEs, and businesses unable to operate or generate an income are laying off staff, or increasingly closing their doors. We are urging Government to act now so that the businesses that remain have a chance of survival.”

Fourth anniversary of Natural England’s first moratorium on house building

New figures released on the fourth anniversary of Natural England’s first moratorium on house building reveal that the Government agency has blocked more than 145,000 new build homes due to nutrient neutrality requirements. These measures are an attempt by Natural England to address high levels of phosphates and nitrates in rivers, despite the quango’s admission that the risk from new homes is ‘very small’. Over a quarter of local authorities are now affected by Natural England’s advice, which prevents them from granting planning permission in areas where ‘nutrient neutrality’ cannot be achieved.

HBF is re-iterating calls for the Government to lift Natural England’s disproportionate moratorium on development and to focus on tackling the root causes of the issue. The Government’s own research has found that agricultural run-off and the inaction of water companies in maintaining infrastructure are the primary causes of the nutrients issue, rather than house building.

HBF is also calling for a package of measures to support affected small businesses, and for the Government to explore short-term solutions to release some of the delayed homes. Very few of the required ‘mitigation schemes’ which would allow house builders to demonstrate nutrient neutrality currently exist.

Stewart Baseley, Executive Chairman of the HBF, said:

“Over the last four years Ministers have failed to intervene on Natural England’s disproportionate ban on new homes, which disregards the findings of government’s own evidence and represents a major misdirection of effort and resources.

Whilst ministers prevaricate, housing supply is tumbling and the consequences are becoming ever clearer for young people in need of decent housing and builders’ jobs.”

In a report earlier this year, HBF warned that the combination of the Government’s approach to planning and nutrient neutrality could see housing supply halve to around 120,000 homes a year.

To find out more about the nutrient neutrality issue impacting home builders, including HBF’s recommendations on what action should be taken to alleviate the impact on industry, visit hbf.co.uk/nutrients.

Housing Pipeline report shows planning permissions fall to a record low

The latest Housing Pipeline report from HBF and Glenigan shows that the downward trend in planning permission approvals in 2022 has continued into the first quarter of 2023. As planning permission approvals provide an indicator of the number of houses likely to be completed three or four years later, future additions to the housing stock will continue to fall short of housing need.

The report finds that:

The number of housing projects granted planning permission in Q1 2023 was the lowest quarterly figure on record, with 3,037 housing projects granted planning permission.
This was a 20% decline on figures from the previous year and 11% down from the final quarter of 2022, despite the number of projects approved over the course of 2022 already being at the lowest level since the data set was started in 2006.
The number of units approved during Q1 2023 was 71,136, a 24% decline from a year ago and a 17% fall from the previous quarter.
In England, the number of units approved was the lowest Q1 figure in almost a decade. In Wales, there was an even greater drop, with Q1 approvals decreasing by 40% when compared to a year ago.
Affordable Housing-led developments and small sites saw the greatest drop, with a 41% drop in permissions for Affordable-led schemes compared to the same quarter last year.

As was predicted, the figures show that the Government’s anti-development policies are starting to bite, with an increasing number of LPAs withdrawing or stalling their local plan consultations. Following the publication of the NPPF consultation at the end of 2022, 58 LPAs have now withdrawn or delayed their local plans. This is expected to continue to have a significant impact on planning permissions – and so housing supply – moving forward, undermining the industry’s efforts to tackle the housing crisis.

HBF continues to push the Government to re-instate mandatory housing targets and to remove barriers to the delivery of new housing supply.

The Housing Pipeline report can be found here.

New build buyers save £130 a month on energy bills, new HBF report finds

A new report from HBF, released for Net Zero Week in July, has found that new build homebuyers are collectively saving £400 million a year in energy bills, with the average new build homebuyer saving £135 a month.

The new ‘Watt A Save’ report also shows that new build properties are significantly more environmentally friendly than older homes, collectively reducing carbon emissions by over 500,000 tonnes. The average new house emits just one-third of the carbon of typical older houses, with each house saving 2.8 tonnes of carbon per year.

The findings come after a winter of high energy prices in which the state of England’s housing stock came under increased scrutiny, with England having one of the least energy-efficient housing stocks in Europe. The figures demonstrate the value of high energy efficiency standards in the new build market for both buyers and wider society. New build homes are built to evolving standards, using the most up-to-date technologies and building materials to ensure the highest level of energy efficiency is embedded at the point of construction.

The report also found that:

New housing uses 55% less energy and emits 60% less carbon than existing properties.
New homes built to updated energy efficiency regulations this year will emit 71% less carbon than the average older property.
New builds consistently achieve high energy performance levels, with 85% being awarded an A or B Energy Performance Certificate (EPC), versus just 4% of older properties.

The report also calls for Government to work with lenders to offer incentives for buyers of energy-saving homes in light of the mortgage market squeeze.

The full findings and recommendations can be found here.

New census of onsite workforce re-confirms industry’s reliance on the overseas workforce

Six years ago, HBF conducted its first census of the home building industry’s onsite workforce to understand how Brexit might affect the industry. Now, post-Brexit and post-pandemic, HBF has released another census to see if the makeup of the industry has changed.

The survey of nearly 15,000 workers demonstrates that the role of the overseas workforce remains vitally important to the industry and has not slipped in the years since Brexit. 19.6% of workers on house building sites across the country were from overseas, and this rises to 65% in London. While the proportion of overseas workers in the industry has remained broadly consistent since 2017, the role of non-EU/EEA workers has grown – they now make up 3.8% of the total workforce, almost double the 2% from 2017 results.

The role of overseas workers in the home building industry is also more pronounced for certain trades, with 28% of general labourers, 25% of plasterers, and 25% of painter and decorator roles filled by non-UK employees compared to just 8% in plumbing and 9% in management and professional roles.

The report confirms that overseas workers remain critical if the industry is to meet housing demand amid a wider skills shortage. While HBF welcomes the recent addition of five construction-related roles to the Shortage Occupation List, the past three years have demonstrated how quickly labour needs can change, and greater flexibility to be able to employ overseas workers, even temporarily, needs to be implemented. Furthermore, with 30,000 more skilled workers required to build every additional 10,000 homes, there is also a growing urgency for the Government to invest in growing the domestic house-building workforce if it is serious about achieving its 300,000 per annum target.

The full findings of the census can be found here. It breaks down the workforce by nationality, age, gender, and ethnicity. The survey also found that:

The on-site homebuilding workforce is overwhelmingly male, with 96.1% of respondents identifying as male.
The majority of female respondents are aged 20 to 29 and tend to be in more senior positions.
Millennials and Gen Z workers account for nearly 60% of respondents, with the most prevalent age group being 30 to 39-year-olds.
57% of the workforce are under 40.

Joint letter warns Government against Infrastructure Levy

HBF signed a joint letter alongside a coalition of local authorities, developers, housing associations, and charities warning against the Government’s proposed Infrastructure Levy. The letter, addressed to the Secretary of State for Levelling Up, Housing and Communities, raises concerns about the impact of the new levy on the availability of funding for affordable and social rent homes. It also calls on the Government to focus on improving the existing system of Section 106 planning obligations and the Community Infrastructure Levy (CIL), rather than undergoing a major overhaul and introducing the new levy.

The letter, signed by representatives of 30 organisations, also argues that:

Replacing the current developer contributions system with the new Infrastructure Levy will increase uncertainty for developers across the planning system.
Councils and developers will still need to rely on Section 106 and CIL alongside the new Levy, but the proposals do not improve these existing mechanisms.
Infrastructure Levy charging schedules would be significantly more complex than existing CIL ones and will be difficult for already under-resourced local planning authorities to develop.

The signatories to the letter are calling for a ministerial roundtable to be convened so that the Government can draw upon their collective expertise and experience. It follows HBF’s response to the technical consultation on the Infrastructure Levy in June, in which HBF warned of the detrimental impact that the proposed levy would have at a time of economic uncertainty and increasingly burdensome regulation. HBF’s full response to the consultation on the Infrastructure Levy can be read here.

Mental Health Awareness Week

Individuals working in construction, including house building, are among those worst affected by mental health issues. The statistics on anxiety and other mental health challenges in the sector make for sobering reading:

A third of construction workers suffer from elevated levels of anxiety every day.
Two construction workers take their own lives every working day.
91% of construction workers have felt overwhelmed and 26% of workers have experienced suicidal thoughts.
The risk of a male construction worker dying by suicide is three times above the national average.

As part of HBF’s ongoing efforts to raise awareness of mental health challenges in the home building sector, HBF ran a social media campaign recognising Mental Health Awareness Week from the 15 to the 21 of May. The theme of this year’s awareness week was anxiety, and HBF compiled and shared several resources for businesses and employees to use.

HBF’s broader mental health campaign, launched in 2019, seeks to break down the stigma that still exists around mental health that deters people from seeking the help they need. Please don’t hesitate to contact emma.ramell@hbf.co.uk if you would like to discuss our work in this area in more detail.

HBF Women into Homebuilding programme celebrated in industry awards

The Home Builders Federation (HBF)’s Women into Homebuilding programme has become a finalist in this year’s Women in Housing Awards and received the highly commended award in Partnerships with Purpose at the Women into Construction 2023 Awards.

Both award ceremonies took place in the final week of June and brought together participants and supporting organisations helping to champion women into construction roles.

Women into Homebuilding is a nationwide employment programme that was created by HBF and Women into Construction to help women train and gain experience in Site Management roles, whilst addressing gender imbalance within the industry. Launched in January 2023, the program has already trained 25 women and is supported by home builders Barratt Developments, Bellway Homes, Cala Homes, Hill Group, Keepmoat, Persimmon Homes, Redrow, St. Modwen and Vistry Group.

The Women into Homebuilding programme will be running three cohorts throughout 2023. The second cohort is currently underway with the last programme cohort taking place later in the year. To find out more about the programme, visit the Women into Homebuilding website.