Can the Government Meet its House Building Target?
Managing Director of NAPIT Certification, David Cowburn, discusses the Government’s target of building one million homes by 2020 and the progress that has been made so far.
Following on from the general election last year, the Government set an ambitious pledge to build one million homes in England by 2020. Roughly, this would mean that 200,000 homes would need to be built every year, which represents the highest levels of house building since 1989. Right now the demand for housing is far outstripping supply, with the consequences being felt by individuals, families and businesses across the country. A recent Communities and Local Government (CLG) Select Committee hearing, held on the 17th October, sought to provide an insight into the plausibility of the Governments house building target.
Whilst the Government has set itself an ambitious target to build one million homes, the outcome of the CLG Select Committee hearing was largely optimistic. John Slaughter, Director of External Affairs of the Home Builders Federation (HBF), gave evidence which showed that in 2014/15 there were around 171,000 net additions to the housing stock in England. This is, of course, 29,000 less homes than the required 200,000 per year average figure needed to meet the Governments one million target; but there has already been an increase from the 2013/14 level of 136,610 which indicates a capacity for growth.
Currently, England and Wales are experiencing a combined average of 250,000 planning permission approvals per year, suggesting the house building figures in the future should see a rise. Despite the anticipated rise in building numbers, it is worth noting that even achieving a rate of 200,000 homes per year would not be enough to meet demand. Statistics from the HBF show that the figure would need to be at 220,000 to 250,000 homes per year to achieve this. There are also concerns that the time taken to receive planning permission approval is still far too long, especially since local authority cuts have led to a sharp fall in planning department staff.
Whilst there was a sense of optimism that the Government’s target can be met, there were clear reminders made at the CLG Select Committee hearing that improving on the 2014/15 figures will not be an easy task unless underlying problems are addressed. An area of concern is the lack of small and medium sized (SME) house building firms who are contributing to the turnout of new homes. Sarah McMonagle, Director of External Affairs from the Federation of Master Builders (FMB), described how only a quarter of the new homes built in 2014/15 were built by SMEs, compared to roughly two thirds of all homes in 1988. The lack of SME building firms, largely as a result of the 2007 recession, has almost certainly contributed to the current lack of housing supply.
There are also concerns that there is a significant shortage of skills required to meet the Governments 2020 target. John Stewart, the Director of Economic Affairs for the HBF, claimed that this was ‘probably the biggest challenge the industry faces’. This has been backed up by the recruitment firm Randstad, who have claimed that roughly 650,000 more construction workers would be required by 2020 in England.
Another issue which is preventing building rates is the reluctance of local authorities to adopt local plans and develop on public land because of the financial and demographic demands they are currently facing, including a lack of central government funding and the aforementioned cuts to local authority planning departments. According to Sarah McMonagle, as the Director of External Affairs of the FMB, this is a huge barrier to the target of building one million homes, since roughly one-third of the homes will need to be built on public land. Places for People, who were represented at the CLG Select Committee hearing, spoke of how they have formed joint ventures with some local authorities over public land to ensure that projects can begin to surface.
Finally, it is difficult to assess how much of an impact Brexit will have upon house building numbers given the amount of uncertainty. In August this year, both Capital Economics and Shelter predicted that house building could fall by 8pc in 2017 and added that this could lead the Government to miss its target of building one million homes by 2020, by 266,000 homes. This decline, they argue, would be caused by a general fall in demand for new housing projects.
We will continue to keep up to date with developments in house building over the coming years which is a crucial area of demand and work for a wide breadth of our membership. Skills shortages are a point of particular interest to us, and we will continue to do what we can to up-skill, train and approve Competent Registered Tradespeople to ensure the quality of new build housing is not compromised by excessive demand.