It is customary at this time of year to reflect on the previous 12 months and the successes, failures, trials and tribulations they brought us. Back in January, the full implications for house builders and the wider economy of the unfolding crisis in the banking sector were not apparent, but as the year progressed, those implications became ever clearer and 2008 turned into probably the most challenging year most of us have ever experienced professionally. As long ago as the autumn of 2007 we started to warn senior ministers of the dangers for the economy of a significant slowdown in our sector and throughout this year we have continually lobbied for action to be taken to assist our industry, providing politicians and officials with a constant flow of up to date information. This lobbying has played an important part in Government announcing a number of measures and initiatives from cash to buy empty stock to a stamp duty holiday and Homebuy Direct. In recent weeks alone, we have held meetings with the Prime Minister, housing minister Margaret Beckett and former housing minister and now chief secretary to the Treasury Yvette Cooper. We also briefed the Bank of England’s Monetary Policy Committee on the market realities. As well as ministers, we have been meeting officials at No.10, Treasury, Communities and Local Government (CLG) and the Homes and Communities Agency (HCA) to lobby for further measures to help the housing market and new home builders. These discussions will continue in the New Year. The £400m HomeBuy Direct announcement made earlier this week is I believe a powerful demonstration of HBF’s ability to deliver for its members. Since earlier this year HBF has been lobbying Treasury, CLG and No.10 Downing Street for a scheme along the lines of the very well regarded EP First-time Buyer Initiative (FTBI). Having first persuaded the Government to act, HBF was then invited to pull together a group of members to help the Housing Corporation design a business-friendly scheme that also met the needs of the Government and mortgage lenders. Last week the Homes and Communities Agency (HCA) announced the 130 successful home builders, with £100m more funding than had been originally provided. HCA estimates this scheme may facilitate the sale of around 18,000 homes which is clearly a significant number. The housing downturn of course remains the priority issue HBF but in addition there have also been an incredible number of other relevant issues throughout the year. Discussions on the Planning Bill have rumbled on, as have negotiations on the Community Infrastructure Levy (CIL), zero carbon and a whole host of regulatory issues. We will continue to robustly represent you in all these discussions. One positive result of such representation this year was the publication in September of the Office of Fair Trading’s (OFT’s) conclusions to its exhaustive 12 month long investigation into the home building industry. In the current environment, getting such a clean bill of health was a huge boost and showed that we have an industry fit for purpose. More recently, we have also seen the conclusions published by David Pretty and Joanna Killian following their review of the Planning Applications Process. I just hope that their recommendations are acted upon and progress is made. Space doesn’t even permit me to detail developments with regard to the Code for Sustainable Homes; Building for Life; CSCS cards, Ecotowns, the Disclosure of Incentives form, Michael Fallon's Private Members Bill on the Merton rule; the Renewable Energy Consultation; the debate over Council Tax on empty properties; the steps taken to ensure skills retention, and plenty more - but they are all important issues, that will also significantly impact on us next year and beyond and we will continue to lobby on the industry’s behalf on them all. ECONOMIC AFFAIRS Pre budget report The Pre-Budget Report was, I have to confess, a damp squib for the industry. The £775m did not include any funds specifically targeted at private housing. We were very pleased Sir James Crosby came out with such a strong recommendation to help the mortgage market, but it was desperately disappointing that the Treasury then said they would further delay a decision until the Budget. We have taken every opportunity since then to stress to Government that we need urgent action to restore mortgage lending. Homebuy Direct Results of the HomeBuy Direct bidding were unveiled earlier this month by housing minister Margaret Beckett. The £400m (originally £300m) is the value of the 15% equity shares of properties from HCA. Individual home builders will then put in another £400m for their 15% equity shares, and buyers will be required to find the remaining 70% from savings or a mortgage. £400m for 18,000 homes is an average of about £22,000 per dwelling, meaning HCA has assumed an average house price of around £150,000. HBF worked closely with the Housing Corporation (now HCA) to design a scheme which worked for members. Burden of Regulation The second big theme of 2008, after the market, has been the increasingly onerous impact of policy and regulation on land values and development viability. I am very grateful to those members who have given their time and expertise to help us detail the scale of this vital issue to Government. I am often asked if the Government realises the scale of this problem. I think the answer has to be that ministers and officials definitely realise there is a serious problem, but there is a lot more work to be done trying to quantify for them the scale of the problem and to begin devising solutions. So some very significant progress, but much further to go. On 7th January HBF will be hosting a seminar for Government officials. To date we have 24 takers from across Government, which shows the scale of interest. Member companies will present hard facts about the impact of regulation on development viability for a range of different development types (e.g. regeneration, urban brownfield, strategic greenfield, etc). We will also have presentations by Government on their own work on the burden of regulation. OFT Code of Conduct As I write, the three warranty providers are in the final stages of agreeing the Code body so that we meet the OFT’s first milestone. I will be able to provide more detail in the New Year. Work is also progressing on the documentation required to operate an industry Code. New home valuation I am acutely aware of the problems house builder members are facing with new home valuations and was very pleased that we persuaded the RICS to let us see an early draft of a new RICS guidance paper on the valuation of new homes which we have circulated on a very limited basis for member comments. The intention of the paper is to help clarify and regularise the valuation of new homes including, we hope, the instructions given by lenders to valuers. Private Rented Sector We are progressing our thoughts on the future shape of the private rented sector and how this might benefit home builders. We are talking to experts, reading background documentation and trying to understand the fundamental barriers to large-scale private rental development in the UK. This will be an important project into 2009. EXTERNAL AFFAIRS Meeting with Margaret Beckett I had a first bilateral meeting with Margaret Beckett in mid-November. I briefed the Minister in full on the significant pressures facing the industry and – besides reiterating our concerns about restoring mortgage and bank finance availability – pressed for further Government support on stock purchase and measures to help pump-prime the commencement of new sites so as to maintain industry capacity as far as possible. Mrs Beckett agreed that further work should be undertaken on the scope for improving and adding to existing support measures. She also recognised our concerns about the overall cost burden of regulation. She stressed, however, that the zero carbon objective remained important to her and the Government. Briefing the Prime Minister Subsequently at the end of November I was invited to a breakfast briefing meeting with the Prime Minister. As this followed the Pre-Budget Report, I called for urgent implementation of Sir James Crosby’s recommendations for improving the availability of mortgage finance and a structured package of other support measures. It was reassuring that the Prime Minister indicated a willingness to consider further measures. Our task is therefore to continue to make the case for what we need. I can assure you we will leave no stone unturned in this respect. CLG Select Committee On 16 December, John Stewart appeared before the CLG Select Committee which is carrying out a short inquiry into housing and the credit crunch. I hope you have all seen John’s earlier written submission to the committee. MPs devoted considerable time to discussing measures to alleviate the downturn in home building, whether from the private sector, social sector or Government. John stressed the need for more Government action quickly. All of those giving evidence emphasised the urgent need to implement Crosby’s recommendation. The merit of raising these points was that the committee then raised them with Margaret Beckett when she gave evidence to them immediately afterwards. Discussions with the Homes and Communities Agency (HCA) We are in close touch with the chief executive of the new HCA, Sir Bob Kerslake, and his team, as they formally commence their work. The HCA was launched on 1 December and will have total budgetary resources of some £17bn over the next three years. We will explore how these resources can best be used and reallocated – given likely underspends if they are not – to enable more rather than less housing supply to be brought forward in the shorter term. I am encouraged that Sir Bob understands the importance of acting constructively at the current time and has stated his willingness to look at a range of ideas for assisting new developments to proceed. Dialogue with the Conservatives We have held further discussions with the Conservatives on a number of issues and they are now regularly seeking our views, including on support measures. Shadow Housing Minister Grant Shapps is also seeking to meet representatives of the home building and construction industries in the English regions and we will let you know of any opportunities to engage with him in your area. Wales In recent weeks we have deepened our dialogue with members of the Welsh Assembly Government on both the economic downturn and other policy issues. HBF has been invited to participate in a series of three Economic Summits held by First Minister Rhodri Morgan to consider what action can be taken to support the Welsh economy during the slowdown. We are keen that the Assembly Government gives its full attention to the position of our industry and its wider importance for the economy as a whole. I am pleased that more money has recently been announced for stock purchase, but clearly more action is required. To strengthen our case we have written to the First Minister seeking his support for work on a structured set of support measures. In our letter we have also raised the wider and longer-term issue of the impact of the overall regulatory cost burden on the ability of the industry to deliver. Working with others John Stewart is chairing a Housing Forum working group, drawing its membership from Government, the home building industry and the social housing sector, which is seeking to identify the big issues facing housing delivery over the next five to ten years. It is quite clear that, given the scale of the crisis we all face, everyone needs to pull together to find solutions, both short and medium to longer term. He also sits on a SEEDA advisory group which is advising CEBR in a study into very much the same issues, although with a South East focus. Definition of Zero Carbon The Government has finally published its long-awaited consultation document on the definition of zero carbon homes. The Government is proposing a “hierarchy” of measures to achieve a zero carbon outcome. The hierarchy would prioritise energy efficiency measures, followed by other measures that could be taken on- or near-site and then by other allowable solutions (that is, a range of chiefly off-site options). It is welcome that the Government has recognised both the practical and financial challenges entailed and suggested that Building Regulations requirements should stop short of Code Level six for energy. A suitable cost cap for any other allowable solutions used is also proposed. There is much detail to consider. We will engage closely with you to determine our response to Government which is required by 18 March and will be setting up a dedicated working group of members to assist us as well as seeking your views in our normal member meetings. In addition, the Zero Carbon Delivery Hub will be holding a series of regional meetings with the CLG in February. Anyone wishing to be part of this group should contact dave.mitchell@hbf.co.uk or on 0207 960 1621. Action on climate change The Committee on Climate Change announced its initial proposals for a series of three five year carbon reduction budgets for the UK - designed to set us on a path to achieve the Government’s agreed statutory target of reducing emissions by 80% by 2050. The Committee’s proposals include specific sectoral aspirations for the built environment and electricity generation. These aspirations assume the zero carbon homes objective proceeds according to the 2016 timetable, although they are without prejudice to the final decision on the definition of zero carbon. Encouragingly, the Committee also places a significant emphasis on the need and opportunity to improve the energy efficiency of the existing housing stock. EU energy legislation We are also keeping a close eye on the current EU legislative proposals for a Renewable Energy Directive and a revision of the existing Energy Performance of Buildings Directive (which sets the requirement for Energy Performance Certificates). Both proposals as currently drafted may have implications for the basis of future Part L building regulations and I have therefore written to Ministers to raise our concerns about the complications and uncertainties that may arise. PLANNING AFFAIRS Planning Act 2008 The Planning Bill was granted Royal Assent on 26th November, though most of the new legislation requires significant regulations to be drafted before change can be commenced. Thus, the establishment of the Infrastructure Planning Commission (IPC), to determine applications for nationally significant infrastructure projects, is expected to take well over a year before it receives its first application for determination. Similarly, Community Infrastructure Levy will not be introduced until the regulations have been drafted and completed various consultation processes. We continue to work with CLG over the drafting, but the current economic and housing market situation has clearly slowed the speed at which details of the implementation of CIL are coming forward. However, the weak market is definitely focussing minds on how to set a standard charge that is flexible enough to cope with change whereas hitherto discussions have generally sought to maximise developer contributions towards public infrastructure. Many new provisions in the Act will require secondary legislation and guidance to facilitate their commencement. The proposal to charge for the submission of appeals has been preceded by a consultation on a revised circular on costs awards. Charges for appeals are thus unlikely to be brought in until October 2009 at the earliest. Killian Pretty Review We were pleased to welcome the publication of the Killian Pretty Review in November. Based on discussions with a wide number of stakeholders and a formal “Call for Solutions” in the Autumn, Joanna Killian and David Pretty have made some bold and robust recommendations to Government to improve the planning application process. Not least amongst them is that the planning system should not be continually used to solve all the ills of the world. This goes right to the heart of the work we are doing with Government regarding the burden of regulation and, while we are calling for the Review to be implemented as an integrated package of measures, this has to be the key issue addressed by Government. Recommendation 15 calls for a revision of the time driven LPA performance targets of 8/13 weeks. It’s suggested replacement is for customer focussed, or customer satisfaction criteria based assessment. We have long been critical of the “refuse now, negotiate before resubmission” strategy of many local authorities and the recent study by the National Audit Office on the timeline of planning applications has endorsed our own 2006 research which identified this unintended consequence of the target approach. Other recommendations of the Review highlight problems of responsibility within the planning application process. This applies to all of us involved, whether applicant, consultant, local authority officer or elected member. If we are to move towards a more collaborative approach between the public and private sector we must all take responsibility for the implementation of the culture change required to meet the challenges or the Review. TECHNICAL AFFAIRS Gas flues in ceiling voids – update The HBF Gas Flues Sub Group will be meeting again early in the new year to review how the industry is responding to the issue of extended gas flues in ceiling voids. The intension is then to report the findings to the Health and Safety Executive (HSE) as they continue to investigate the issue. As you will recall the HSE issued their Safety alert - ‘Gas Flues in Ceiling Voids’ on 2 October. However, we still await the publication of their final report into the fatal incident that highlighted this as an issue. We continue discussions on this subject with CLG, HSE, Corgi and NHBC and it has been discussed at all recent HBF board and members meetings including each of the recent Regional Technical and Health and Safety meetings. Section 38 agreements and commuted sums The HBF working group looking into the issue of commuted sums has now produced a positioning paper. This will now be discussed with the officials at the Department for Transport (DFT) who are producing the guidance document ‘Commuted sums for future maintenance in relation to Adoption and Transfer of Infrastructure Assets’. It is hoped that our input and positioning paper will help influence the final version of the DfT’s guidance document. Inquiry into construction deaths. The Department for Work and Pensions (DWP) has announced the launch of an inquiry into the underlying causes of construction fatalities. The inquiry will be carried out in three phases. Firstly, to review existing work to understand fatal injuries in construction with specific reference to vulnerability. Secondly, to carry out a deeper analysis of the underlying causes including factors outside the health and safety system. And thirdly, reporting to Ministers and Health and Safety Executive Board. It is intended that this inquiry will report back to Ministers during 2009 and we will monitor progress and input when necessary. Building Regulations: Part G (hygiene) The proposed new Part G will be titled ‘Sanitation, Hot Water Safety and Water Efficiency’. The CLG plans to publish the final revised version around March 2009 with the intention of it being implemented in October 2009. This is six months later than originally intended so giving the industry more time to prepare. Part F (means of ventilation) and Part L (conservation of fuel and power) Three month consultations on these are due out in spring 2009. The current intention is that these will come into force in April 2010. HBF will be setting up working parties to look at and consider the industry response. Part A (Structural Safety) and Part C (Resistance to moisture and weather) A BRAC working group has been set up to look at Parts A and C with a view to consultation documents being prepared for 2009. It could be that the consultation period for these could run in parallel with Parts F and L. AND FINALLY... I think many of us will be glad to see the back of what has been an extremely difficult 2008. And whilst I am not naive enough to think that 2009 is going to see a sudden or dramatic improvement, one thing experience has taught me is that the housing market like the economy is cyclical and things will improve. On that slightly more positive note I would like to wish you all a very happy Christmas and a more prosperous new year and assure you that I and my colleagues will continue to represent you at every opportunity in 2009.
