INTRODUCTION I hope you all had a pleasant Summer break and have returned to work refreshed. From a HBF perspective it has been an unusually busy holiday period. With the Coalition Government still relatively new to office, some details of their radical housing and planning proposals are slowly starting to emerge, but it is clear that more clarification is needed as quickly as possible. We have been pushing hard for this through a combination of face to face meetings with the relevant ministers and submitting papers on the relevant policy areas. It has been a delicate balancing act. Since the election there have been numerous opportunities to publicly criticise the actions taken by the new Government with some sections of the media desperate for negative reactions of any sort. On occasion we have felt the need to issue strongly worded public statements but overall we have ensured our responses have been balanced. Currently, I believe very strongly that we can best represent you by working with the new Government to try to influence policy to create a more favourable environment in which our industry can operate. The alternative is to criticise to the point that we are excluded from discussions. As I say, it is a difficult tight rope to walk. There are of course going to be frustrations with our approach, and I am fully aware that we are not going to facilitate change overnight. The radically different approach of this Government will take time to develop and be understood by house builders and Local Authorities alike but If we are to have any chance of influencing emerging policy we have to stay close to ministers and be prepared to ‘get into the trenches’ and work on the policy detail with officials and civil servants. I would urge you to continue to feedback to us your experiences of the situation on the ground and how Local Authorities are interpreting the new system. Your feedback is the best evidence we have to take to ministers and officials to facilitate action and change – they will be judged on results on the ground. Whilst it is still early days there are some observations I would like to make. First it is absolutely clear to me that this Government, with its recent mandate, is not going to back away from its localism agenda. Hoping that we will somehow return to the old world is simply not going to happen. They are totally committed to introducing a new approach and as an industry we simply have to adapt to prosper. Second, we – by which I mean HBF and individual companies – need to be more proactive, putting forward our own proposals and solutions. The Government’s hands-off approach to housing and planning policy presents us with opportunities, as well as uncertainties. The corollary to reduced public support for housing must be an enhanced role for the private sector. Third, because a combination of a subdued economic background, continuing mortgage constraints, public spending cuts and the Government’s radical localist planning system will make it difficult to lift housing production, we need to be putting the economic and social case for new housing very forcefully. Britain cannot go on for several years with home building at levels last seen in the first half of the 1920s. We are of course constantly reviewing our engagement strategy (assisted by our recently formed Localism Engagement Group whose initial work is reported below) and continually looking at the best way HBF can influence the issues that affect you. We will continue to communicate our approach and proposals through the usual channels and at the regular member meetings we hold. I have set out below in detail all the areas we have been working on with the new Government. HBF ACTIVITY WITH THE NEW GOVERNMENT Political contacts As well as the meetings with Housing Minister Grant Shapps and Decentralisation (Planning) Minister Greg Clark in June, to which I referred in our previous ‘election special’ Update, Shapps subsequently invited us and a number of members to attend a discussion about how to make the new planning system work which focussed heavily on the role of the proposed new incentive. We will be pursuing a programme of poliical contacts across the parties as the summer break comes to an end and a number of senior politicians, including the Secretary Of State Eric Pickles, will be attending meetings throughout the Autumn. In addition, I am due to meet planning minister Bob Neill in the near future to discuss the Localism Bill and the preparation of the new national planning policy framework. We will also be attending all three of the main party conferences during the next few weeks to meet as many politicians as possible to discuss the housing and planning picture and how we would wish to see this being taken forward. There are of course a lot of new MPs following the election and one of our objectives will be to try to identify those of the fresh intake with a strong interest in housing so that we can build relationships with them – as well as cementing our relations with those parliamentarians whom we already know. At present of course the political climate is atypical in the sense that the official Labour Party Opposition has been focusing inwards on its leadership election following Gordon Brown’s decision to step down. That hiatus will be ended by the announcement of a new party leader at the annual conference and a more active opposition stance can be expected during the Autumn. It is important that we ensure house building remains a key issue both in government and opposition and to that end we recently met with Shadow Housing spokesman John Healey, and housing expert Nick Raynsford, to ensure they are fully briefed on industry issues and views. Localism Engagement Group Following discussions with members earlier in the Summer, we have set up a small group of senior members to assist us in developing an HBF engagement strategy for our relations with the new Government and a range of more local audiences. As I write the group is about to meet for the second time and our aim is to produce – and of course implement - a strategy that we can share with you at an early stage. A lot of thinking has already been done on this important area of our work and we are looking at both the national and local (including local government) audiences we need to reach, the messages we should be communicating to them and the various means of doing so. We have been delighted in this regard to welcome on board Tim Collins, Grant Shapps’ former chief of staff, to assist us. Tim’s knowledge of Conservative Party thinking and the campaign and communication channels we need to tap into will be of great help in ensuring that we can implement our strategy effectively. We are also conscious that the strategy will require the right ammunition if it is to prove successful and influential. In this respect we are looking at bringing together the planning and housing data that will best assist us and you to make the case for more housing nationally and locally. We will set out our thinking on this as it is firmed up and communicate it widely to members as part of our strategy. Decentralisation and Localism Bill HBF held a meeting with the CLG officials charged with the task of taking the Bill through its various stages towards Royal Assent to discuss both the structure and content. It is currently proposed to present the Bill to parliament in November with the possibility of the Bill completing its passage through the various necessary committees and both Houses to be granted Royal Assent in July 2011. This seems a very ambitious programme for such a complex Bill and suggests that a great deal of the content will be facilitating clauses, with the detail of how new proposals will be implemented being left to the secondary legislation of regulations and further guidance. It is understood that the Bill will be made up of 5 clear parts: Housing; Planning; Local Government ; Local Government Finance; and (possibly) London Following the meeting we sent the Bill team our priorities for issues that we felt should be addressed by the Bill itself rather than left for regulations. These were: The role of the National Planning Framework The process of plan making and the primacy of the development plan (including the definition of what constitutes the development plan) and whether or not material considerations remain part of the balance of decisions The link between development and council tax receipts for both residential and commercial development (New Homes Bonus and Business Bonus) should be in the Bill. Although we know that this doesn’t have to be the case it is the corollary of allowing local decisions regarding plan making and therefore should be tied into primary legislation. Presumption in favour of sustainable development (and its definition). Proposed changes to the appeals process Amendment of CIL and/or introduction of local tariff (given that the payment of such tariff is part of the presumption in favour of sustainable development). A clear definition of the proposed “duty to co-operate” with applicants/local communities and other authorities in all elements of the planning system including plan making, pre application discussions, applications and S106 obligations. We will, of course, keep members informed of the various drafts of the Bill as they come forward and will be setting up a number of task and finish groups specifically to discuss various aspects of what is expected to be one of the most radical pieces of legislation to be brought forward for many years. New Homes Bonus One of the critical structural features of the new localist planning system is the proposed New Homes Bonus. CLG is currently preparing a consultation for publication around the time of the Spending Review. HBF has been discussing details of the Bonus with CLG officials. We hope shortly to provide a simple facility on the HBF web site in which members will be able to calculate a rough estimate of the Bonus’s value to a local authority from granting planning permission. This should help members with their planning negotiations for individual sites. This is one of the areas we have been pushing Government hardest on and we will continue to impress upon them the need for full details of a powerful incentive system put in place as soon as possible. Spending Review & HCA Initiatives An unprecedented fiscal squeeze, combining some tax increases with eye-watering public spending cuts, will inevitably have an impact on economic activity, jobs and consumer confidence. The outcome of the Spending Review will be announced on 20 October. CLG has already had to make substantial cuts in 2010-11 spending, and big cuts are anticipated in the Spending Review. HCA programmes in 2010-11 have been cut by £220 million. Kickstart looked like being a major casualty of these cuts, so we are very pleased the HCA has managed to find funding for 44 of the 74 Kickstart schemes at risk. The current HomeBuy Direct scheme expires on 30 September. The HCA seems destined to face a very tough budget position for the Spending Review period 2011-12 to 2014-15, constraining the Agency’s ability to support Affordable Housing and its many other programmes. HBF made a Spending Review submission to Treasury and CLG at the beginning of August, focusing especially on home building’s contribution to economic activity and jobs. In preparing the submission, we held several meetings with key CLG officials and convened a special meeting of HBF’s Public Private Initiatives Group. Our submission called for urgent clarification of the New Homes Bonus and early announcement of its introduction in April 2011. Given the success of HomeBuy Direct and concerns about future mortgage funding, we asked for funding for a new HBD in the Spending Review period. We also called for a clearer definition of Affordable Housing to encourage private sector initiatives, funding for some form of ongoing Kickstart scheme, a detailed review of the cumulative burden of regulation, and an active programme of surplus public sector land disposal. Following the Emergency Budget we resumed our regular meetings between HBF members and HCA officials to monitor progress with HBD and Kickstart. Deregulation The coalition Government is committed to deregulation. It has announced it will reduce regulatory costs by introducing a one-in-one-out system for new regulations. More details of how this will work are expected shortly. There will also be so-called “sunset clauses” for regulations. The Government is undertaking a fundamental review of all regulation scheduled for introduction over the coming year. We wrote to CLG about the burden of regulation on new housing as soon the new ministerial team was appointed. We are now close to finalising a paper looking at a range of regulatory and policy solutions. We have also been holding discussions with HCA officials as they develop a new area-wide viability model. This is likely to become a very important tool for local authorities as they weigh up their demands for affordable housing and community infrastructure against the need to ensure housing development remains viable. HBF made a submission to the Department of Energy and Climate Change in response to their request for “burdens imposed by policies and regulations associated with energy and climate change” that we think should be “amended, reduced or removed”. HBF has been asked to join an RICS stakeholder group to assist with the preparation of new RICS guidance on ‘Tests of Financial Viability in Planning’. HBF was a guest of Sir Don Curry, Non-Executive Chair of the Better Regulation Executive, at a dinner to discuss regulation in construction and home building. Royal Town Planning Institute – Larger than Local We have agreed to take part in a coalition of various other groups investigating the process of strategic planning within the localism agenda. It is clear that some issues (such as waste, minerals and transportation) will require a decision making structure that is “larger than local” and the group is also considering whether some housing decisions might also require a sub regional approach that will rely on the “duty to co-operate” requirement on local authorities promised in the Localism Bill. Community Right to Build (CRtB) HBF has been participating in the CLG working group set up to discuss and devise a working methodology for the CRtB. Launched by Grant Shapps under the previous Conservative plans to bring forward small scale development through the creation of local housing trusts (LHT) the CRtB will allow local communities to bring forward development without the need for planning permission. It has to be said that the emerging plans appear to be creating an even more complex process than the planning system itself and it has been said by many of the participants on the working group (particularly the professional bodies) that the best way for such projects to be taken forward would be by changing existing policy restrictions rather than inventing a whole new process that seems to replicate much of the planning process itself. However, the main benefit of the exercise is that this is the first brick of “localism” that is having to face up to key issues such as the definition of a community and the process of gaining an “overwhelming majority” of support from local residents. Initial ideas being discussed base the concept of community on electoral boundaries (although with a minimum of 100 residents and, possibly, a maximum of around 10,000) and the significant majority has already been redefined by Grant Shapps from his initial suggestion of 90% in favour to a lower 80% of voters. It is clear that, even if the process works as envisaged it will contribute only a small number of additional dwellings over time. However, in the light of the lessons to be learned for other parts of the localism agenda we continue to participate in its inception. ECONOMIC AFFAIRS Economic Conditions In the economic forecasts published with the Emergency Budget (22 June), the Office for Budget Responsibility (OBR) expected subdued economic growth over the next 18 months, even before taking full account of the unprecedented fiscal consolidation. It predicted very weak growth of real incomes, a key housing market driver, and relatively slow growth in consumer spending. We must hope that the Monetary Policy Committee (MPC) will be able to maintain today’s very low interest rates for some time yet. I have to say the mortgage outlook is a source of some concern. The CML has estimated that by 2015 mortgage lenders need to refinance some £300 billion currently supported by Government and Bank of England schemes, with peak refinancing requirements in 2011. This seems likely to constrain the availability of mortgage finance, which could in turn hold back recovery in higher LTVs, and it may lead to some upward pressure on mortgage rates. We continue to discuss mortgage availability and mortgage regulation with the CML and individual lenders, and will work with the CML to ensure the Treasury and Bank are fully aware of the implications of both for the new homes industry. HBF has also met officials at the FSA to begin discussing the regulation of second-charge mortgages and its potential impact on shared-equity sales by home builders. New Home Valuation In July, HBF hosted a meeting of the New Build Valuation Forum, made up of home builders, valuers and lenders and officials from HBF, the RICS, CML and CLG. As well as reviewing a range of issues around the valuation of new homes, the group discussed the valuation of low and zero carbon homes with special guest Neil Jefferson, chief executive of the Zero Carbon Hub. HBF has also met senior officials at Nationwide Building Society to discuss particular valuations problems arising from Nationwide’s special instruction to valuers to value new homes as second hand. Following the meeting, HBF helped facilitate a series of meetings between Nationwide and individual home builders. Consumer Code The Code has now been operating for three months, and early indications are that it is working smoothly. The Code Management Board appointed Noel Hunter OBE to take over as Chairman from 1 August, following the retirement of Interim-Chairman, Rod MacEachrane. Mr Hunter brings with him unrivalled expertise in consumer protection, gained through a wide variety of organisations. EXTERNAL AFFAIRS Zero carbon Grant Shapps made his promised statement on the definition of zero carbon in late July immediately before parliament broke for the summer. The statement was helpful in confirming that the Government will introduce a minimum standard for fabric efficiency under the zero carbon policy based on that proposed in the consultation on this matter earlier this year. This is a standard the industry has indicated it can work with. It also set out the need to re-examine the proposed second element of the policy which at present would require a 70% improvement on Part L 2006 to be achieved via on-site measures (energy efficiency and on-site renewables). Importantly, the Minister indicated the need to balance ambitions to mitigate carbon in this way against the viability of development, taking account of costs. The Zero Carbon Hub has been asked to undertake a work programme to test what would be an appropriate level for on-site “carbon compliance” measures. HBF staff and members will be actively involved in this work which is expected to report back with its conclusions in late Autumn. The Minister’s statement additionally said the Government would further explore the feasibility of developers being able to pay into local energy funds as a means of meeting required carbon savings that can be made in the form of permitted off-site (Allowable Solutions) measures under the zero carbon policy, while confirming the continuation of Government funding for the Hub during the current financial year. Sustainability Group The new HBF Sustainability Group has held two successful meetings and is already helping us to bring greater focus and direction to our work in this increasingly important field. Immediate priorities on which small task groups are being set up have been agreed to be zero carbon, sustainability in planning, issues relating to the evolution and deployment of the Code for Sustainable Homes and ground-related issues (including SUDS and flood risk). We are grateful to members for their very positive support for getting this new Group up and running. The next meeting is due on 23 September. False self-employment We have recently met the Treasury team that produced last year’s proposals for changing the tax rules relating to self-employment in construction. The officials have been asked by new Ministers to hold further exploratory discussions with us and other interested bodies to see if there is a generally acceptable basis for revising the existing rules. The Treasury still seems to be looking at the principle of deeming that workers would be regarded as employed for tax purposes unless they qualify for an agreed set of exemptions. There is clearly a recognition, however, that the originally proposed exemptions were insufficient to meet legitimate concerns – including from house builders – that they would result in genuinely self-employed people being classified as employed in tax terms given the particular nature of industry operations. We will continue to stay in touch with Treasury on this issue to ensure that any further proposals for change are acceptable to members TECHNICAL AFFAIRS Building Regulations Revisions to the Building Regulations Part F (means of ventilation), Part J (Combustion appliances and fuel storage) and Part L (conservation of fuel and power) were all released on 1 May 2010 and will take effect from 1st October 2010. All of the above three building regulations become operative from 1 October 2010, and will apply to works from this date, unless work has already started on site, or a formal application is submitted prior to this date, with the requirement that works start on site before 1 October 2011. The relevant documents can be found on the planning portal www.planningportal.gov.uk/approveddocuments HBF wrote to Andrew Stunell raising the issue of availability of the final SAP calculation software back in July. The minister suggested that a meeting with his officials would be beneficial to discuss this issue further. A small group of HBF members met with his officials on the 26 August to outline concerns surrounding not having the final SAP software available. CLG have asked for further clarification surrounding certain issues and a response is being prepared. We still await the final version of the approved SAP software. It is currently anticipated that this will be available around the middle of September. Your Ideas on Future Changes to the Building Regulations HBF received a letter from Andrew Stunell regarding ‘Your Ideas on Future Changes to the Building Regulations’. The foundation/rationale behind this is to seek cost effective views on how building regulations can be improved and slimmed down whilst remaining fit for use. The government is committed to reducing regulation and the letter talks about a one in one out approach to managing costs. HBF has sounded out members on this and responded accordingly offering full support on this issue. Flood and Water Management Act Two consultations are expected shortly relating to the Flood and Water Management Act. These will be on Mandatory Build Standards (MBS) and the Sustainable Urban Drainage (SUDs) standards As and when these consultations are released HBF will be setting up workshops to formulate an industry reply. Anyone wishing to take part in these should contact dave.mitchell@hbf.co.uk Gas flues in ceilings HBF was asked to attend a meeting recently with the HSE to review the issue of gas flues in ceilings. HSE appears to be broadly happy with the work HBF members have been doing in risk assessing developments back to Technical Bulletin 200(TB200) that was issued in June 2007, and fitting hatches where necessary. It has now turned its attention to work done prior to TB200 back to the year 2000. HBF was asked to send out a further short questionnaire/survey to members to assist in the gathering of this information. The results from this survey are being compiled and will be sent back to the HSE very shortly. We will keep members informed on the progress on this. Work is still progressing in the HSE/Gas Safe working group towards finalising the proposed technical bulletin TB008 document. The release of the final version of this document is not now expected until November time. HBF Technical Conference 2010 This years technical Conference will take place at Thinktank, Birmingham on Tuesday 9 November 2010 and will look at the impact regulatory costs are having on the industry. It will include presentations on building regulations, the Code for Sustainable Homes and the Flood and Water Management Act. To book a place or for further details please Email events@house-builder.co.uk or ring 020 7960 1646 AND FINALLY… I hope you have found this report useful and as ever, should you require more information on anything or indeed wish to let us have your views on any of the items please don’t hesitate to contact me or any of the team here at HBF I will update you again shortly. Stewart Baseley Executive Chairman
