When I stood here two years ago we were still reeling from the shock of the collapse of Northern Rock. The following months saw a resultant collapse in mortgage lending and as a consequence sales rates that led to house builders the length and breadth of the country announcing redundancies and office closures at a rate most of us had never experienced. Many smaller house builders, along with the companies in the supply chain that served them – the brick factories, the window manufactures etc - were forced to stop trading completely. 2008 then became without doubt the most difficult year in my long association with this industry. By this time last year, with the worlds banking system in meltdown Margaret Beckett had just become the latest housing minister, and addressing us in her first speech in that role she detailed how the Government was absolutely committed to assisting the industry and developing a progressive relationship. A year on the world looks a very different place. Beckett has been replaced by yet another housing minister- John Healey - and the most recent trading statements being issued by our larger members form part of a consistent flow of more positive results and reports emerging from across the sector. It is however far too early to suggest that we are on the road to recovery. My view is that the market has stabilised but remains extremely fragile. Transaction levels are at very low levels still and will continue to struggle until there is greater liquidity in the mortgage market. It’s not just the absolute level of lending we need to see increase, but also the terms and rates on which mortgages are advanced. In particular we need to see LTV’s return to more sensible levels to allow those without deposits to access the private housing market and meet their aspiration of home ownership. And we know that is what the vast majority would prefer to do. Despite the economic turmoil of the past year or so and the fall in house prices we have witnessed, a survey carried out earlier this year by the NHMB – in the midst of the crisis - revealed that 88% of Britons still believe buying a house is a sensible investment in their future. It’s difficult for any of us to gauge exactly to what extent the recent market stabilisation has been helped by the various Government led stimulus packages but I think we must give significant credit for the measures taken in recent months to assist new housing delivery. Yes, I think the Government was initially slow to react last year when all the indicators were screaming at them to take action – indeed we at HBF had been warning since the autumn of 2007 of the impending downturn - and the initial announcements were simply not enough - something that we highlighted to them at the time. However, over the past year there has been a realisation of the importance both socially and economically of maintaining housing delivery, and at a time when a whole host of industries and sectors of the economy have been calling for special assistance and money, home building has been prioritised and funding diverted to assist. However if I have one big message for the Government today it’s a plea not to withdraw these incentives in the near future as I fear that to so do would potentially stall the market just as it is beginning to show signs of recovery. Indeed in our submission to Treasury ahead of the Pre Budget Report, that is our main message – extend the Stamp Duty reduction period and extend the timescales on Home Buy Direct and Kickstart. Amongst the other key things we will be pushing for is assistance for first time buyers in the shape of a Government backed savings deposit scheme – something that Gordon Brown did actually refer to in his response to the Queens speech last year. As a result we presented our ideas to the Treasury back in February although all has gone ominously quiet since then but we will keep plugging away. We will also be urging Government to look at options around institutional investment in the private rental sector and encouraging them to work with us, CML, the major lenders and insurers on looking at a govt backed mortgage indemnity guarantee scheme. In short the Pre Budget Report provides a real opportunity for the Government to help build on the improvements we have seen in recent months in the market and demonstrate its commitment to underpinning this recovery. Whilst as yet we don’t officially know the date of the General Election I think the past months party conferences signalled the start of the campaign and today’s conference will give us a fascinating insight into a policy debate that could become a major battleground in the months ahead. I think it is recognition of the significance the two major parties are attaching to housing policy that both the Minister and Shadow Minister are here today. Whether or not housing plays as one of the major electoral issues for the public at large, and it certainly should, the two main parties are presenting us with the clearest choice between their housing policies we have seen for some time. In very broad-brush terms we have on the one hand the emerging approach outlined to us earlier by Grant Shapps that stems from his party’s wider belief in localism. Under this philosophy there would be no centralised or ‘top down’ targets to deliver more homes, but a reliance on incentivising local communities to consider and agree to new development in their areas. And on the other, and without wishing to second guess what John Healey will tell us later today, we have the Government’s national and regional targets that it intends will be delivered through Regional Spatial Strategies that require Local Authorities to deliver a specified quota of new homes in their area. So let’s start on what they agree on. Both parties have stated that they want to increase home building levels. The current Government as far as I know still has a target in place of three million new homes by 2020 - however remote that possibility now looks. But whoever is in power the horrible truth is that the planning system, despite this Governments repeated attempts to improve it, is simply not delivering sufficient permissioned land to provide housing at anything close to this volume. It wasn’t before the recession let alone now. We also have an ever increasing regulatory burden that coupled with the impact the decline in house prices has had on land values is posing a significant threat to the viability of many housing sites. And whilst there is now seemingly a realisation within Government that the cumulative costs of Section 106 contributions, affordable housing and the multitude of other items on the wish lists of central and local government, cannot all be paid for by developers out of land values, there is no vision as to how these hitherto taken for granted contributions will be funded. And that is before we add in the costs of moving towards low carbon housing as 2016 draws closer. There was recognition in the Budget that Government would look at the regulatory burden and the threat posed to development viability, and indeed we have been told on several occasions that we would be invited to meet with officials on this matter - but it simply hasn’t happened and so we await the Pre Budget Report in which it was stated we would see the result of this enquiry, with anticipation - but not a lot of hope. Let’s be clear. As an industry we are not trying to shirk our responsibilities. I jointly chair the zero carbon task force with the housing minister, and I do so because I want to ensure that the requirements are deliverable and affordable. Our approach of embracing this policy has already borne valuable fruit. Two years ago we had a policy objective of achieving zero carbon fully on site, whereas now the proposed on site requirement would be significantly less with allowable solutions offsite and the Government has also recognised the need for a practical standard for fabric efficiency. In addition the Government has provided matching finance to that from the NHBC and Robust Details Ltd to set up the Zero Carbon Hub as a means of working out solutions on how we can achieve this most challenging of objectives. Having made this progress, we must continue to work towards a solution that is realistic. One that will see the required technologies developed; one that recognises what house builders should be expected to deliver – and one that recognises what is within the remit of others such as the energy providers. And one that is progressive and sensible and doesn’t set unrealistic milestones. And most importantly one which our customers will find acceptable. Similarly with Community Infrastructure Levy. Yes, developers should be expected to make a contribution to the additional infrastructure that is required to serve the new homes they have provided. That’s why we proposed CIL with a scaled back section 106 as an alternative to the PGS approach, but regrettably I feel we still have some way to go based on the draft regulations which we will be telling then govt in the next week or so. One thing that fundamentally needs to change whoever is in power is that Community infrastructure provision, be it roads, schools, police services, or health facilities, is recognised to be the primary responsibility of Government – that is why communities pay their taxes – and not just the development community And whilst in recent years ever increasing land values have allowed central and local Government to continually demand more – the reduction in land values caused by the drop in house prices means that land will just not be able to contribute in the same way in the future. These are challenges we cannot ignore whoever forms the next administration. Let’s turn now to the Conservatives whose proposals are by any judgement radical. I welcomed Grant Shapps statement at last week’s party conference – [and repeated today??] – that the Conservatives want to increase housing output, and for the country to become “a nation of home builders”. He and his colleagues propose to achieve this by abolishing the current Regional Spatial Strategy requirements and introducing a radically different, bottom-up approach to housing provision where local authorities are incentivised to build more homes. Let’s be clear, there is no doubt in my mind that making such significant change now, at the back end of the worst recession in living memory, is a high risk strategy. Localism by definition puts the responsibility for decisions about development onto the community for which it is proposed. In the run up to an election this may well be an attractive, populist proposition. But as even senior Tory Steven Norris acknowledges, ‘Nimbyism has not disappeared. It is alive and kicking in every community in the land. It knows neither class nor creed. It is an expression of innate conservatism; the desire to resist change, however desirable it is said to be by politicians’. The Conservatives say their policies will deliver more housing because there will be incentives to encourage local communities to consider and agree to development. But if, as we heard earlier, shadow housing minister Grant Shapps is really proposing to delegate power down to parish, ward and even street level, I am concerned based on my first hand knowledge over many many years what level of incentives can be offered, let alone afforded, that would be sufficient to overcome the enormous innate nimbyism we know exists at the most local level in many places. That said nobody that attended the Conservatives’ conference in Manchester last week , could have failed to recognise that localism is a deeply held view running through all the Conservative's policies that resonates with party members. With the possible exception of a renewed pledge to scrap HIPs, the loudest cheers for Caroline Spelman’s and Grant Shapps’ speeches were when they confirmed the early scrapping of the Government’s regional targets. So be absolutely clear in the event that the Tories form the next Government -this policy will become real – localism goes to the heart of their philosophical beliefs and it defines many of their emerging policies – not just on housing. The key questions are therefore how would we get from where we are today to where they want to take us without damaging legitimate commercial interests; and how a localist system could create sufficient assurances and checks to enable developers to have the confidence and certainty to invest. In a business climate where planning risk is already a major issue, and many are concerned about the technical, cost and consumer challenges the drive to Zero Carbon creates, any further increase in risk as a result of localism would clearly not be a recipe for delivering more homes. So what we must do is work together to ensure that, should they be elected, we are able to help them understand the real issues that we face and the unintended consequences their policies could bring. If not, there is a real danger in my view that we will see the supply of permissioned land decline even further just as the house building industry starts to recover from the worst downturn for decades. And that of course brings with it many ramifications for jobs and society. That is why this summer we produced a paper called ‘Making Localism Work for Housing Delivery’ in which we set out the issues any locally based system for housing provision must address. For me, it’s about how you protect the overriding national interest whilst providing local autonomy. I totally understand the sentiment of not imposing central Government targets on local communities – I am sure we all do. But ultimately I feel that central Government just cannot abdicate responsibility for the country’s housing needs any more than it could on schools or hospitals - it’s impossible to conceive that any government would risk an undersupply of beds or classrooms. It has to know that for a population of some 60 million there is a need for so many hospitals and so many schools. Housing to me is no different. We know, give or take we need to be providing about 250,000 homes of all tenures each year, And we know that the current system has failed to deliver anywhere near that - but if localism is to work I believe there have to be certain ground rules 1. There must be a robust transition plan that Local Authorities agree to work to. 2. We must ensure that every LA produces in a timely fashion a local plan that adequately provides for need in their area. 3. The Government must ensure that the sum of those local plans adds up to a number that is adequate for the nation’s housing requirements. 4. It must then ensure that the local plans are implemented. And to that end let’s reintroduce the presumption in favour of development so business can plan with more certainty. 5. And Local Authorities must have both the skills and resources to speed up planning on such land. 6. If we are to create a nation of homebuilders let’s take a long hard look at the barriers to entry and review the regulatory burden that I know puts off many from using their entrepreneurial skills to start house building businesses. 7. And let’s ensure that everyone understands that viability is the key to sufficient land coming forward for development. We have of course represented these issues to the Conservatives in our discussions with them and indeed are having a highly constructive dialogue with them on all theses points. To date it is difficult to appreciate the Conservatives full policy on housing. So far we have seen their ‘Control Shift’ and ‘Strong Foundations’ reports but are particularly waiting for the promised planning green paper later this autumn which it is to be hoped will contain assurances on transition, future planning process and the checks and balances we believe would be required for localism to function. There are some other Conservative proposals beyond housing that are on the face of it very attractive. Their stated intention to reduce bureaucracy is laudable, and many will welcome David Cameron’s much-heralded ‘bonfire of the quangos’ - myself included. Some so-called ‘quangos’ have now been afforded a great deal of rope - many years, not to mention many millions of pounds of tax payers’ money, to prove their value and demonstrate that they have made a discernable improvement to their particular areas of so called expertise. Other so called quangos, such as the Homes and Communities Agency (HCA), have not yet had long enough to fully demonstrate their effectiveness, yet have delivered more in their short life than other agencies have delivered in a decade. The speedy implementation of schemes such as the housing association stock purchases last year and Home Buy Direct and Kickstart really demonstrates the power of an agency focused on delivery and not policy, and it must be given an opportunity to prove its effectiveness. Indeed I think whoever is in power should be encouraged to devolve more power to the HCA, albeit within the parameters that reflect their Government’s policies. I’m not just saying this because Sir Bob spoke just before me (and is still here!) By entrusting the HCA with key responsibilities within the wider policy framework of the day Housing Ministers of either political persuasion might then change with less disruption to operational matters than we have seen in recent years. So what of the future? At HBF we are of course committed to working with both parties – and whatever the result of the election - to ensure industry considerations are taken in to account as policy is developed such that it facilitates housing delivery. The social and economic benefits of doing so are quite clear, as are the enormously damaging consequences of not doing so. As an industry we now need to look forward. We need to be tackling head on the challenges that face us – be they economically motivated, politically motivated or more practical such as the challenge of zero carbon. Be in no doubt all of these will require us to raise our game in the years ahead. All experts in this field agree we need to be supplying more homes – and both main political parties accept this – it’s about finding the best way to do so. But let me set aside one myth – namely that the housing industry model is broken- I fundamentally disagree. In the years to come whatever their housing policy positions, neither party when in Government will be able to escape unprecedented cuts in public spending. This will place even more responsibility on the private house building sector to deliver the houses this country need – which makes it even more vital that the policy framework allows us to do so.
