I have been asked to address the challenges we face in 2008 and beyond and clearly we meet at a crucial time for our industry. Home Builders are at a crossroads. Our Industry is facing a combination of market and policy challenges we have never seen before. The impact of these challenges is being felt across the country – with knock-on effects for the supply chain and companies large and small. And no one is immune to the effects of a global downturn. Our Industry – as it always does - is responding to the short term market pressures We are finding new ways to assist consumers and ever more innovative packages to support first time buyers. And many are going further- talking to the Housing Corporation for example about the prospect of increasing our contribution to affordable housing to help meet pressing housing need. And on the ever expanding policy front - as the global environment figures highly in every industry’s in-box - we continue to work with government and all parties on the incredibly ambitious target of building all homes to a zero carbon standard from 2016 – even though we don’t yet have a definition or know how to deliver it. So this dynamism on the part of our industry should be applauded - unfortunately all too often it isn’t matched by the same sense of urgency from the Government The Chancellor’s first Budget – the most boring I have ever endured – was a huge missed opportunity. The option we and many others proposed for raising stamp duty thresholds to help first time buyers and the market generally has largely been missed. I believe he could and should have gone much further to restore confidence in the market. In considering the challenges we face in 2008 and beyond one of the difficulties we have is trying to predict what might emerge next. If we look back on some of the big issues we have faced over the past year or so many of them are relatively new. The zero carbon agenda for example wasn’t on our radar screens eighteen months ago This time last year no one knew we would face an OFT market study of our industry We didn’t have a target of building 3 million new homes by 2020 Nor had the Community Infrastructure Levy emerged as government policy because at that time we were still lobbying hard to persuade them that PGS was doomed to failure All of these isuues of course have followed us into 2008 and the consequences of all of them will be with us for many years to come. That’s why it is so essential that HBF is fully engaged on each of these big ticket items working hard to ensure that the policies which emerge to enable delivery of government objectives are practical and as business friendly as possible. 2008 is however very different to last year in one key area – the massive uncertainty in the market – you don’t need me to tell you how challenging these times are. Part of my job is to ensure Ministers understand how the industry will react in such uncertain times and what the implications are for government housing aspirations in both the short and medium term Most importantly they need to understand that homebuilders owe a duty of care first to our shareholders staff and customers – we are not in business to deliver government targets at any expense nor to meet government social policy objectives. Indeed if govt wants us to remain an integral part of that process it must ensure it aligns our interests in the long term far better than it has hitherto That said I also need to ensure that Government looks beyond the short term economic hiatus which will inevitably lead to declining housing starts and completions this year and continues to focus on the policies required to deliver homes in the medium term When the economic cycle changes for the better – as it surely will – and with that the demand for homes increases again we need to be able to meet that demand To do that we need an environment based on certainty to enable proper business planning to proceed. One of my biggest concerns is the growing costs of regulation. Government needs to recognise that it cannot continue to pile additional regulatory burdens onto homebuilders without a long term adverse impact on our capacity to deliver the very stretching volume targets it has set – always assuming of course that the planning system ever delivers sufficient planning permissions in the first place !! Objectives for Affordable Housing, Zero Carbon Homes , CIL and all the other items on the governments shopping list do not come cheap. Our business model is predicated on development realising value for both landowners and builders. Looking ahead and attempting to estimate the cumlative costs of all these items the simple fact is that more and more sites will simply not be viable at all or generate a land value sufficient to tempt owers to sell. And in order to achieve its long term housing aspiration of building around 250000 homes each and every year the hard truth is that more land will be required – at least 30% more if current densities of around 40 hectare are maintained and even more if densities drop back as I expect they will. So in my opinion the government faces some tough choices. If it is serious about achieving its housing numbers what is it prepared to sacrafice from its ever growing shopping list of demands. They may need to re-examine the approach to the provision of affordable homes - a hard choice for a Government committed to expand social housing, but essential if we are to make progress on total housing numbers. They need to seriously revisit their Lifetime Homes agenda and question whether the costs of redesigning all new homes by 2013 is the most effective way of meeting their inclusion aspirations – a hard choice with single issue pressure groups breathing down their necks. They need to ensure that the parameters of the new Community Infrastructure Levy are tightly drawn and set at a realistic level – and not allow local authorities to view homebuilders as unlimited source of cash. A tough choice when localism is political flavour of the month and local elections are in the offing In the same vein, Caroline Flint must resist the fashion to nod towards the green lobby with an uncosted and unsustainable free-for-all on zero-carbon – and recognise the realities of what can be achieved in a cost effective manner Our role is to point out the tough choices and point up the need for sound long-term strategy if we are to achieve effectively. We need a sensible, joined up debate with Government about how the range of policy demands and regulatory pressures on industry can be managed coherently to create a space in which there is a real business opportunity for firms to move into. And the Government as part of this must recognise that it cannot achieve what it wants without the private sector or at its expense. To give you some examples - those of us serious about delivering zero-carbon homes – and make no mistake we as an industry are serious about this – support the early establishment of an industry run 2016 Delivery Body to tackle the practical barriers we face. We need this to develop successfully a mass market for homes meeting zero carbon standards – looking in depth at consumer attitudes, supply chain issues, and strengthening our engagement with the energy supply industry and other partners. Indeed one of the few bright spots in yesterdays Budget was confirmation that the Government is setting aside some cash to fund in part this Delivery Body And on planning, we need to convert carefully-crafted planning policy into highly effective planning delivery. New Labour’s constant critique of Whitehall and Town Hall alike was that it lacked the cutting edge of delivery needed to modernise Britain. After ten years in office , however, the figures speak for themselves. FAILURE on the part of local planning authorities to meet targets, FAILURE to respond to Government deadlines, FAILURE on the part of regional spatial strategies to identify sufficient land to meet future housing demand. The answer is not to ‘loosen up’ local authorities, turn a blind eye, or take Ministerial hands off the levers of change in the name of localism. Rather it is sustained, effective action for the longer term – with more carrot and even more stick – to ensure that local planning authorities are not let off the hook. Looking even further ahead the other major issue I have called on Government to grasp is future strategy on land use. Given the often conflicting demands of development, climate change mitigation, transport, energy infrastructure, biofuels and much else we need a clear long-term vision on what land we use for what purpose. Without such a strategy we will again be creating uncertainty rather than assisting delivery for our future Above all else we will fail to properly plan to meet the needs of our growing population yet again There is much in what I have said that is challenging for us as well as Government. And if I sound a little exasperated let me tell you why. Britain needs new homes. Better quality homes. Homes this industry is proud to have been providing to higher and higher levels of customer satisfaction and design for many years. Homebuilders want to continue to meet that customer demand. The one thing we need from Government of any colour above anything else - to perform our day jobs effectively – is for them to perform theirs. We need them to act now to respond to the short-term pressures we are all facing and restore confidence in the market. We need them to be realistic about their ambitions for contributions from development land to ensure the cost base does not become a major barrier to supply. We need them to remain resolute in driving through improvements to the planning system and business climate for the long-term to ensure the land supply future homebuyers will need. And we need them to think even further ahead to ensure we can provide homes for generations to come .
