Spending Review: Reaction

Chancellor George Osborne delivered his 2015 Spending Review and Autumn Statement earlier today. Planning will be publishing reaction from across the planning sector as it happens.

Chancellor George Osborne
Chancellor George Osborne

Paul Miner, planning campaign manager at the Campaign to Protect Rural England (CPRE), said: "Although we welcome a focus on brownfield development, we’re wary of moves to develop brownfield sites in the Green Belt - many Green Belt sites classed as ‘brownfield’ contain a lot of valuable open land, often historic parkland, which should be kept undeveloped. The Chancellor wasn’t clear on the implications of the ‘delivery test’ for local authorities on housing, but we’d remind him that most housing targets are undeliverable because of the reliance on private sector builders to meet the targets set. A delivery test should therefore apply to developers and the Government - through providing necessary supporting infrastructure funding - as well as local authorities. We also remain keen to hear more about the previously promised £1 billion Brownfield Fund, and would like to see a greater emphasis on local consultation and neighbourhood plans."

Antony Pollard, director at Turley, said: "The planning system was given only briefly albeit with an assertion that further reforms will be forthcoming with the express aim of contributing to achieving a boosting of the supply of housing. This includes a new delivery test on local authorities, to ensure delivery against the number of homes set out in Local Plans. This represents a further potential ‘stick’ for under-performing authorities alongside the implications of failing to identify a five year supply of deliverable land. Direct reference was made to the re-use of unused employment land to enable the delivery of affordable Starter Homes. Interestingly this includes previously developed sites in the Green Belt, with sites being treated as brownfield land from a planning perspective as long as they incorporate starter homes. This represents an important opportunity to enable development of houses in areas which to date have been heavily constrained albeit support will still be required from local communities. This is not the quick fix it seems as sites can be more expensive to develop, for example due to access or contamination."

Vicky Fowler, partner in the planning and environment practice at law firm Berwin Leighton Paisner, said: "The Chancellor has taken a major step to release swathes of land for residential development with the move to release land which has been allocated for retail or commercial but has not been developed. This could be a hugely important move because it effectively creates a presumption in favour of residential development, as long as that land contributes to starter homes. The measure would overrule a local authority’s local plan, meaning that if a council has not been able to attract investment for retail or employment then it is opens the door to residential development. The impact of this policy could be highly significant in bringing forward good quality land for housing. The reference to Government help is a clear signal for great involvement of the HCA and more direct commissioning as is proposed at Northstowe. The extra funds will be used for kick-starting developments through the continuation or expansion of HCA funds that have already successfully helped to get development under way. The focus will be on delivering starter homes as quickly as possible. The removal of restrictions on shared ownership seems to be a push to align this tenure type with the starter home initiative. In particular, it means removing the insistence that registered providers such as housing associations or local authorities retain control over this tenure."

Melanie Leech, chief executive of the British Property Federation, said: "While there are some really sensible suggestions in today’s announcement, the planning system still has one big problem – the lack of resources in local authority planning departments. Both the private and public sector have identified this as one of the biggest obstacles for development, and with the private sector willing to discuss how it might be able to plug the funding gap, it is frustrating that Government has not engaged on this matter."

On news that the government will amend planning policy to ensure the release of unused and previously undeveloped commercial, retail and industrial land for Starter Homes, and support regeneration of previously developed, brownfield sites in the greenbelt, by allowing them to be developed in the same way as brownfield sites elsewhere, providing it delivers Starter Homes, Leech said: "Whilst likely to raise howls of indignation from some quarters, this is a very sensible step. This change will put a stop to endless battles in the planning regime and will help bring forward the Government’s intended 200,000 Starter Homes. The sites that will be eligible for this will not be lush green fields, but rather disused scrap yards and car parks which happen to sit within the Green Belt, and which are calling out to be more productively used."

On the establishment of a new delivery test on local authorities, to ensure delivery against the number of homes set out in Local Plans, Leech said: "Local Plans are the key to sustainable development, and this is a welcome move that will ensure that local authorities really do concentrate on growth for their area and that their local plans are focused on delivery and the practicalities of housing the population. The lack of resources afflicting local authority planning departments is an issue, and if authorities can keep their local plans kept short and sharp, they will help themselves."

The proposals to release public sector land with capacity for 160,000 homes representing a more than 50% increase on the government’s record in the last parliament, Leech said: "The release of public sector land is always to be welcomed, and it is good to see this taking place. The homes that are brought forward on these sites must be serviced with sufficient infrastructure and will ideally have homes for sale and for rent, to ensure that they contribute to mixed, vibrant communities."

On news that the government will bring forward proposals for a more standardised approach to viability assessments, and extend the ability to appeal against unviable section 106 agreements to 2018, Leech said: "A lot of disagreement between local authorities and developers arise due to viability assessments, and so the move towards a standardised viability model should go a long way to solving some of the disputes around development. It is an enormously important step and we are delighted to see it taken forward. The model must be sure to take into account the needs of the Build to Rent sector as well as the more traditional development approaches."

John Hicks, director and UK Head of Government & Public, AECOM said: "Given the urgent need to house the UK’s current and future workforce, we welcome the initiative to build 400,000 affordable homes and the Chancellor’s response to the difficulties faced by the shared ownership sector following the changes to Right to Buy. Government investment in Ebbsfleet Garden City and other schemes will further fuel housing growth. However, accelerated home ownership must not come at the expense of the affordable rental sector. History shows that supply has only increased through a balanced, multi-tenure approach. We would therefore like to see greater focus on extending the breadth of development players and encouragement for new entrants. Importantly, homes must be built where there is demand. Building housing in line with infrastructure investment and development is the key to creating communities where people want to live and work. Greater emphasis on sustainable, long-term planning of infrastructure to underpin economic growth is now needed."

Claire Dutch, partner, in Hogan Lovells' planning practice said: "It is no surprise that housing is near the top of the government's priorities. It is also no shock that the government has continued with its obsession about home ownership, introducing different products to enable people to buy their own homes. Build to rent seems to have fallen by the wayside. This is remarkable given that surely the greatest priority should be to get new homes built, regardless of their tenure. The Housing and Planning Bill is presently going through parliament. It is odd that the government is already proposing, before that Bill is passed, another set of major planning reforms relating to public land release and starter homes, which could have usefully been included in the current bill."

Jon Suckley, partner, HOW Planning said: "The Autumn Statement was sprinkled with initiatives to improve home ownership and housing delivery. The Chancellor has made a commitment to build 400,000 new affordable homes of which 50% are to be starter homes. This commitment provides further strength to the proposals contained in the Housing and Planning Bill published in October of this year which outlines that the Government intends to create a legal obligation on Councils to provide 200,000 new starter homes. The introduction of starter homes is now gaining real political traction and it is understood that starter homes are defined as new build homes available at 20% of the open market price only to first time buyers under 40. £2.3 billion will be given to house builders to deliver starter homes and housebuilders, developers and planners are very interested to understand the full detail of this initiative which has yet to be published. The Chancellor’s proposals to remove the current restrictions on who can buy a home through shared ownership will also be welcome and will contribute to improving levels of homeownership. Help to buy Shared Ownership will allow anyone who has a household income of less than £80,000 outside London and £90,000 inside London to buy a home via this means."

Janet Askew, president of the Royal Town Planning Institute, said: "Putting housing at the heart of the country’s economic planning is good news but the focus on overall numbers, when we need balanced communities in our cities and towns, is worrying. We need a range of different housing types which are affordable to rent and to buy. We also need to be realistic regarding the ability of local authorities’ planning teams to deliver these housing initiatives under the current funding arrangements. But the drive to build presents a good opportunity for city, county and district leaders to ensure that planning is at the heart of all they do and is integrated with transport, health, environment and business to ensure not just housing, but economic growth and social well-being are delivered holistically for people."

Steve Perkins, director of urban development at the global construction consultancy Turner & Townsend, said: "At times the Chancellor’s flurry of announcements came close to sounding like a developer’s charter. The relief from Britain’s housebuilders is palpable – and these measures will make it easier for developers to get both the money and the land they need to build. But there is still the awkward question of what will happen when the surge of new building unlocked by these measures collides with the lack of capacity – both in the construction industry itself and in the planning process. As demand from developers increases, the shortage of skilled workers is likely to drive up construction costs, and stretch planning authorities – already pared back by local government austerity – to the limit. Britain’s construction industry has already made great strides in increasing levels of housebuilding, and while these measures will give it a much-needed stimulus, they don’t remove all the structural barriers that have for too long prevented it from meeting demand."

Richard Laudy, head of infrastructure at Pinsent Masons, said: "The Chancellor has set a bold five year plan on the UK Government's fiscal policy – it is ambitious and welcomed but there still remains an elephant in the room, specifically, how are we going to pay for it?.The UK Government intends to raise capital through budget cuts and a lightweight asset sale programme recently announced to fund infrastructure projects. However, capital raised by these measures are a mere drop in the ocean when set against the £500bn infrastructure deficit we currently have in Britain. Therefore, the infrastructure deficit will need to be plugged by private finance. As the Chancellor said, the recent Arcadis survey puts the UK in the top ten nations in the world as the most attractive places to invest in infrastructure. There are plenty of investors looking favourably at the UK, that is not the problem. But they all have one thing in common: they will all want a return on their investment and someone has to pay for that. The challenge is not the finance, but the funding of the finance. With the Government still working to pay of a massive fiscal deficit, ultimately the public will have to pay, through taxation, far increases and/or higher utility charges. That tricky but fundamental question has yet to be addressed. The interesting thing about the Autumn Statement is not so much what is said, but what is not said. There is still no major announcement in respect of funding models and structures, despite the UK’s undoubted attractiveness as an investment destination. We expect there will be some tough and potentially unpopular decisions to be made by government over the next five years. This could lead to some very controversial and unpopular decisions and it will mean that the case for investment in infrastructure will need to be carefully articulated and the hearts and minds of the public will need to be captured. The newly formed National Infrastructure Commission is the best vehicle by which to make that case and it should be given the mandate to consider the funding models and structures that we need to deliver the vision. The easy bit is the vision; the tough bit is actually delivering. The naysayers will only be silenced when the shovels are in the ground. But there is the even trickier question of how to pay for the capital investment. Higher taxation to pay for infrastructure? I think that will be a tough sell to the man in the street."

Will Higham, director of Campaigns at business lobby London First, said: "Of course it’s good that the Chancellor wants to increase housebuilding. But these measures simply don’t go far enough. We need to double housebuilding in the capital, so that we deliver a minimum of 50,000 new homes each and every year. The impact of increased stamp duty on second homes will have some effect. The London Help to Buy helps on the demand side, but the root of London’s problem lack of supply. There’s so much unused NHS and local authority land that the government ought now to be using to create new homes, which could give a significant help to those in London struggling to find a home that’s actually affordable."

Stewart Baseley, executive chairman of the Home Builders Federation said: "The government is clearly committed to increasing both housing supply and home ownership. Measures introduced in recent years have led to a big increase in house building levels but the scale of the challenge requires further action to close the gap between demand and supply. The Chancellor’s announcements today will provide extra impetus to deliver further increases in housing supply. The industry has been gearing up to boost its capacity to a level where it can deliver the increases in housing supply that are so desperately needed. Over the past two years the industry has initiated a huge recruitment and training drive, taking on tens of thousands of new staff to achieve the 30 per cent increase in output seen over that period. Today’s announcement could lead to thousands of new jobs and apprenticeships created in the sector. Boosting home ownership and creating additional actual demand for new homes enables builders to invest in the people, land and materials necessary to accelerate supply. If buyers can buy, builders will build. Further reforms of the planning system to increase the supply of smaller sites, to ensure local plans deliver, and to increase the rate at which planning permissions are processed – as well as releasing more public land - would be a huge step towards speeding up the rate at which builders can build. Building more high quality homes will give more people of all ages access to their own home, and boost existing communities by providing improved infrastructure and amenities. Building more homes will also deliver a boost to the UKs economy, creating jobs and benefitting local economies in every area."

Chris Fry, managing director at consultancy Temple, said: "Today’s announcements reinforce the strong direction of travel for the UK’s infrastructure renaissance and also provide new impetus to housing supply.  The announcements also provide a fantastic opportunity for infrastructure and housing to be progressed hand in hand at many key locations, an example of sustainable development which can deliver tangible social and economic benefits. An integrated approach has to be more cost effective in the long run and should provide communities with 21st century transport and energy solutions built in. The trick now will be in how these infrastructure and housing projects are planned and implemented so that they add to the quality, and also the resilience, of our towns and cities"

Melanie Leech, chief executive of the British Property Federation, said: "This could be a seminal moment for the Government, and the start of a building programme that actually delivers. By committing billions of pounds to building new homes, Government is really putting its money where its mouth is, and has set itself some ambitious targets that it must not fall short of. Government must understand that new homes must be built in locations with good transport links, social infrastructure such as hospitals and schools, and leisure and employment facilities. Noone wants to live in a new house built in the middle of nowhere, with no shops, jobs or community facilities nearby. Great places are also those which have a variety of housing types to suit different demographics, and the Build to Rent sector must not be pushed aside in blind pursuit of making us a nation of homeowners. Today’s announcements mean nothing unless Government invests simultaneously in placemaking, and it must not be blinkered in its pursuit of new homes if it wants to create sustainable communities at the same time."

James Parker, associate director in the planning and environment practice at law firm Berwin Leighton Paisner said: "The benefits of infrastructure are sometimes hard to quantify, but it would seem like a real boon for the UK as a whole that this commitment to long term investment remains a central plank of the UK’s future. There were no immediate surprises in the Chancellor’s speech but the continued narrative in respect of infrastructure offers certainty for all those engaged in UK infrastructure. The cuts to government departments cast a question mark over how the public sector will deliver much of this planned investment. However the message to the world’s investment community was clear – investment in UK infrastructure remains a commitment of the UK administration."

Peter Tooher, director at Nexus Planning commented: "George 'the builder' continues to see house building as a key driver and the review marks a clear shift away from affordable to rent to affordable to buy. It will be interesting to see how the continued possibility of a full scale extension of Right to Buy will affect house building in that sector and whether the increasingly self-financing local authorities can step up and continue to play their part in planned housing growth. The emphasis on affordable to buy will, subject to the detail in the Housing Bill, be welcomed by the home building industry - a lot of section 106 agreements will be revisited in the months ahead."

Iain Gilbey, partner and head of planning at Pinsent Masons, said: "Today's announcements by George Osborne on housing as part of the Comprehensive Spending Review, appear to reinforce the UK government's commitment to delivering a wider variety and number of homes in its lifetime. Whilst we will need to understand better the extent to which the "new" funding is recycled or repackaged, coupled with the proposals in the Housing and Planning Bill, there are now a variety of opportunities to upscale housing delivery in the short and medium-term. The question is whether these initiatives will lead to genuine affordability for those currently excluded from traditional housing types - or delivered at a scale that will affect house prices and house price inflation, particularly in the South-East "hot spots". Many will argue that the UK Government has failed to grasp the delivery "nettle", in offering a compromise on the inclusion of housing, but only as a component part of other major infrastructure schemes, in Nationally Significant Infrastructure Projects (NSIP). The UK Government needs to consider moving housing within the NSIP regime. There is a clear imperative for central government to show strong political leadership in driving large-scale housing development in the national public interest. Without a national solution the government may fail to deliver. With the National Infrastructure Commission now launched, we need to see housing as a top priority in the commission alongside transport and energy storage. Without greater local authority and Department for Communities and Local Government resource and a cross-district or sub-regional approach to large scale housing delivery, and the agreement to large scale projects 'in principle", it will be difficult to see how these eye-watering numbers will, in practice, be delivered."

Trevor Ivory, planning partner at DLA Piper commented: "It is good to see that increasingly the building of new homes remains at the heart of Government policy. While this Government's reforms to the planning system have begun to address some of the barriers to delivery, many in the industry have long argued that much more public investment is needed if we are to achieve the numbers of new homes the country needs and so today's announcement will be widely welcomed. The focus on providing affordable housing to buy rather than rent reflects the Prime Minister's comments in his speech to the Conservative Party conference a few weeks ago and is a fundamental change from the more traditional focus on affordable rented housing. It is likely to cause real issues for housing associations and also leaves the Government open to the charge that it is not doing enough to help those for whom buying a home is out of reach, even with support. Further clarity is needed on how Starter Homes will relate to other forms of affordable housing provision. The inclusion of a legal requirement to provide Starter Homes in the Housing and Planning Bill has created a great deal of uncertainty about what this means for other forms of affordable housing that only have policy rather than legal support. The Government needs to be much clearer about whether it wants Starter Homes provided in place of other forms of affordable housing or as an additional requirement on house builders. If it is the former then housing charities and local authorities will cry foul. If it is the latter then the initiative risks jeopardising the viability of development at a time when the market is only just recovering in many parts of the country."

Jonathan Northey, real estate partner at DLA Piper, commented: "The Chancellor's commitment to promote measures to tackle the UK's housing crisis is positive and any assistance to substantially increase supply is to be welcomed. This announcement has finally shown how the Government proposes to make a large difference to the market and it will be very interesting to assess the details behind the headlines. One initial concern is how the 400,000 homes are to be procured. Any developer will tell you at the moment that the capacity in the construction market simply isn't there. So this injection of starter homes can only increase this problem. The changes may attract new entrants from outside the UK, but this takes time and will only solve part of the issue. There is a risk that these measures could drive up already high land prices and make development even more costly in the long-term. Unless the starter homes initiative is accompanied by measures to assist supply, such as a much needed review of the green belt and a big further influx of public land then there just doesn't seem to be the space to put these homes on the existing land available."

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