Construction can now boast a return to growth thanks to this government’s focus on capital projects, and one happy consequence will be more homes built to greener standards
Five years after the boom ended in a catastrophic bust, and after four years of very rough bumping along the bottom for the economy and for the construction sector in particular, a little excitement at an unexpectedly cheery 0.9% growth in activity in the last quarter is surely legitimate. Design offices report a flush of work. The figures for housing starts have started to climb. There are clear signs that the money channelled into infrastructure projects is at last producing “on the ground” projects at scale.
That is excellent news, and the government deserves credit for facing down critics of its efforts to refocus on capital projects at the expense of unsustainable borrowing for day-to-day spending. And its various schemes to underpin the private housing market are clearly beginning to work. Oddly, another coalition government initiative to boost construction - perhaps the most important - has been almost entirely unsung so far. That is the coalition’s reversal of the persistent loss of social housing stock. As plenty of analysts have pointed out, every previous serious expansion of housebuilding has been led by public sector investment in social housing. For the last 60 years the private sector has followed, not led, the industry. Now it is again.
I’m delighted the government’s £4.5bn social homes programme will leave us with more social housing at the end of this parliament than there was at its beginning. That reverses the previous steep falls, starting in 1980 with Right-to-Buy, and continued throughout Labour’s rule (when 440,000 homes went). It’s not just the 180,000 extra homes that are important, the new policy of replacement one-for-one of all those being sold off is vital too.
This is real
There are still plenty of Jonahs, of course, who say it’s just another unsustainable housing bubble; or it’s not really happening at all; or who simply lament all the “lost output” since 2008.
There are still plenty of Jonahs, of course, who say it’s just another unsustainable housing bubble; or it’s not really happening at all; or who simply lament all the ‘lost output’ since 2008
First, what is happening is “bricks-and-mortar” real. It is certainly not just a dead-cat-bounce or a statistical blip. Even the bleakest critic will soon have to concede that. But is it sustainable? Not if it simply relies on us all borrowing up to the hilt to do so. That’s just what happened under Labour in 2008, and just what the government is determined to avoid.
Ultimately, securing sustainable and steady growth will depend on how successful the country is at rebuilding our international trading position. That in turn depends not just on success at expanding our sales abroad (including extending a very successful record of selling UK building design and construction services overseas), but also on some imponderables about the future of the global economy.
There’s some good work being done to encourage businesses to get into exporting and growing overseas. I’ve been impressed with the quality of UK Trade and Industry’s export fairs and seminars, and heartened to see that design companies have been enthusiastic participants at them. Firms are keen to learn how to make their skills and products relevant and competitive. There is money to be made exporting, and a lot of very professional back-up available for any UK company that wants to take advantage of it.
Better still, the signals from the global economy are switching from red to quite a green-tinted amber. So, yes, if we don’t learn the lessons of 2008 it could all go wrong again, but it is now looking less likely that it will go wrong, when a year ago it looked almost inevitable that it would.
A chance to do better
Of course the bust did huge damage. Jobs were lost, firms closed, the production of new homes slumped, and the whole sector has been having its worst ever time since the last worst ever time. As a worker in, and a keen observer of, the sector for over four decades I regret the damage, but it is time to look on the bright side. There is a silver lining. Or at least a green one.
The huge slowdown in building meant that fewer homes were built to the lower pre-2010 standards. We still need those homes, so when they come, they will be more energy efficient
The huge slowdown in building of all sorts meant that fewer homes were built to the lower pre-2010 performance standards than anyone planned. We still need those homes, so when they come, they will be more energy efficient than they would have been. By my calculation, that will give us at least 250,000 new homes performing 25% better than they would have done. You may sneer that they’d all got permission under the old regs anyway, but that’s not true either.
The planning pipeline was turned off almost completely, and now the developers’ rush is to get their permission before the next upgrade to Part L. That, of course, would have brought even greater benefits if it had been announced in time for this October instead of being delayed to next spring. Even so, it means some homes will be two upgrades better than they would have been: 2014 standards, not 2008.
Yes, the bust brought some terrible losses, but it is also bringing us more, greener homes.
Andrew Stunell is Lib Dem MP for Hazel Grove and a former minister responsible for Building Regulations