The government’s switch to supporting housing associations shows policy is heading in the right direction, but construction needs more support in the face of Brexit
The lack of headline-grabbing policies in last week’s long-awaited housing white paper – no new funding, little relaxation of the green belt, and instead a host of small technical tweaks – led to the announcement being branded a “damp squib” and a “missed opportunity”. Even one of the more positive comments, from Family Mosaic boss Brendan Sarsfield, pleased at the thawing of recent icy policies towards housing association building programmes, was simply that “at least government is no longer going to get in the way”.
Sarsfield’s view, however, cuts to the considerable significance of the policy shift signalled – albeit quietly – by the white paper. The government’s move away from the dogmatic pursuit of home ownership, a central tenet of the Cameron-Osborne years, has been steadily trailed under Theresa May, and the white paper was its confirmation. Rowing back on the ambition to build 200,000 starter homes – offered at a discount to market rate to first-time buyers – frees councils to pursue greater diversity of tenure to meet affordable homes commitments. And rhetoric around support for housing associations, while lacking in finer detail, is streets apart from the last government’s roll-out of policy after policy that hamstrung their ability to build, along with that of the nascent private rented sector.
So the direction of travel, in terms of getting more homes built and addressing affordability, is the right one. This echoes similarly positive positioning from the government in another key built environment sector: infrastructure. Here, intervention has fallen short of the industry’s highest hopes (think of the lack of statutory independence for delivery watchdog the National Infrastructure Commission, and the delays over a verdict on Heathrow); but approval for Hinkley Point C and a £2.3bn fund to better link infrastructure with housing and regeneration has paved the way for delivery of some critical projects, and a steady work stream for the sector.
In more certain times, this tactic from the government might be deemed enough to ensure delivery of the built environment the UK needs. But amid the market uncertainty around Brexit, it leaves far too much to chance
In more certain times, this tactic from the government – setting the compass and then letting the market do its work, or “no longer getting in the way” – might be deemed enough to ensure delivery of the built environment the UK needs. But amid the market uncertainty around Brexit, it leaves far too much to chance. The Construction Products Association’s latest forecasts, published this week, predict paper thin growth for construction output for the next two years: 0.8% this year, and 0.7% next. Meanwhile, the UK’s biggest contractor, Balfour Beatty – where 10% of the workforce hold non-British EU passports – warned recently that if current skills shortages were exacerbated by clampdowns on free movement of EU labour, it would put at risk delivery of major infrastructure schemes like HS2.
The CPA’s forecasts predict a drop-off in commercial work as investors exercise caution around the UK’s long-term economic prospects, with this counterbalanced by growth in infrastructure and housing. With such precarious growth on the horizon for the industry, and so much riding on these two sectors of national priority for the built environment, there are two clear, interlinked arguments for greater government support – both for these sectors, and for the industry as a whole.
If construction, at 6.5% of GDP, grows, the economy is boosted – if not, obviously the reverse is true. Meanwhile, if the overall industry shrinks, its capacity to deliver in the two areas that the government is prioritising will be compromised. The UK will be left increasingly short of homes, and short of the infrastructure improvements that only become more vital in a more independent Britain.
A leaked document last week showed some of the priority sectors the government has identified for support under Brexit arrangements; so far, construction does not appear to be among them. Our Building a Better Brexit campaign will seek to change that. For the industry to deliver to anywhere near the levels required in areas like homes and infrastructure, it will need the support of a government that can smooth the way to post-Brexit realities over skills and materials. And one that will, away from the specifics of Brexit negotiations, be prepared to step in with detailed policy support if needed to help the industry deliver what is being asked of it against a backdrop of uncertainty.
Both in political set-pieces, like next month’s Budget, and in ongoing negotiations over transitional and permanent arrangements for Brexit, the government needs to be more alert to the challenges facing the sector, and have the understanding – and the agility – to help it respond.
Sarah Richardson, editor
This article is published in print with the headline “The white stuff”