As the party conference season kicks off, Building looks at what the political parties are saying on the key areas for construction
The best way for the UK to build its way out of looming crises such as climate change and population growth is to take the party politics out of infrastructure planning, according to a new report by former London Olympics supremo Sir John Armitt.
Last week’s report, commissioned by Labour leader Ed Miliband and shadow chancellor Ed Balls, concludes that the country should end decades of dithering on infrastructure by establishing an independent infrastructure quango.
Appointed by both government and opposition parties, the body would seek to end the rowing provoked by short-term electoral goals by assessing Britain’s long-term needs and closely monitoring the government’s progress.
So with the party conference season about to kick off - starting with the Lib Dems’ get-together in Glasgow, which begins this weekend - Building takes a look at how much political consensus already exists, first in three of the main infrastructure sectors covered by the Armitt report and second, in other key areas of construction.
Perhaps given the sheer difficulty of tackling climate change, there is now a remarkable degree of political consensus over new nuclear power stations in the UK with both Labour and the Tories fully behind their development. In February shadow energy secretary Caroline Flint said nuclear had a “vital role to play as part of a more sustainable, balanced and low-carbon future energy mix”.
Conservative leader David Cameron has invested a lot of political capital in nuclear power, having personally signed an agreement with France to work together on its development, and even “green” Tory Tim Yeo supports the development of new nuclear power plants. The Liberal Democrats meanwhile have traditionally opposed nuclear on principle but, as part of the coalition, the party has agreed to support new plants as long as they are not subsidised by the taxpayer. At its conference, members are due to vote on a policy paper which could lead to this stance becoming the party’s long-term policy position - potentially a historic change for the Lib Dems.
For now there is a consensus, at least at the national level, on HS2, with the coalition parties and the Labour opposition all committed to the £43bn high-speed rail project. However, this belies the levels of opposition at the local level, where MPs and councillors of all main parties can be fiercely opposed - especially in the Tory shires where the line will pass through between London and Birmingham. With the cost of the project recently revised up from £33bn- and a leaked Treasury briefing suggesting it could in fact run as high as £73bn - pressure on the project is growing.
Last month shadow chancellor Ed Balls warned there was “no blank cheque” for the project, and Labour would withdraw its support if the costs did get out of control. Balls’ comments followed increasingly sceptical public statements by other senior Labour figures previously in favour of HS2, including Lord Mandelson, a former business secretary, and Alistair Darling, who approved the project while he was chancellor.
Even Lib Dem business secretary Vince Cable recently said the case for HS2 had “yet to be made”. Taken together these are signs that the national consensus could fracture, putting a project already hugely important to construction consultants in peril.
Airport expansion in the South-east is such a politically divisive subject that many in all three parties will be relieved that the issue won’t be properly tacked by politicians until after the next election given that the government-commissioned Howard Review into the issue won’t report until 2015.
At last year’s conference, the Lib Dems voted against expansion of any major London airport and against the idea of a new one in the Thames Estuary with business secretary Vince Cable promising that Heathrow expansion “is not going to happen while the Lib Dems are in government”.
The Conservative leadership is thought to have warmed to the idea of a third runway at the UK’s largest airport Heathrow, despite ruling it out in its last election manifesto. However many Tories in the capital - not least London mayor Boris Johnson - remain implacably opposed and instead back either a new aiport in the Thames Estuary or expansion of other existing airports such as Stanstead. Other Tory backbenchers simply want a quick decision on how to increase airport capacity and suggest the Howard Review could come up with a preferred option in its interim report, expected before the end of the year.
The last Labour government pushed for a third runway at Heathrow but shadow transport minister Maria Eagle has now ruled this out, along with a new airport in the Thames Estuary. Labour is now thought to be keen on the idea of expanding Gatwick instead.
Housing is likely to be a key battle ground in the lead up to the next election. Chancellor George Osborne made his housing market stimulus, in the form of the £130bn Help to Buy mortgage guarantee scheme, the centrepiece of the budget in March. This has had an immediate effect on the market, with prices rising at their fastest pace in seven years, yet there is scant evidence yet that this is translating to a big increase in supply. Indeed, the fear is that Help to Buy will lead to another housing market bubble. In the spending review in June, the coalition also set out plans for a £3.3bn programme to deliver 165,000 homes over three years. However, the programme actually amounts to more of the same on the 2011-15 allocation of £4.5bn over four years, and is a huge reduction on the level of funding committed by Labour, with £8.4bn spent in 2008-11. Indeed, there remains a clear difference here between the coalition and Labour, with the latter wishing to stimulate the economy with a £10bn housebuilding programme funded by a short-term increase in borrowing - something Osborne has steadfastly refused to countenance.
Labour has also said the proceeds of the auction of 4G mobile phone spectrum should be used to fund a £3bn programme of housebuilding, while in June leader Ed Miliband outlined plans to tackle land hoarding with developers to be fined it they don’t build on land with planning permission. The party is also exploring new ways to enable councils to build more homes.
In recent months, Liberal Democrat leaders such as Vince Cable and Simon Hughes have spoken for the need for a massive increase in housebuilding but have been vague about how this should be achieved other than through existing government policy.
The Tories remain wedded to the success of the Green Deal - the party’s flagship green policy developed in opposition - as a method for improving the existing building stock. How the scheme fares over the next 12 months is likely to dictate whether the party will further incentivise the scheme before the election.
The Liberal Democrats had no policy on retrofit at the last election but, in government, have been supportive of the Green Deal and, at the party conference, are set to vote on a policy paper on a whole raft of incentives to drive uptake.
Labour has been very critical of the Green Deal’s slow roll-out, although it backed a similar “pay as you save” scheme at the last election. In June, shadow energy minister Luciana Berger said the Green Deal was simply not a good deal for the public as it stands. The party cares most about the scheme’s ability to lower fuel bills and benefit low income households so could alter the Green Deal to boost this market should Labour win power.
Labour has attacked the government for scrapping its £55bn Building Schools for the Future programme and replacing it with the £2bn Priority School Building Programme (PSBP), with shadow ministers also criticising the series of delays to the PSBP. Labour, however, has offered little in the way of an alternative. Given the necessity for cuts to continue over the next parliament, Labour will shortly need to set out how it intends to fund school building programmes at a level over and above what the government is currently delivering.
One area where there is a clear line between the Conservatives and both Labour and the Lib Dems is free schools, a flagship policy of education secretary Michael Gove but opposed by the opposition and Lib Dem party members, both of which argue that free schools are a waste of scarce resources. Labour has said that if it is elected in 2015 it will not open any more free schools, but instead expand the academies programme, promising academies and local authority schools more autonomy. However, given that free schools are such a small part of the construction market, the real questions about the future of school building, including to what extent this may involve private finance, have yet to be answered.
On the eve of the three main party conferences, Building asked seven leading industry organisations what they would say if a political genie in a bottle offered them three policy wishes.
1. Stimulate home improvement market by cuting the rate of VAT to 5% on this.
2. Boost housing by eliminating affordable housing contributions on very minor developments to increase SME building, lifting borrowing cap on local authorities to aid council homes and committing to introducing flexible Community Infrastructure Levy (CIL) charges according to the size of the site.
3. Improve energy efficiency by investing £4bn per year - the equivalent funds collected from carbon taxes - into the mass retrofitting of the UK’s existing homes or alternatively introducing variable council tax or variable stamp duty to encourage homeowners.
1. Boost infrastructure by focusing on smaller repair and maintenance jobs, giving long term certainty through a project pipeline adequately funded by the public sector and creating public/private partnerships to deliver the largest schemes such as HS2 more quickly.
2. Address housing shortage by doubling target for releasing public land for residential use, increasingly investment in social housing and private rented sector and guaranteeing quality in the latter through new regulation.
3. Improve the construction sector by reforming procurement practices to reduce red tape and help SMEs, which could be further assisted though better communication of routes to finance and the pipeline of public work.
Home Builders Federation (HBF)
1. Further improve the planning system by allowing NPPF time to work, tackling the problem of the over-use of planning conditions which delay construction and ensuring more land availability for housing development.
2. Develop a long-term plan for the managing the future of demand side stimuli such as Help to Buy and Funding for Lending to provide better clarity to industry.
3. Deliver on present government’s commitment to reduce regulation and regulatory costs, particularly in relation to Part L of Building Regulations and housing standards.
Association for Consultancy and Engineering (ACE)
1. Secure vital infrastructure improvements by de-politicising infrastructure along the lines of the Armitt review and having all parties back the principles behind the current National Infrastructure Plan plus ensuring more long-term funding settlements for infrastructure-focused public bodies such as Transport for London (TfL).
2. Tackle the looming gap in housing supply - estimated by ACE to be a shortfall in homes of 886,000 by 2021, equivalent to two cities the size of Birmingham.
3. Back SMEs by fully tackling payment issues and lending constraints in the market.
1. Introduce minimum space standards for all new homes
2. Develop a cross-cutting built environment design policy, implemented by new minister and chief built environment design adviser with a cross-government role in the Cabinet Office
3. Bring in a requirement for publicly funded projects to use design review
UK Green Building Council
1. Drive Green Deal, ECO and other retrofit work by introducing differentiated stamp duty.
2. Boost standards in domestic and commercial sector by properly implementing minimum energy performance standards (MEPS) regulations.
3. Commit to existing zero carbon timetable by implementing robust Allowable Solutions such as off-site renewable.
Civil Engineering Contractors Association (CECA)
1. Create a long-term model for planning nationally important infrastructure by all parties agreeing to work together
2. Bring in certainty over the development of roads by securing Royal Asset for the forthcoming Bill to convert the Highways Agency into a publically owned company.
3. Break the deadlock for UK nuclear new build, releasing the first of a new fleet of next generation nuclear power stations.