Prime minister pitches in on policy as housing minister Keith Hill tells firms they must embrace modern methods

Housebuilders came under increased fire from the government this week, with Tony Blair and housing minister Keith Hill calling on them to embrace reform.

The speeches add to a turbulent month for the sector in which it has endured brickbats from critics, including CABE, and has felt the regulatory burden increase – notably with European Union rules over the procurement of social housing.

Blair, who made his comments during a speech at the University of London, said a policy shift was necessary to address the problems of housing and that the quality of developments needed to rise. He said: “The forthcoming housing strategy will show how to provide pathways into home ownership and improve social housing.”

Hill made his critical contribution on Tuesday in the keynote address at the Future Homes conference in London, sponsored by Building. Hill said: “The industry needs to build houses more quickly, more efficiently, and more sustainably” – and he urged the sector to embrace modern methods of construction to make sure the government’s housebuilding targets were achieved.

He said: “We have a historic opportunity to work together.”

Hill added that Gordon Brown, the chancellor of the exchequer, wanted to be at the conference but could not make it. Brown had wanted to reaffirm the government’s commitment to working with housebuilders to achieve joint aims

Blair’s criticisms came as the government finally bowed to EU pressure to reclassify registered social landlords (RSLs) as public bodies. The effect of this will be that developers must comply with EU procurement rules on social housing projects.

This has caused alarm among housebuilders because they fear it could lengthen the tendering process, as all contracts above a certain value awarded by RSLs must be advertised throughout the EU.

Housing expert Roger Humber attacked the process as having “clear and adverse implications” for housebuilders. He said: “The new rules could add six months to the tendering process, as well as increasing administration costs.”

He added that informal partnerships between developers and RSLs would become a thing of the past.

Legal firm Trowers & Hamlins has received a number of calls from RSLs and housing developers complaining about the changes. Partner Charles Morrish said: “The government really needs to address the situation, as at the moment it’s a bloody mess.”

The industry needs to build houses more efficiently

Housing minister Keith Hill

CABE also dealt another blow to the industry by calling recent developments in the UK “mediocre”.

CABE made the comment in an audit of 100 new-build housing schemes across London and the South-east. The report said the designs of 22% were poor, 61% average and 17% good or very good.

The authors of the report accused developers of “following the path of least resistance” in conflicts with local authority planning departments. It said this stifled creativity and the design quality of projects. Developers also came under attack for their choice of materials. The report said firms rarely used local materials that added character to a development.

Richard Simmons, CABE chief executive, urged buyers to demand higher-quality homes. He said:

“The best design must become the norm. None of us should settle for mediocre.”

The Office of the Deputy Prime Minister added to the overall gloom when it refused to deny rumours that the proposals for Planning Policy Guidance 3 (PPG3) will give local authorities powers to dictate the size, type and affordability of most developments.

Richard McCarthy, the ODPM’s head of sustainable communities, appeared to discount the truth of these policy changes when he told the Future Homes conference: “People are working on leaked documents that are out of date.” But when asked if that meant that the proposal had been removed from the draft, he replied: “We are looking at the whole housing market.”

Under the proposals, councils could prescribe the exact details of a development before contracting a scheme out to developers, thereby preventing housebuilders from proposing schemes to planning authorities. McCarthy said improving PPG3 was essential to government policy.

The House Builders Federation argues that this will adversely affect the housing market and that it conflicts with the recommendations of the government-backed Barker review.

McCarthy added that the government intended to review how land was allocated and released for development. He said English Partnerships was about to conclude a deal to buy a 100-site portfolio of surplus land from NHS Estates. He said 20,000 homes could be built on this land.

Other conference news

  • Darren Richards, operations director of technology consultant Mtech, said modern methods of construction could now match traditional build techniques on cost. He said estimates for the 900-unit Ketley Millennium village in Shropshire, being developed by Taylor Woodrow, showed steel and timber frame construction could save 3%.
  • Richards also said that the application of innovation in the housebuilding sector may be held back by the length of time it takes to get accreditation for new technology.
  • Economic forecasters Douglas McWilliams of CEBR and John Wriglesworth of Hometrack predicted that the housing market would make a “soft landing” next year rather than suffering a repetition of the early 1990s.
  • Wriglesworth forecasted a narrowing of the North–South house price divide.
  • McWilliams said the UK was near the top of the interest rate cycle – he predicted that there may be one more rate rise ahead.
  • McWilliams added that commodity prices would continue to rise.