Government says SMEs are ‘indispensable’ after housebuilder's closure

The government is reforming the planning system to protect SME housebuilders, adding such firms remain an “indispensable” part of the UK housebuilding industry.

A spokesman for the Department for Levelling Up, Housing and Communities (DLUHC) made the comments in response to concerns over the closure of £33m-turnover Warwick-based builder AC Lloyd, which has shut its residential development arm following the call-in by the department of a 200-home application by the firm.

AC Lloyd Homes is understood to have shut up shop in the wake of the decision by housing secretary Michael Gove to call in the Leamington Spa scheme last month.

The firm had received outline approval for the job in 2021, along with a resolution to grant reserved matters approval from Warwick District Council at the end of last year.

The most recent accounts for the firm, published on Companies House, stated it had been expecting to start building work this year.

AC Lloyd’s decision comes amid increasing concern in the housing sector over Gove’s decisions to call-in several schemes on design grounds, the impact of his wider planning reforms and the health of the SME sector.

A report by the House of Lords Built Environment Committee last year found that SME housebuilders built just 10% of homes in 2020, down from 39% in 1988, while a recent survey by the Home Builders Federation found that 93% of SME housebuilders rated achieving planning consent as their biggest barrier to growth.

The DLUHC spokesperson said: “SMEs are an indispensable part of our housebuilding sector and we fully appreciate how important these businesses are to levelling up the country and building for the future.

“They have a vital role in making the housing market more diverse and resilient, and we are committed to ensuring the right support is in place.”

The spokesperson added: “The Levelling Up and Regeneration Bill (LURB) will support SMEs to build more homes by making the planning process easier to navigate, faster and more predictable, as well as reducing delays and costs for housebuilders.”

The government has previously said that measures in the much delayed LURB, such as those to replace Environmental Impact Assessments with a new slimmed down system, a reduced local plan formation timetable and National Development Management Policies, will result in a planning system that is quicker to navigate.

But Rico Wojtulewicz, head of housing and planning policy at the House Builders Association, which represents SME housebuilders, said that since abandoning former housing secretary Robert Jenrick’s original planning reform programme, the government had shown every sign of viewing SMEs as totally dispensable.

He added: “We’re clearly not indispensable to government, they’ve been dispensing with us since the planning reforms were ditched. Every decision has directly harmed SMEs.

“All our suggestions, such as for changing site size definitions in the planning process to reflect SME schemes, have been ignored. They don’t see it.

“Since Robert Jenrick left there’s been very little or no conversation with the industry. It’s no surprise that AC Lloyd is going. We’re seeing people leaving the industry all the time.”