Meeting the UK's Housing Demand Report Published

The purpose of the inquiry was to understand what the requirements and demands were for new housing in the UK and to recognise the potential barriers to delivering this housing. CIOB submitted evidence to the inquiry which can be read here.

On 10 January 2022, the Committee published its report on the findings which can be accessed in full here. The report contains a series of recommendations to Government, which in the coming weeks will be analysed by the Department of Levelling Up, Housing & Communities (DLUHC) ahead of an official response which we expect to be published in late February.

The policy and public affairs team have digested the report and detailed some of the key takeaways below:

1. SMEs

In our response, we acknowledged that while volume housebuilders play a crucial role in delivering large scale housing projects that significantly contribute to regional and national housing targets, there is a part to play for SMEs in delivering, smaller, more constrained sites. However, in recent decades volume housebuilders have come to dominate the market with SMEs now only delivering around 12% of homes built.

This is problematic as an over-reliance on larger housebuilders has a significant, and often negative effect on national housing supply. The Committee agreed with this perspective, recommending that Government further supports SMEs through a number of measures including reducing the planning risk by making decisions more predictable and reducing delays, increasing access to finance by working with lenders to encourage them to provide more support in commercial terms and by making more small sites available.

Alongside the Committee’s recommendation to make smaller sites available is a suggestion that the Government pursues a wider adoption of the ‘master developer’ model which has been recently used by Homes England on their strategic sites. This opens up avenues for SMEs to work alongside larger developers and make use of their resources to gain new skills in sustainable development practices and should be encouraged by landowners with larger strategic sites.

2. Skills

On skills, we highlighted that improving the quality of, and access to, education and training is crucial to ensuring that there is a sufficient pipeline of qualified, professional workers who are passionate about careers in the built environment.

The Committee held the same view and the report highlights that this must be addressed in order to unlock the required development to meet the Government’s 300,000 homes per annum targets. To achieve this, it is recommended that Government broadens the base of talent by encouraging housebuilders to draw from a more diverse range of talents. At present only 4 per cent of trades roles are held by women and only 5 per cent of the construction workforce in the UK identify as BAME (Black, Asian and minority ethnic), this drops to 1 per cent among senior industry roles.

To assist Government in addressing this issue we have recently launched a special report and Charter on diversity and inclusion. The aim of the charter is to promote positive change with its five actions for improving diversity and inclusion. Employers that sign-up will see improvements in the diversity and sense of belonging in their organisations, helping to address the skills shortage increasingly affecting the sector.

The report and Charter can be accessed here. We were also pleased to see the Charter referenced in the Committee’s report as a positive driver for change.

Separately, the Committee highlighted the importance of apprenticeships in the built environment, noting a considerable fall in the number of apprenticeships being undertaken since the introduction of the Apprenticeship Levy. Some larger construction firms are currently paying two levies (the Apprenticeship Levy and the CITB Levy) which is creating a financial burden as opposed to greater opportunities to invest in apprentices. With so many funding pots available, access to finance is made more complex for SMEs, many of whom may not have the resources available to negotiate these. The Committee rightly recommends the Government reviews the Levy as a system to encourage organisations to take on apprenticeships to ensure a consistent stream of skilled workers join the sector.

3. Planning and Local Planning Authorities

Despite planning reforms taking a backseat as the front bench of Government deals with concerns from backbench MPs in the home counties, it is still a potentially drastic change to the planning system that the construction sector must be aware of.

The Committee’s report calls for the Government to continue to pursue a reform of the current planning system by streamlining the planning process to remove unnecessary and time-consuming barriers which, at present, make increasing the number of homes built much more difficult. The Committee acknowledged that it is not currently clear what form the planning reforms will take, and Government must set out a strategy that ensures that the Local Plan process is clearer and quicker. Not only will this provide certainty for housing developers looking to invest in a local area but will also allow for the planning process to become more streamlined as allocations in local plans allow for sites to progress at a quicker pace. A plan-led system also means that local authorities can take a strategic approach to development to create communities with ample facilities to serve current and future residents.

The report also recommends that local authority planning departments are provided with a greater investment and resource allocation as currently understaffed planning departments are struggling to deal with the number of planning applications which will only be exacerbated if local authorities are required to deliver more housing per year.

4. Housing Demand and Types

Our evidence to the Committee highlighted that there is a need to provide good quality homes in the right places, as opposed to simply focusing on quantity of homes. This point was echoed in the Committee’s report, highlighting shared concerns about the quality of conversions from office to residential properties delivered under the Permitted Development Rights (PDR) regime. It is acknowledged that the Government has recently taken steps to impose minimum standards for PDR conversions, however, if these minimum standards do not go far enough to address the significant quality issues the Committee has recommended that the Government should not hesitate in introducing stricter rules.

We were pleased to see that the Committee shared our viewpoints across a number of issues in relation to meeting the UK’s housing demand. We will now await the Government’s formal response and provide necessary input and advice on how to increase the quantity and, most notably, the quality of homes in the UK.

The Committee’s formal report can be accessed here.