Chancellor must use Budget to stop utility companies delaying housebuilding

The Housing & Finance Institute is calling on the Chancellor to introduce new Utility Direction Powers in this month’s Budget, in order to force utility companies to deliver connections to new homes on time.

The Institute also wants a new housing innovation fund to promote better and different ways of addressing the housing crisis – and calls for housing to be included as its own national infrastructure priority.

The Institute is submitting its initial findings to the Government today following a six-month pilot scheme that launched in response to failing water companies severely infringing the ability of private developers to build more homes.

Their report also calls for more transparency about what homes are being built and when, plus new independent arbitrators to bridge the gap between developers and utility companies.

Natalie Elphicke, Chief Executive of The Housing & Finance Institute, commented: “Too often new homes are being delayed by hold ups with utilities. Water, broadband and sewage connectivity is a particular problem, with some water companies completely failing to deliver what housing developers require.

“Our pilot scheme, set up because we knew this has been slowing down the rate of housing completions right across the country, has provided us with new ideas for fixing these issues and facilitating the completion of more homes at a faster rate.

“We are consulting on these proposals in our report today. Most significantly, we would like to see new powers for the government to force utility companies to connect new homes in a timely and business-like fashion.

“Infrastructure for housing is also at creaking point in some parts of the country. We won’t make the changes needed by doing things the same old way. That’s why we are calling for a new housing innovation fund to promote different and better ways of addressing the housing crisis.”

Stephen Hammond MP, chairman of the All-Party Parliamentary Group on Infrastructure, commented: “I welcome these clear and practical recommendations from the Housing & Finance Institute and urge the Chancellor to be bold at the Budget.

“The Government is in a position to make a very real difference to the rate of housebuilding by making some cost-efficient technical changes. By implementing the measures proposed by this pilot scheme we can go a long way to providing a framework for more homes being built faster.

“In particular, we need to find a way to get utility companies and private developers working more in sync. We cannot allow blockages to hold up the release of more housing supply in the way they are doing now.”

The scheme brought together senior industry, local council and government representatives from across the country including South East Local Enterprise Partnership, the Home Builders Federation, Laing O’Rourke, Anglian Water, Keepmoat Homes, Kent County Council and the Department for Communities and Local Government.

Its conclusions, broken down into eight core areas, are:

1. Better housing supply administration systems

a) To modernise public sector administration to provide publicly available real time supply chain information on what homes are being built and when they are ready to be occupied, as well as access to residential finance and measures of affordability.
b) To make better use of existing Land Registry information on land ownership.
c) To improve the completeness of Land Registry information by including all options to purchase land.

2. Better industry contact and booking information

a) Regulated utility companies to have single points of contact to deal with housing industry connections, including individuals by name, email address, phone number and role and that these should be easily accessible from the organisation’s website.
b) All works bookings to be made by open source booking systems.
c) Regulated utilities to be required to make available information about their costs to different types of market participants and also by area, for example by larger and smaller developers and by individual local council area.
d) Specific focus to be given to the more effective roll out of high speed broadband.

3. Effective technical mediation

a) The creation of Fast Track Development Mediators to provide technical and engineering support for developers to unblock site-specific housing infrastructure concerns.

4. Delivery arbitration

a) The establishment of a Housing Installation Code and Independent Arbitrator to address the business-to-business relationship imbalance between a regulated utility and a developer. This could be modelled on the Grocery Code.

5. Intervention

a) Utility Direction Powers: These would allow an authorised body (such as PINS or the HCA) or the Secretary of State to serve a direction order requiring a regulated utility company to be required to bring forward utilities to a site within a specified time period and providing a ‘take or pay’ guarantee to the utility company in the event that the homes do not come forward as expected.

6. Funding Innovation

a) A design and develop housing futures innovation fund to support and showcase different and best practice.
b) Local area funding plans to be agreed and prioritised for delivery with utilities. This could include ‘take or pay’ guarantees or advance funding for the installation of utilities works.
c) Homes & Communities Agency to develop an on-line triage process to developers to schemes that are open and relevant for them to apply for. This could be modelled on the HRMC Holiday Pay system.

7. Local infrastructure prioritisation

a) Improved assessment of infrastructure by reference to that which is essential to the delivery of housing (such as water and electricity, site flood or transport connections) and that which is about the broader delivery or sustainability of general public services.
b) A more dynamic and robust delivery programme for local infrastructure relating to housing. Particular consideration should be given to infrastructure that is reliant on third parties to deliver, such as transport.
c) The primary accountability for such housing infrastructure delivery programmes should be at a political level (a council portfolio holder and leader) rather than simply administrative. These should be transparent and publicly available.

8. National Infrastructure Priorities

a) Housing to be included as an individual core national priority within the national infrastructure plan.

The Prime Minister’s chief of staff, Gavin Barwell, had welcomed the launch of the pilot scheme in his former guise as housing and planning minister. In January he commented: “I welcome this new pilot scheme and its focus on identifying ways of working together to overcome infrastructure barriers, and I look forward to seeing the report on its findings.”

A water company may take between six months and a year to connect a property and still meet their regulatory target. This is despite the fact that the water company will benefit from the revenues of the new connections for many years.

Research in the HFI’s 2016 report, Let’s Build More Homes Faster, revealed the scale of the failure.