Brian Berry, CEO of the Federation of Master Builders (FMB), gives his review of a disappointing spring Budget
The first few months of 2023 have been a relatively quiet period politically, far from the ups and downs of last year, and this reserved approach seemingly filtered into the Spring Budget delivered in mid-March. The Budget did support the house building industry in part, but failed to tackle the big issues.
Beyond the Budget, there has been little progress on easing the housing crisis, especially for those of us on the SME side of the housing fence. We had a strong engagement in January with the former Housing Minister, Lucy Frazer, but unfortunately a February reshuffle meant she was whisked away to pastures new.
The larger house builders are facing plenty of battles with Michael Gove, the energetic Secretary of State at the Department for Levelling-Up, Housing and Communities, with the recent news some will be banned from developing if they don’t sign up to the new Building Safety Contract. I just hope this doesn’t boil over into an overall anti-development mood from the Government. We simply must get on with building more homes.
A TAME BUDGET
It was one of the tamer Budgets of the last few years and certainly a country mile away from the one delivered by Kwasi Kwarteng in September of last year. It continued the current Chancellor’s push to steady the ship, but disappointingly, it didn’t tackle the big issues the country is facing. No mention of housing, no mention of energy efficiency, although labour shortages were tackled in detail, through changes to the Shortage Occupation List, thereby easing migration rules for key trades. The FMB fought for, and has welcomed, this element.
We all know that Government coffers are not bottomless, but housing and retrofitting homes represent a huge job and growth opportunity. Beyond this, it would get the next generation on the housing ladder and where retrofit is concerned, it would lower energy bills.
As we know, small local builders are delivering a mere 10% of new housing, and England could end up delivering the lowest number of homes since the Second World War according to recent research from the Home Builders Federation. Consequently, housing should have been front and centre of the Spring Budget. This may well turn into an existential crisis for the incumbent Government, with fewer homeowners, the traditional Conservative voter base may ebb away. As things stand the Party that sorts out the housing crisis would be well on its way to election victory.
While there were some minor changes for housing buried in the detail, concerning improving housing delivery from those affected by nutrient neutrality issues through a new call for evidence from local authorities and a commitment to fund local mitigation schemes, there is very little that will comfort small local house builders. If the Government is to deliver its own aims of building more beautiful, diverse, and locally focussed housing, then they must back the nation’s local housebuilders and remove the barriers like planning, skills shortages and land that stand in their way.
BUILDING SAFETY LEVY
Since my last article there have been a number of consultations, including proposed changes to the National Policy Planning Framework, which sets out planning rules, and the introduction of the Building Safety Levy. The Building Safety Levy plans to mitigate cladding issues, but this has been extended to all sizes of housebuilders and this seems misjudged. I commend the Levy for protecting consumers against the steep costs of cladding remediation, but we don’t feel the Levy is appropriate for smaller builders.
Small, local housebuilders have no connection to high rise buildings or cladding issues and could end up paying for mistakes that are not of their doing. They are an industry delivering less and less housing, but are asked to pay more, either directly or through increased administration from regulation. This Levy penalises small housebuilders for building homes, and does little to turn around SME housebuilders. The Government needs to consider the impact on small, local firms, as the most vulnerable part of the sector, and alter their plans.