Government has moved things on for the built environment, now it needs to move things *up*

Fortunately, CIC published a set of policy recommendations for the then-new Government ahead of the King’s Speech last year. In this we outlined some of the actions the Government can take to empower the country’s economic growth, as well as enhance the nation’s health and wellbeing by ensuring a better built environment for everyone.

One year in, government is setting a firm path for the future of the built environment but has yet to truly take command.

In principle – if not yet in practice - the broader construction industry has got a lot of what it was asking for in the first year. There’s a ‘quid pro quo’ element here, where government makes concessions on planning bureaucracy and resourcing, has a plan to improve access to finance and public funds, yet puts measures in place to ensure quality standards and timeliness are met and incentivised in line with its missions.

The downside of this is that, for a number of reasons (not least government wanting to make changes early in the political cycle and the longstanding implications of the Building Safety Act and Grenfell Tower Inquiry), our industry is being hit by a lot of change at once with yet more in the pipeline.

National Insurance increases, Biodiversity Net Gain, the ongoing implications of the Building Safety Act and the Building Safety Levy – due next year. Whereas in principle, these are often necessary, there is a need to rationalise the burden and avoid any unintended consequences.

The flagship 1.5 million home target has been deemed to be unreachable by some in the industry but this is a government manifesto target not an industry one. This government’s legacy will be based on whether it can provide built environment that meets the needs of its people. To that end if it can address the issues of affordability, sustainability and resilience without reaching the target it may have been more ‘successful’ than if it reached its target through providing poor quality or unaffordable accommodation.

Either way it is encouraging to see government put political – and actual - capital behind this manifesto pledge as they looked to hit the ground running on planning, infrastructure and housing. Measures we asked for such as boosting the housing budget for building social and affordable homes are being delivered including through the £39bn investment in the Affordable Homes Programme.

Although justice for those that perished in the Grenfell Tower disaster has so far been elusive, it is worth noting that the new government neither set the schedule for the Grenfell Tower Inquiry nor set up the Building Safety Regulator – now to be established as an executive agency under MHCLG. In fact government should be praised for their admirably quick response to the Grenfell Tower Inquiry Part 2 Report which took place within the promised 6 months. It wasn’t always smooth sailing getting to that point but earlier this year the government announced that it had accepted the report’s findings and set out its plans to act on all 58 recommendations.

Embedding change from the top

It also helps to remember where we were before the last election with the Conservative Party’s reputation for competence dented by the premiership of Boris Johnson and Liz Truss and the heavy political focus demanded on issues such as Brexit and Covid proving a distraction. The outgoing Rishi Sunak would probably be the first to admit that the practical business of governance was overshadowed by electoral comms during his time as PM.

One year on the core ministers for construction have been increasingly open. Industry would probably assess them as smart, engaged and occasionally stubborn.

With something like 16 housing ministers in 13 years the incumbent Matthew Pennycook is already among the longest serving in this spell, Pennycook has already outlasted one shadow housing secretary in the busy Kevin Hollinrake, succeeded by James Cleverly. So far so good, but by the beginning of year two, the resignation of Secretary of State for Housing, Communities and Local Government, Angela Rayner, led to a reshuffle which moved on both the respected Construction Minister Sarah Jones and the Building Safety Minister Alex Norris, who had himself replaced Rushnara Ali after it came to light that she had attended a conference sponsored by a cladding firm linked to Grenfell.

Outside of government and its ministerial team, the construction industry may have lost parliamentary supporters like Andrew Lewer and Peter Aldous at the last election but it has gained others – the likes of Mike Reader, Gideon Amos, Sarah Gibson and Rachel Blake in addition to a number of other professionally trained built environment and housing specialists. Hopefully this will mean intelligent scrutiny of government’s architectural and planning ambitions - there is also a school of thought that suggests these ambitions would benefit with an inspirational figurehead such as the late Richard Rogers.

Failing to plan is planning to fail

The task of improving the quality and productivity of our built and natural environment requires the rebuilding and re-purposing of the planning system.

Successive governments have found the planning system to be a fifty-digit combination to unlock, with efforts to do so not helped by oscillating decision-making and internecine tensions. Ten months on from CIC’s recommendations, we have seen significant intent from this government with the flagship Planning and Infrastructure Bill, the five land use principles and attempts to coordinate the various frameworks and initiatives relating to land use and planning.

The Bill contained sweeping measures aimed at speeding up planning to boost housebuilding and remove obstacles to the delivery of vital infrastructure. Infrastructure is likely to be the main beneficiary with the creation of institutions such as NISTA and the British infrastructure taskforce. In addition to this we’ve seen a pipeline setting out 780 planned projects including transport, energy, schools and hospitals and the publication of the 10 Year Infrastructure Strategy. This has helped give British business the certainty to plan for the long term with government also set to invest heavily in critical defence projects.

The emphasis on spatial planning, firm housing targets and local plans has been particularly welcome, aligning with CIC’s vision for creating sustainable, well-designed communities.

For planners to play their part and new strategic authorities to be successful they both must be well resourced and supported, especially given government’s ambitious targets. Government initially tried addressing this issue with proposals to recruit a few hundred more local authority planners yet it is doubtful this will be enough. An estimated 2,200 planning officers are needed across England and Wales to address the skills gap with 25% of public sector planners having left the planning profession between 2013 and 2020. The shortfall in local authority resources has undermined LPAs’ ability to negotiate with developers on financial contributions or allocate these funds effectively for communities (concerns backed up by the National Audit Office). It has also delayed thousands of homes and led to drastically under-resourced enforcement teams, unable or lacking the skills to monitor the new developments. The removal of funding for Level 7 apprenticeships may exacerbate this problem as this funding supports career changers and public sector roles.

Public disquiet over the Planning and Infrastructure Bill has been focussed on the nature elements of the Bill with ENGOs and biodiversity specialists spooked by government’s persistent scapegoating of newts and bats - a factor in only a small percentage of planning appeal decisions. This has led to a breakdown of trust. Now it is entirely possible that Government’s flagship Nature Restoration and Marine Recovery Fund schemes *could* lead to a top down, focussed approach that will improve natural habitats and tackle nature depletion yet the dissenters have raised major concerns this could spell the end for localised and achievable improvements on small sites that benefit communities and wildlife alike.

Given recent history, perhaps the ENGOs are right to be concerned. Research summarised by RTPI indicated that just half of the nature enhancements required through planning conditions were being delivered, dropping to around one-third when excluding newly planted trees. Again we see the need for a planning system with the resources and skills to monitor new developments.

The route to a sustainable future

In other areas government is only inching towards better practice such as bringing forward nature-based solutions to help address the implications of a changing climate. These would have a major impact in cooling urban areas and reducing surface water flood risks. There has been some movement on the circular economy yet very little action as yet to bring forward the great benefits of protecting green spaces, improved soil management or Sustainable Drainage Systems (although national standards have now been published here) so we await what year two will bring.

Government has shown admirable resolve in ploughing on with its Net Zero obligations and the decentralisation and diversification of our energy supply. The independent Climate Change Committee has been broadly positive about the UK’s progress noting the removal of planning barriers around onshore wind and heat pumps, a new clarity around policy, and policies developed by the previous government beginning to deliver value. Government has stood firm on plans to require solar panels on housing with industry (and future occupiers hoping for reduced bills) waiting to see what progress will be delivered through measures including the Future Homes and Building standards due later this year.

Maintenance and future fit

Despite some incentives and new initiatives to improve our existing building stock such as the Warm Homes Plan, government has yet to launch a comprehensive national retrofit programme to adapt the UK’s leaky homes. This would not only help decarbonisation but also protect against overheating and save the NHS billions in treatment costs. In mitigation this is a big challenge and a hot potato for politicians no doubt aware of a litany of national and international failures including the coalition government’s Green Deal for Home Improvement and the homes blighted by sub-standard work under initiatives such as ECO4 and the Great British Insulation Scheme. Given such an initiative needs to be underpinned by long-term funding and a comprehensive upskilling plan (not to mention a robust consumer protection strategy), a ‘measure twice, cut once’ approach would be understandable.

What we have seen is a much-needed proposal to increase spending on critical maintenance for health, education and justice estates to more than £10bn a year by 2034/35. Concerns about the historic use of RAAC have reaffirmed the need to have a robust plan to address safety across a government property portfolio valued at around £158 billion.

Growing the market

It’s probably safe to say that there has been no transformational change yet in terms of the health of the industry with infrastructure investment perhaps the early big winner in terms of government’s built environment policies.

There has been little positive impact to report in terms of the number of construction insolvencies or the number of companies in critical distress. Just as construction is seen as an economic multiplier given the economic activity construction projects initiate, insolvencies – especially the larger ones - can be considered ‘chaos multipliers’ given the way they ripple through the supply chain.

Fresh figures from the NHBC show new home registrations across the UK rose 4% in Q2 compared to a year earlier and the previous quarter, yet other indicators of housing growth paint a less rosy picture with ‘flat’ an apt descriptor. The Building Safety Regulator set up by the previous government as part of the Building Safety Act has recently come in for criticism for being slow and unresponsive, resulting in delays to construction starts. New home registrations have slumped by 59% in London, although we have seen modest UK-wide growth.

Measures to restore competitive balance to smaller housebuilders are necessary and have been welcomed. In terms of market share, volume housebuilders will play the most important role in delivering most of the new housing stock it is probably fair to say that their viability is not in question, which is positive. Berkeley Group for example is set to bring in pre-tax profits of just under one billion over the next two years. And although other big housebuilders future finances may not seem as healthy, these will have been impacted by one-off costs such as £100 million to fund affordable housing following a CMA investigation and £145 million costs as a result of defective cavity barriers.

Bringing in talent

Government has been working more closely with industry to boost construction capacity through initiatives such as the Construction Skills Mission Board and measures to support key construction trades including 5,000 more construction apprenticeship places and the 32 new Homebuilding Skills Hubs.

CIC has, however, noted concerns from members about the potential withdrawal of funding for Level 7 apprenticeships, particularly in architecture and planning, and whether the education system is doing enough to help pupils develop core built environment skills and understanding at an early stage, especially with infrastructure plans reaching well into the next decade.

CIC also urged government to adopt a pragmatic, evidence-based approach to migrant workers that can be coupled with a comprehensive skills plan for UK workers. Government has pledged a more objective approach to immigration steered by the Migration Advisory Committee although the continuing political headwinds on immigration could result in a more restrictive approach. After May’s immigration white paper, the construction industry remains unsure about what to expect.

Can government stay the course

Whereas the first year has hardly been a ‘free hit’ for government, many of the initiatives which have taken place have been aimed at laying the foundations for growth over the span of this new parliament and beyond. These have been in conjunction with other measures to restore diminished public spending.

Year two has kicked off with proposals on fair payment and the early discussions around a new construction regulator and we will soon find out whether it is learning the (ongoing) lessons of the Building Safety Act implementation when working on the substantial task of setting up the new body.

Like any government its success will depend on whether it is on top of the potential unintended consequences of policy actions. To this end it has a succession of questions to answer (and answer soon) including but not limited to…

• Will developers favour smaller properties as a result of solar PV and Building Safety Levy?

• Can the new rules policing build out provide certainty for both the communities concerned that homes are going up without playgrounds, infrastructure, doctors and schools and also the developers that need certainty to build and maintain these assets in an often volatile economy?

• How resilient will government policies be in the shadow of populist movements on the left and the right?

• Will the political capital invested in the planned New Towns and the new funding initiatives for local regeneration boost quality and create liveable communities?

• Can government deliver continuity and focus after the resignation of Secretary of State for Housing, Communities and Local Government, Angela Rayner?

• Is our building stock robust and resilient in the face of growing threats including overheating, flooding, drought, high winds and driven rain.

• Will it bring forward measures to better support the consumer and ultimately build confidence in the industry, for example through the New Homes Quality Ombudsman and New Homes Quality Board.

• Is the trend of building ‘upwards rather than outwards’ compatible with access to green spaces, family living and accessibility, especially in major cities?

• Will the increase in US Private Capital investment have a positive impact in restoring long-term patient investment that puts stewardship and social value ahead of short-term return?

Can government and industry harness AI for the built environment in a productive and safe way?