Plans for localism met with cautious optimism

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The government's plans for devolving power to local areas are some of the most ambitious proposals for a generation, says Lewis Sidnick, Head of Corporate Affairs at the National Housing-Building Council.

Upon taking power, the government acknowledged that too few homes were being built. According to the National Housing-Building Council (NHBC), which registers around 80 per cent of all new homes built in the UK, about 185,000 were built in 2006/7 and the following financial year this fell to about 85,000. NHBC was registering 20,000 new homes a month during the summer of 2007. By late 2008, this had fallen to under 5,000 a month. With such a collapse in the market, Grant Shapps, who would be appointed housing minister in 2010, told the NHBC annual lunch in 2009 that Britain needs to build more homes – and if the Conservative Party was elected, he would implement a new approach.

Following the election, the government presented a new approach to support new house building that had three core parts. Firstly, local communities would be engaged as part of a drive to build support for development. The Localism Bill makes provision for house builders of large developments to consult more extensively with local residents on the impact and scale of the development on the area. The government's objective is to win the support of residents towards the building of new homes in their area. It argues that nimbyism was partly a cause of centrally imposed targets.

Secondly, the government aims to incentivise house building. The government will reward areas which build new homes through the New Homes Bonus incentive scheme, which will be equal to the national average for the council tax band on each additional property and will carry enhancements for affordable homes. It will be paid for the following six years as an un-ringfenced grant.

Lastly, the government has proposed a simplification of the planning system. The objective is to scrap the national planning guidance, which ran to hundreds of pages, and replace it with short and simple guidance. The government has published the National Planning Policy Framework (NPPF), which aims to deliver this by reducing planning red tape, and make decisions speedier at local level.

It is positive that since coming to power the government has put an emphasis on the importance of housing and proposes policies aimed at boosting the industry. It is important that these measures, together with those in the last Budget to support first time buyers, are successful and NHBC is working with government to help support their implementation.

Will the policies work? There are uncertainties about their success. Will empowering local communities invite the most vociferous opponents of developments to block much needed new housing, or will it help developers build relationships with communities to create better housing legacies? Current NHBC figures provide some reason for cautious optimism. Last quarter there was an 11 per cent increase in housing construction compared to the same quarter last year.

However, even if this rate of growth continued it would still be many years before the industry returns to its position in 2006. Even then the gap between supply and demand was widening. As it stands, the Institute for Public Policy Research (IPPR) estimates that the shortfall could be as high as 750,000 by 2025.

The priority must still be to secure the recovery of the industry, and build quality homes that people need. The social and economic consequences of continued low supply of housing, increasing demand, and first time buyers priced out of the market for many years makes this a critical issue for the government to help address.

Lewis Sidnick is Head of Corporate Affairs at NHBC. NHBC is an independent expert authority on the housing industry. More than 80 per cent of new homes in the UK are built to NHBC's quality Standards and 1.7 million homeowners are protected by its insurance (www.nhbc.co.uk).

Throughout recess, ePolitix.com will be focusing on a different policy theme each week. This week we are featuring articles with a focus on localism and the Big Society.