Short term and long term planning in the UK construction

Between 1992 and 2007, house prices on England rose by a staggering 250 percent. The average age of a first time buyer (without family or state assistance) was now 37 years of age. Four out of ten Britons between the ages of 18 and 30 said they would have delayed having children until after they brought their first property. In 2010 it was reported that UK construction industry was experiencing its worst slump in 30 years. About 118,000 homes were built in England in 2009, down from 175,000 in 2007. It was less than half of the 240,000 needed annually to meet the government's goal to build 3 million homes from mid-2007 to 2020. The lack of new properties is affecting both private buyers and those seeking state housing. Nearly 5 million people are on waiting lists for government-subsidized housing and first-time home buyers are struggling to enter the market because of prohibitively high prices and more limitations on mortgages.

What is the cause of the housing slump? The global recession certainly played a major part as construction projects were abandoned resulting in a lower number of new homes. Poor planning perhaps contributed to the problem as well. The amount of land approved for development has been decreasing steadily over the last 10 years. Moreover, there was not enough land available to meet the short-term and long-term demand, according to the Home Builders Federation, the industry's main lobby group. Consequently, citigrouphas predicted a possible shortage of 1.2 million homes by 2016. Peter Redfern, chief executive officer of Taylor Wimpey Plc, the country's second-largest home builder, feels that with a scarcity of readily available land a growing population, a radical change is needed to enable planning to be granted on more sites.

The previous Labour government set its home building target following a 2004 report that concluded there wasa shortfall of about 450,000 homes (later the decline in building during the recession had pushed that figure closer to 1 million). Regional governing bodies set their own housing targets. Local councils that failed to meet both of these goals would potentially lose their state funding. The government also planned to provide financial incentives to local councils to encourage them to grant planning permission.

Former Labour Housing Minister John Healey believes that central planning is necessary for coordinating infra-structure work that helps promote investment, boost economic growth and deliver homes. From another perspective, the Home Builder Federation argues that the government needs to reduce the cost, complexity, and uncertainty of regulation that is preventing the building of more homes. At the same time, the conservations, the opposition party at the time, argued that more planning authority should be given to local councils. Bearing all this in mind, market fragility and supply uncertainty in the UK sector is still making planning a complex task for any government.

Discussion Question

1.Why have plans failed to achieve the targets in the UK housing industry?

2.What short-term and long-term plan does the UK construction sector need?

3.What is the rationale to build more homes as disputed by Home builders Federation?

4.What "carrot and stick" approach do you observe to be provided for local councils?