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'Comprehensive plan' will save the construction industry, says Cameron

6 Sep 12 The government has set out a housing and planning package designed to revive the fortunes of the construction industry.

New measures include the removal of local authority affordable housing requirements if developers can prove that they make the project unviable.

Where local authorities are proving slow at processing planning applications, developers can opt to go to the Planning Inspectorate. More applications also will go into a fast track appeal process.

For a limited period, there will be an extension of home improvement work that is considered permitted development. In other words, homeowners in most areas will be allowed to build larger extensions without getting planning permission.

Help for first-time home buyers is offered with a £280m extension of the 'FirstBuy' scheme.

Re-announced measures include legislation for government guarantees of up to £40bn worth of major infrastructure projects and up to £10bn of new homes. The Infrastructure (Financial Assistance) Bill will include guaranteeing the debt of Housing Associations and private sector developers.

Re-opening previous Section 106 planning agreements for renegotiation is also part of this policy package.

Prime Minister David Cameron said: "The measures announced today show this government is serious about rolling its sleeves up and doing it all it can to kick-start the economy. Some of the proposals are controversial; others have been a long time in coming. But along with our housing strategy, they provide a comprehensive plan to unleash one of the biggest homebuilding programmes this country has seen in a generation. That means more investment around the county; more jobs for our people; and more young families able to realise their dreams and get on the housing ladder."

CBI director-general John Cridland responded: “We have long said that unfreezing the housing market will be a major game-changer in the drive for economic growth. The housing and planning announcements today will provide a much-needed tonic for the construction sector, getting diggers on site and people into work.  It will make a difference to households across the country.”

On easing planning restrictions, he said: “Making planning cheaper, quicker and easier will unblock stalled housing developments and provide a fillip to business confidence. Getting the details clarified as soon as possible will allow businesses to move at pace.”

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Julia Evans, chief executive of the National Federation of Builders, commented: “A few extensions will not provide the answer to the problem of a stalled housing market, a planning system in chaos, an urgent need for funding by developers and buyers and lost jobs. The planning system needs a root and branch reform.”

She said: “While much of this is welcome it does not provide any immediate stimulus to housebuilding – most of the measures will take some time to be finalised, introduced and to take effect. The most important issue for house builders remains lack of mortgage funding for purchasers and shortage of developer finance for smaller developers. We have seen no sign to date that the Funding for Lending scheme is making any difference to this problem.”

The Association for Consultancy & Engineering described the Infrastructure (Financial Assistance) Bill as “a promising step in the right direction” but warned that it may take time to get significant projects underway and it may not achieve best value for money.

ACE chief executive Nelson Ogunshakin said: “With a large number of projects struggling to establish private finance at reasonable rates amid on-going uncertainty about planning and regulations, a more pro-active approach from government may generate better value for money. This would be especially valuable where a lead on financing from government helps to strengthen private investor confidence and bring down the rate they require for investing.”

Mr Ogunshakin also doubted there would be a rapid acceleration in house building. He said: "Even if plans to reduce the planning and regulatory red tape do work, the process of drawing up detailed plans, getting planning permission, and putting in place construction contracts, is unlikely to be completed within 12 months. So amid concerns that the new rules to ease planning permission may be challenged through the courts, it might be years before we see a real impact on new house building from this financing scheme.”

For London First, the tax regime is the central issue that needs tackling. Faraz Baber, director of planning at London First, said: “The package of measures to reinvigorate the housing delivery is to be welcomed but unless government resolve the problems that are currently surrounding planning taxes imposed on development, housing delivery will continue to be stifled as schemes remain financially unviable to proceed.”

Construction union Ucatt said that the government’s package of measures wold actually worsen the housing crisis as relaxing section 106 deals could enable schemes to go ahead without any new social/affordable homes being built.

Ucatt added that the relaxation of home improvement planning laws would increase the number of neighbour disputes but would not significantly boost the construction industry.

Ucatt general secretary Steve Murphy said: “What the industry needs is a large amount of new investment and for the Government to reverse its cuts in the construction budget. Tinkering around the edges is not going to return the industry to growth.”

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