APPENDIX 10
Memorandum from the House Builders Federation
INVESTMENT POLICY AND THE HOUSING INDUSTRY
INTRODUCTION
The House Builders Federation (HBF) represents
housebuilders who, collectively, account for approximately 80
per cent of the annual output of new houses built in Wales. Members
include Welsh branches of UK wide companies such as Beazer Homes
based in Cardiff, regional housebuilders such as David MacLean's
based in Wrexham and small local builders such as CBA contractors
of Prestatyn.
HBF members primarily build new homes for the
owner occupied sector. The importance of this cannot be overlooked;
there is approaching 80 per cent owner occupation in Wales. This
is higher than in England. However a great many HBF members also
build `social' housing in partnership with local authorities or
Registered Social Landlords.
The HBF has a particular interest in the relationship
between housing and economic development. This interest is two
fold:
— The quality and value of housing
are often used when trying to attract inward investment.
— Local planning authorities are required
to allocate enough sites in their local plans which can accommodate
the ADDITIONAL demand for housing generated by an inward investor.
The HBF contends that rather than being to the
detriment of indigenous industry, inward investment has a positive
impact upon the Welsh house building industry and that the Welsh
house building industry has a positive impact on inward investment.
The availability of cheap, high quality housing is often used
to attract inward investment.
INWARD INVESTMENT
AS A
STIMULUS FOR
THE WELSH
HOUSE BUILDING
INDUSTRY
Work by the Welsh Development Agency and the
Land Authority have been highly effective in encouraging inward
investment. The boost that this has provided to the local economy
has proved to be of direct benefit to the Welsh house building
industry, providing jobs and skills training. It has also had
a `knock on' benefit to the diverse industries that are related
to the housing industry.
Whenever a company decides to locate in Wales,
such as Sony at Bridgend, and Acer in Cardiff, it increases employment.
This increase in employment means that many more people wish to
buy their own homes. In many instances, people prefer to buy new,
rather than second hand homes. This demand provides jobs directly
for the various building trades, but also supplier industries
such as quarries and brickworks.
It should be recognised, that even if home buyers
were predisposed to buy a second hand rather than brand new home,
the shortage of second hand homes in some locations, such as Newport,
means that it cannot meet all this demand. In such instances,
planning authorities seek to increase the supply of land for housing
development to meet this demand and to reduce the number of second
hand properties lying empty (known as voids). However, differences
in quality between old and new housing stock means that there
will be an increase in demand for new homes no matter how many
empty second hand homes are filled. This is particularly the case
when inward investment increases a household's income. People
frequently decide to sell their old home and to "trade up"
to a new property.
The impact on employment of inward investment
and house building is not solely confined to direct, industry
related employment. Studies have indicated that for every 7,000
jobs created in the housebuilding industry, around two thirds
again are created in allied services. For example, local stores
benefit from the demand for white goods, carpets and DIY goods.
Other services such as insurance legal and finance, also benefit.
HOUSING AS
A STIMULUS
TO ECONOMIC
DEVELOPMENT
Virtually every local economic development strategy
refers to the quality of housing within its area. Whenever entrepreneurs
or investors are being encouraged to set up business in a town,
they are often reminded that not only is a town a pleasant place
to work, but it is also pleasant to live there too.
More than other parts of the UK, Wales suffers
from poor housing quality. If economic development is to be encouraged,
whether indigenous or exogenous, new good quality housing is a
vital ingredient. Working with LAW and the WDA, the HBF has been
able to provide quality housing in good mixed use sites such as
at Pontprennau. In such locations, companies are prepared to invest,
confident that not only will their staff be able to live satisfactorily,
but that there is an appropriate client base nearby with a suitable
disposable income.
CONCLUSION
The HBF confirms that there is a mutually beneficial
relationship between the Welsh housing industry and inward investment.
It understands some of the concerns raised in the past about the
relative merits of indigenous versus exogenous growth. However,
the HBF contends that the two are not necessarily contradictory.
The HBF is satisfied that recent inward investment decisions will
have a positive impact on the national house building industry,
local employment and economic development. It therefore requests
that any proposals that the Committee makes regarding future national
economic development strategies should not dogmatically favour
one form of growth against another.
Graeme Salt
External Affairs Manager
19 January 1998
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