Examination of Witnesses (Questions 280
- 299)
WEDNESDAY 7 JULY 2004
MR JOHN
SLAUGHTER, MR
ANDREW WHITAKER
AND MR
IAN HORNBY
Q280 Chairman: Welcome. Thank you
very much indeed for patiently listening through what has been
rather a lengthy session and thank you for coming along. Not surprisingly,
you welcome the Barker Review conclusions. I say "not surprisingly"
because she is suggesting that we need to build lots more houses,
which is your business, although I thought the object of the exercise
was actually to reduce house prices so it seems slightly strange
and anomalous that you welcomed a measure which ostensibly set
out to reduce the price of the things that you sell. Is there
anything in the Barker Review that you do not like?
Mr Slaughter: I do not think there
is anything that we do not like.
Chairman: Nothing at all, not even a
smidgeon of anything?
Q281 Mr Francois: The colour of the
cover, or anything?
Mr Slaughter: I think we regard
it as a very fair assessment of the issues and very important
in recognising the housing supply shortfall the country faces
and the need to tackle issues on the planning system. You ask
is there anything we do not like. It would be tempting to give
a flip answer, but I will try and avoid that by saying that there
are industry issues that are addressed in the report as well.
It is not a report that only deals with one audience. We are being
asked to address a number of quite significant issues. There may
not be as many recommendations numerically facing house builders
as the Government, planners or other groups, but they are still
significant issues. I would not say that we do not like them,
but we recognise that there are issues that we have to pick up
as an industry and respond to as well.
Q282 Chairman: What about the issue
of land banks, which we touched on with the previous witnesses?
Do you have ideas on that?
Mr Slaughter: In the sense of
do we agree with what Kate Barker says?
Q283 Chairman: Yes.
Mr Slaughter: Yes, I think we
feel that is a reasonable assessment. She has essentially pointed
out, as we would see it, the business need for there to be a certain
level of land banks and that the level of land banks, taking into
consideration the timescale for development and the uncertainties
of the planning system, is not unreasonable.
Q284 Chairman: She also made a number
of recommendations for you, did she not?
Mr Slaughter: Yes.
Q285 Chairman: A strategy to improve
customer satisfaction; a code of conduct for your members requiring
fair contracts; a new strategy to remove barriers to modern methods
of construction; a strategy to improve the uptake of apprenticeships;
a code on the external design of new homes; a best practice guide
for compensating householders for development. A very long list.
Are you happy with that list?
Mr Slaughter: We think it is a
reasonable list. We recognise there are issues in these areas.
Q286 Chairman: Surely there must
be things you are already doing?
Mr Slaughter: Well, we are, yes.
We are addressing these issues, but I think the way that we see
Kate Barker's report is picking up the fact that there is work
going on in these areas already, that it has been recognised—and
some of the discussion earlier this afternoon has touched on some
of these issues—that there are real issues to be tackled,
not just in terms of delivering more houses but in actually delivering
sustainable development and sustainable communities. We recognise
all that and we welcome that. We are willing to respond positively
to it and we have already said that that is what we are doing.
Q287 Chairman: What would you say
to the thought that you are being handed a long list of codes
and strategies to get on with but given absolutely no new obligations
at all?
Mr Slaughter: Well, in a sense
they are obligations. Perhaps I may make an observation to explain
my comment. We perhaps regard the Barker report in a sense as
a package This was not explicitly discussed earlier, but the Ministers
have said that they will need to come back and look at how the
whole Barker agenda is being worked through, not just how they
have responded to the issues that they were discussing earlier
on but how the industry has responded to these challenges late
in 2005. So if we look at this as a package situation then we
feel that is a reasonable thing for us to look at and pick up
these issues.
Q288 Chairman: Do you think if implemented
in full the Barker recommendations would actually reduce house
prices?
Mr Slaughter: I think we have
to be very careful what we are saying here.
Q289 Chairman: Well, reduce the rate
of increase in house prices I should say.
Mr Slaughter: Barker does not
suggest there should be any particular outcome, perhaps I should
first say that, in terms of a level of price increases in the
future. What she points to above all else in her analysis is that
if you look back over thirty years there has been a consistently
higher real increase in house prices in the UK market than in
other European countries and that this is the sign of a significant
undersupply of housing, and her objective is to reduce that real
level of increases. I do not think she has actually said that
we should be looking for falling prices or any particular outcome,
but rather a better balanced market, and I think that is what
we would also suggest is the right focus.
Q290 Mr Francois: Is it true that
if, for argument's sake, the Bank of England were to put up interest
rates by 2% that is going to have a much more fundamental effect
on house prices than anything that is in Barker?
Mr Slaughter: Well, I think you
have got to distinguish the short term from the longer term position.
That is why I specifically referred to the thirty year perspective
in my previous answer. The Barker analysis does talk about both
the short term and long term. I think one of the most interesting
things she finds in her analysis is that the undersupply in itself
contributes to short term volatility in the market. So I think
our view would certainly be that what we are really looking at
is the long term trend movement in house prices, not the short
term factors, which can always be influenced by other factors,
including interest rates.
Q291 Mr Francois: Just on that point,
what are you calling long and short term, because the market goes
up and down, but you are talking about four or five year movements
in that market as opposed to something that lasts six months?
Mr Slaughter: Yes.
Q292 Mr Francois: If you have got
a four or five year trend of falling prices in a housing market,
are you calling that short term?
Mr Slaughter: I think we are for
the purposes of Barker's analysis, yes. We are looking at house
building programmes that are stretching over twenty or thirty
years and that is how that analysis goes, and I think given the
scale of the issues that Barker is addressing we have to look
at those kinds of timescales.
Q293 Joan Walley: Good afternoon.
I think most people accept that especially in the South East there
is a dire need for more affordable houses and I think that the
Kate Barker report identified something like 77% of the private
dwellings that are being built by your members were three bedroom
properties. Is there a general consensus about that figure?
Mr Slaughter: Well, if you look
at the latest figures, I do not know how many bedrooms they necessarily
are but the latest statistics for the first quarter of 2004 show
that about 40% of new housing starts are for flats and apartments.
I would imagine many of those are not three bedrooms, but I do
not actually have the precise figures on that to hand.
Q294 Joan Walley: If you do have
information on that which is more up to date than what was in
the Barker report, or if you disagree with that figure that was
in the Barker report it would be helpful for the Committee to
have that. The real underlying point of my question is to ask
you what your members are doing about building affordable houses
and what are you doing to tackle the need for more affordable
houses? Is it a question of just building apartments and flats
rather than three bedroom houses?
Mr Whitaker: I think you have
to separate the argument about the overall quantum of housing
from any specific ten year pattern or subsidy for housing in that
even if you are building social rented housing you still need
land on which to build it. I think our members are responding
very well to the affordable housing agenda, as indeed they would
do. If you are building a product that people cannot afford then
you have to realign your product to something that people can
afford and it is the very fact that we do not build enough houses
that allows companies to, if you like, go for the top of the market.
If we were building enough houses some people would want medium
priced houses, some people would want expensive houses and some
people would want cheap houses, rather like motor cars. Some motor
car companies build cheap motor cars, some motor car companies
build expensive motor cars, but because we have enough motor cars
generally there is a huge choice out there. We do not have enough
housing in this country and that is what is leading to the affordability
problems.
Q295 Joan Walley: Okay. Could I just
move on in terms of the lack of skills, which we have covered
with other witnesses earlier on. I think the Barker report concluded
that something like 70,000 new workers would be needed in the
industry and if more were built then obviously it could rise a
lot more than that. Do you think that is achievable, that we would
actually get the construction skill workers?
Mr Slaughter: That is my area.
Yes. The 70,000 is for the construction sector as a whole, so
the number for house building is considerably less. It is quite
interesting, having listened to the skills sections of the earlier
evidence. The latest figures from the CITB that I am aware of
certainly showed, to take apprenticeships, for example, that the
level of applications for apprenticeships has increased enormously
in the last year or so.
Q296 Joan Walley: Could I just ask
you about that, because the level of applications for apprenticeships
might be increasing but those can really only be progressed provided
you have got employers and contractors prepared to take those
on and my experience, certainly from a constituency level, is
that the colleges which are seeking to set up new courses and
new apprenticeship courses are finding that the employers are
not willing to take on apprenticeships on the scale that is needed,
to such an extent that I think we should be looking at procurement
and getting it conditional upon tenders and so on that that is
linked into it. What more could your organisation be doing?
Mr Slaughter: As a trade association?
Q297 Joan Walley: Yes. What is your
policy on apprenticeships? It is a bigger responsibility than
just having applications for them.
Mr Slaughter: Our policy is to
increase the take-up of apprenticeships but not just apprenticeships.
One point I would make in this area of the discussion is that
we regard the skills issue as crossing a lot of areas. It is not
just about traditional craft skills, it is about management skills,
it is about new professional skills to meet the sustainable development,
sustainable communities agenda. So I do not want to just talk
about apprenticeships. What we are trying to do as a trade association
is to work with our members. We have a careers and skills committee
where we are positively discussing at the moment how to take forward
the kinds of issues you are raising. Obviously in terms of Barker
there is a specific recommendation skills which identifies us
and CITB in particular to develop a strategy for working on the
skills agenda and that is what we have started to do. As a trade
association we have set up a specific working group in order to
discuss with our members and with the CITB and other stakeholders
how we can put together a strategy to meet the skills issue. I
would not deny that there are some questions out there like the
ones that you have raised about placements. If you look at
apprenticeships, there are other potential constraints on the
number of apprenticeships that can come through the system because
it also relies on the funding provision and there are issues about
just how many apprenticeship you can process in a particular period,
but we are looking at all those issues. We are very constructively
engaged and I think it is fair to say that in the work we have
done on Barker so far we would certainly agree that the skills
area is one of the key things and it is a linking issue from the
industry perspective. We need skills not just in their own right
but to deliver design, to deliver modern methods of construction
and arguably customer care objectives as well. So we are taking
all this very, very seriously.
Q298 Joan Walley: I am sure it will
be interesting for the Committee to have details of how that is
going forward at your committee level at CITB, particularly in
view of the earlier comments from Countryside about this being
more a skills issue possibly than a housing issue. Just finally
on a constituency level, I cannot help but flag up an interest
that I would be very interested on a constituency basis to know
how those discussions would have an impact locally as well, but
that is not for this Committee now.
Mr Slaughter: Yes, okay.
Mr Whitaker: Can I lead the skills
debate to a wider issue of certainty of the system. The industry
at the moment is outputting about 160,000 a year—you have
got the figures in front of you—from various people and
it is geared up to produce that. Without certainty that we are
going to be allowed to build an increase in output, the training
needed to bring people into the industry to produce that output
is uncertain.
Q299 Joan Walley: So why have you
not got that certainty, given the Sustainable Communities Plan
that the Minister referred to earlier and given the progress that
has been made further through the Barker report? What makes you
think you have not got that certainty?
Mr Whitaker: Well, because, with
respect, the Communities Plan is quite a young plan. It is only
recently that we have seen commitment from the Government to an
increased house building—
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