Select Committee on Environmental Audit Minutes of Evidence

Examination of Witnesses (Questions 280 - 299)



  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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