Memorandum by Billingham and Kite Ltd
(AH 45)
1. INTRODUCTION
1.1 This document represents the written
evidence to the Committee on behalf of Billingham and Kite Ltd
to the Inquiry by the UK Parliament Committee on the Office of
the Deputy Prime Minister.
1.2 The scope of the new Inquiry is wide
and the evidence on behalf of the company is restricted to four
of the topics referred to in the press notice. These are dealt
with under the same headings used in the Press Release. Before
considering these topics background information concerning the
company is set out
2. COMPANY BACKGROUND
2.1 Billingham and Kite Ltd are a company
whose business is that of house building. They have been established
for about 50 years and during that time have built over 900 houses.
The average production is thus about 18 dwellings per annum.
2.2 The company build using traditional
house building technology, which involves labour intensive production.
They have a directly employed labour force of over 20 persons
including apprentices in the craft industries involved in the
company's business. It is the company's experience that many of
these apprentices stay with the firm for long periods, some until
retirement. Additionally about the same number of persons are
employed indirectly as a result of the company's activities.
2.3 The company seeks to provide a wide
spectrum of house sizes built to a high quality of craftsmanship
in the northern part of Worcestershire and the adjoining parts
of the Black Country. In order to ensure the security of its trained
workforce, in which it invests from the outset of the careers
of the individual employees, the company seeks a continuity of
output. This in turn needs a reliable flow of housing land to
be made available through the planning system.
2.4 The company have adversely experienced
in the past two and a half years the effects of a Local Planning
Authority placing an embargo on housing land. A Senior Inspector
appointed by the ODPM described the embargo in an appeal decision
as "draconian" as follows:
"| in its currently adopted form,
the policy is both crude and draconian, and the Council does not
intend to incorporate it into the emerging Local Plan or to quickly
review the Local Plan in the light of the current housing supply
position. Although subject to publicity and consultation, the
policy has not been subject to independent scrutiny, and there
is at least some doubt about the current housing land supply position."
Planning Inspectorate decision letter dated October
2003 ref APP/P1805/A/03/1113038).
2.5 Such experience, and that of planning
delay generally, has resulted in considerable concern regarding
the supply of land for housing. The importance which the company
attach to this matter can be measured by the fact that this is
the first time in five decades of its existence that the company
has felt moved to representations on emerging Government policy
earlier this year, and to submit evidence to a Parliamentary Committee.
3. THE SCALE
OF THE
GOVERNMENT'S
PLANS TO
BOOST HOUSING
SUPPLY
3.1 It is considered axiomatic that the
overall scale of housing supply in the UK should be rooted in
the calculations of total numerical need. A roof over each households
head, and the ability to be part of a household of one's own choosing
(rather than sharing because of lack of choice) are, it is submitted,
unquestionable rights. How the numbers are delivered is a matter
of practicality and political will.
3.2 It is submitted that in relation to
scale the starting point should be the ODPM forecasts of housing
need. These are a function of population numbers, age, household
formation rates, international migration and redundancy of the
existing housing stock. Within the UK inter regional and intra
regional migration, and sub regional differences in house condition,
play upon these other factors to influence the distribution of
the figure for total housing need.
3.3 The emerging preference of the ODPM
is to table a trajectory of need for a minimum of 15 years and
then review and roll this forward at least every five years. Such
an approach is to be applauded.
3.4 Firstly it considers the long view,
and thus all those involved in investment decisions relating to
housing (house builders together with infrastructure and service
providers) have a 15 year horizon for the articulation of their
investment aspirations.
3.5 Secondly it allows short term fine tuning
every five years. This is necessary because although much of the
data for housing need forecasts is relatively fixed material dimensions
are not. Thus a baby borne tomorrow will need a dwelling in 20
to 25 years time and this (save for minuscule mortality rates
for that age range) is relatively fixed. What is less fixed is
the propensity to migrate and the propensity to marry/cohabit
or head a household.
3.6 Even survival rates which hitherto have
been considered to be only slow moving have changed markedly in
the last decade, with a concomitant impact on housing need figures.
If people live longer the house they occupy does not become vacant
as early as previously anticipated and the expected availability
of a space for another household is delayed, on recent figures
by several years. Life expectancy has increased very noticeably,
due largely to messages from Government concerning healthier lifestyle
kicking in, and these can reasonably be expected to be compounded
as the number of people whose life expectancy can be enhanced
through the adopted lifestyle changes increases.
3.7 Population and housing forecasting is
articulated on the basis of indices which have varying degrees
of uncertainty. For this reason the emerging view of the ODPM
for a 15 year plus trajectory with quinquennial review and roll
forward is considered to be right. The target supply over the
long period provides the context for strategic planning by all
interested parties, but the regular fine tuning keeps that long
view in concert with actual as opposed to expected trends.
3.8 The provision of numbers of dwellings
to meet need unfettered by any social or political engineering
or colouring is considered to be a fundamental requirement. It
is considered that the land use planning system should be likened
to a library which has on its shelves a full range of resources
to meet a full range of demand for differing tastes.
3.9 In planning, the total numerical housing
need should not be questioned as it represents a social phenomena,
of a kind that should not be interfered with. Where and how the
dwellings are provided is an appropriate activity for the body
politic to influence, but it is considered that there is a compelling
Human Rights dimension to facilitating the total numbers that
are determined by social trends.
3.10 Aside from this philosophy it seems
that recent experience is that a failure to meet the full demand
introduces distortions, such as price variation, which themselves
further undermine the achievement by all of a roof over their
own head.
4. THE RELATIVE
IMPORTANCE OF
INCREASING THE
SUPPLY OF
PRIVATE HOUSING
AS OOPPOSED
TO SUBSIDISED
HOUSING
4.1 Examination of the data in the joint
Treasury/ODPM document ("Housing Policy: An Overview"
July 2005) suggests a correlation between the decline of total
new housing provision and the reduction in subsidised (mainly
local authority) housing provision. It is not a direct correlation
as a material proportion of public housing several decades ago
was addressing the replacement of redundant stock, which was more
naturally a task for the public sector.
4.2 However the data in that document indicates
that supply of housing by the private sector has remained relatively
constant over the long period, and that the marked decline appears
to be related to the decline in public sector subsidised housing.
4.3 It flows that unless that supply source
is rekindled, which seems unlikely, then in order to achieve the
total supply required, and avoid the distortions which may arise
through failure to do so, then the quantity delivered by the private
sector should be increased.
4.4 In order to achieve this end the need
is for the nurturing of conditions which safeguard retention and
enhancement of the capacity of the house building industry. Ingredients
of such capacity include the fostering of craft skills within
a long view. A continuing and reliable flow of housing land is
a condition precedent to the fostering of those skills.
4.5 In considering this it should be borne
in mind that many house builders are parts of conglomerates who
will switch in and out of markets according to global trends.
They are therefore an unreliable device for the sustenance of
a skills base.
4.6 One of the by-products of nurturing
capacity in the house building industry of a type furnished by
Billingham and Kite Ltd is that it safeguards skilled and unskilled
jobs which can only be undertaken at the point of production rather
than in some distant continent. This would seem a happy coincidence
of meeting social needs and economic ends also.
5. HOW THE
PLANNING SYSTEM
SHOULD RESPOND
TO THE
DEMAND FOR
HOUSING FOR
SALE
5.1 The ODPM's consultation paper ("Planning
for Housing" July 2005) suggests an approach based on the
15 year trajectory related to housing market areas. The Regional
Spatial Strategy for the South East has already included the concept
of housing market areas in its work.
5.2 It is considered that the essence of
this approach is to be supported. It has the benefit of securing
total numbers to meet the social requirements of the population,
but guiding a distribution in a sophisticated way such that distortions
due to a mismatch between supply and demand are minimised.
5.3 A significant proportion of total private
supply is delivered by companies such as Billingham and Kite Ltd.
Like Billingham and Kite Ltd, some 3,000 of the 12,000 members
of the Federation of Master Builders are also registered with
the National House Building Council and are therefore involved
in building new homes. Such companies individually build relatively
low volumes, and are serving localised markets that they understand
well. Whilst individually modest, in total these organisations
have a significant contribution to make to the overall supply
of housing.
5.4 It is important to the sustenance of
this source of supply that the planning system facilitates land
suitable for this type of company. Whilst large tracts of land
allocations such as regional growth centres can meet the needs
of volume house builders those companies building at a smaller
scale and meeting the needs of localised markets have resources
which only allow them to deliver housing on smaller parcels of
land. The Planning system should ensure a variety of sizes of
site to nurture this sector of the industry and thus facilitate
satisfying the demand for houses for sale.
6. THE REGIONAL
DISPARITIES IN
THE SUPPLY
AND DEMAND
FOR HOUSING
AND HOW
THEY MIGHT
BE TTACKLED
6.1 As is noted in the Barker Report there
are two features of the housing market which affect the ability
of strategies for change to succeed. The first is that 90% of
transactions relate to the second hand market, and the second
is that the new supply adds only 1% to the total stock. The scope
for tempering what may be described as "natural" trends
is therefore very limited.
6.2 A further feature is that transactions
are relatively limited in their geographical range. The writer
undertook analysis of the 1991 Census some time ago, in several
English Regions, which indicated that the significant majority
of people who moved did so within a limited distance of a handful
of kilometres. This further tempers what can be achieved regionally
by adjusting supply.
6.3 In this context where there is a "natural"
migration trend in a particular region or sub region this trend
can largely be satisfied within the existing housing stock. Retarding
or accelerating the trend by altering the supply of new housing
is unlikely to have the effect of altering the trend but will
more than likely just exacerbate the distortions of failing to
meet the trend.
6.4 Efforts at altering trends such as the
renaissance of urban areas may well succeed but a brake on "natural"
trends is not in itself going to achieve this. It is submitted
that until the "natural" trend has changed any interference
in extraneous devices such as the supply of housing outside metropolitan
areas will simply distort the supply and demand balance. This
would appear to be the experience of the past few years in the
UK .
6.5 In this context it is considered that
the generality of providing for new housing in relation to housing
market areas on the basis of regional and sub regional migration
trends that presently subsist is the most appropriate approach.
If a change to the trends is considered desirable for the purpose
of urban renaissance then other instruments of change will be
preferable to the crude and draconian housing supply switch.
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