Asked by
To ask His Majesty’s Government, further to the letter to the
Prime Minister from housebuilding firms on 6 July, what steps
they are taking to strengthen the viability of small and
medium-sized housebuilders.
The Parliamentary Under-Secretary of State, Department for
Levelling Up, Housing & Communities () (Con)
SMEs are an indispensable part of our housebuilding sector, and
we are committed to strengthening their viability. We are
providing financial support through our £1.5 billion levelling-up
home building fund, which will help SMEs build around 42,000
homes. Through the £1 billion ENABLE Build guarantee scheme and
the Levelling-up and Regeneration Bill changes to the planning
system, we will further support SMEs in making the planning
process easier to navigate, faster and more predictable.
(LD)
I thank the Minister for her genuinely helpful Answer. With
planning permissions at an all-time low and taking longer, the
Home Builders Federation says that SME builders are going out of
business now, while 145,000 desperately needed homes are on hold
due to, to quote its letter to the Prime Minister, the
Government’s “anti-development policies”. Does the Minister agree
that this is largely a result of policy conflicts and mixed
messages from the Government, as reported even today in the
Times? It might be helpful to SMEs if they knew what the
Government were doing about the 48 local authorities that have
paused or withdrawn their local plans and the 74 that are
affected by Natural England’s nutrient neutrality building
moratorium. SMEs in these areas need urgent action; they cannot
just pack up and go elsewhere.
(Con)
I have explained how we are supporting them financially, but we
are aware that the planning system, for example, is not as
user-friendly as it should be to SME builders. That is why we are
making changes in the LUR Bill, but we are also trying to ensure
that the planning system is now better funded, so any time now we
will see an increase in planning fees, for example, by 35% for
major applications and 25% for other applications. All this
investment should make sure that SMEs find the system simpler and
easier to use, and that therefore they can access it and build
more houses for us.
Lord Swire (Con)
My Lords, the letter to the Prime Minister refers not to an
anti-development policy but to an anti-development environment. I
submit that the anti-development environment is in part caused by
the fact that people are fed up with the large-volume
housebuilders building identikit housing estates up and down the
country, and that the people more likely to reflect the desires
and wishes of local communities are the smaller, SME
housebuilders.
The problem is also in design. We have had the Royal Fine Art
Commission, which gave way to the Commission for Architecture and
the Built Environment, which in turn has given way to the Design
Council, but none of these bodies has really had teeth. What more
can we do to ensure that there is greater control over the sort
of properties we are building in the country, to give more
training to local planning officers and to increase not only
their quantity but their quality?
(Con)
I think we need both types. We need the large developers building
large numbers of houses; we also need to support our SMEs across
this country. My noble friend is absolutely right. That is why we
see quite a lot in the LUR Bill about beautiful homes for people
in this country. Therefore, local authorities will in future have
to produce design codes for their areas.
(CB)
My Lords, one way of helping small and medium-sized housebuilders
would be finally to end the pernicious practice of retentions.
Many small construction firms, often with very low profit
margins, are crippled by having up to 5% of the funds owed to
them withheld, and sometimes never paid at all. Roofing firms
alone are currently owned £300 million. This prevents them
investing in growth through skills or technology, and may even
force them into insolvency. There were over 4,000 construction
insolvencies in the year to March 2023. What specific progress
are the Government making to deliver their long-standing goal of
ending retentions by 2025, and specifically in removing
retentions from all public contracts?
(Con)
The noble Lord brings up a really important issue. I understand
that other government departments apart from DLUHC are meeting
the sector and working on this issue. We will deliver for the
sector as soon as we possibly can.
of Ullock (Lab)
My Lords, securing planning permission is the major barrier to
growth, according to 93% of SME builders. The Minister has
mentioned the Levelling-up and Regeneration Bill a couple of
times. In order to make a real difference quickly and promote the
use of SMEs in local authority tenders, will she accept our
Amendment 244, which asks local authorities to consider SMEs when
granting planning permissions?
(Con)
I can tell the noble Baroness that I will look at her
amendment.
(Con)
My Lords, further to my noble friend Lord Swire’s excellent
question, the number of sites with planning consent for fewer
than 100 dwellings has fallen by 38% over the past five years.
These are the sites most used by small and medium-sized builders.
Is there not a case for the planning system to promote much more
effectively the use of smaller sites, not just to help smaller
builders but to strengthen and diversify the construction
industry and accelerate the delivery of new homes?
(Con)
My noble friend is right. That is why the NPPF includes policies
to support SMEs; for example, it sets out that local planning
authorities should identify land to accommodate at least 10% of
their housing requirements on sites no larger than one hectare.
That might seem large, but we also make it clear in the framework
that local planning authorities should work with developers to
look at subdivisions in those areas where we could help speed up
the delivery of homes, particularly by SMEs delivering those
homes.
(LD)
My Lords, the brickmaker Forterra has shut its Howley Park
brickmaking plant because of a 31% decline in demand for bricks
in the past 12 months. That coincides with news that, in this
last financial year, the Minister’s department has sent back to
the Treasury £225 million unspent on affordable housing. Is it
not time that there was some connection inside the department to
make sure that the available money is spent on affordable
housing, possibly affordable social housing as a countercyclical
measure at a time when the private sector is under such
pressure?
(Con)
I do not know whether the noble Lord is aware, but we have been
through quite a lot of economic volatility, which has obviously
led to developers’ slowdown. Therefore, the amount of money
mentioned in the Guardian article that I believe the noble Lord
is referring to, about money going back to the Treasury, is not
quite correct. It is actually being put into projects of more
than one year, so it will be forward spent. As the economy
strengthens, as it is doing now in the housing sector, that money
will be available to build affordable and other housing.
(CB)
My Lords, the steep decline in SME builders is deeply disturbing.
Their market share has dropped from 40% to 10% in the past 35
years. How does increasing the market dominance of a small number
of big players square with the Government’s often-mentioned
mission to drive economic growth through innovation and
competition?
(Con)
As I said in answer to a previous question, we need both. We need
everybody, including small builders, local authorities and larger
builders, to make sure that we build the houses that this country
urgently needs. I am aware that the SME sector is currently
struggling with challenges, particularly with the macroeconomic
climate. We will continue to prioritise supporting the industry
and local areas and delivering the safe, high-quality homes that
this country needs.
(GP)
My Lords, the House often discusses problems of labour and skills
shortages. Yesterday the All-Party Parliamentary Group on
Apprenticeships, of which I declare that I am an officer, put out
a report, one focus of which was the difficulties that small and
medium enterprises, including builders, are encountering in being
able to take on apprenticeships and see them through. What are
the Government doing to deal with that pressing issue?
(Con)
My Lords, it is a pressing issue. The interesting thing is that
we recognise that the SMEs play a crucial role in promoting
skills in the construction industry and are responsible for many
of the training programmes, particularly for new entrants into
the sector. We are supporting construction skills through the
Construction Industry Training Board, which last year spent
nearly £150 million on training grants and apprenticeships across
the sector. It is important that we continue to support them,
because we need these skills in the sector and we need to grow
it.
