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Hertfordshire Housing Conference9 November 2012

Housing and growth

The role housing associations can play in stimulating the local economy

Kevin ThompsonChief Executive

kevin.thompson@nhh.org.uk

www.nhh.org.uk

What I will cover

National picture What is driving the recoveryThe role construction could playGovernment thinking – stimulus packageThe contribution housing could make

Hertfordshire picture

Hertfordshire housing associations contribution and capacity

The way forward

What is driving the recovery?

Estimated GDP growth by sector to quarter 3 2012 

Impact on housing

Construction sector supply chain employs three million people and generates around 13% of GDP

Lowest level of housebuilding for 90 years

Housing represents 12% of construction down from 17%

232,000 new homes needed year on year

114,000 in 2011

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Contribution housebuilding can make 

New homes a quick way to boost growth – 330,000 plots already with planning permission (CPRE)

Benefits retained within local economies – jobs, schools, suppliers, local people housed to work in local businesses

Compare High Speed 2 – economic benefits being assessed from 2037.

Impact on investment – attractive, stable, long term

Contribution to finance sector recovery•£10 billion bond financing since 1987•£5.4 billion since the 2008 banking crisis

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Facts and figures 

Additional 1% of GDP for every 100,000 homes built

1.5 jobs in construction for every home built

Up to six jobs in the supply chain for every home built

Every £1 spent on construction generates £3 in the wider economy

(source National Housing Federation)

  

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A practical example 

Impact of spending £1 billion on shared ownership properties

66,000 new homes

99, 000 new jobs in construction

396,000 new jobs within supply chain

£15.25 billion generated within the wider economy

(source National Housing Federation)

  

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Political tide turning

David Cameron “The government is serious about rolling its sleeves up and doing all it can to kick start the economy. (the proposals) provide a comprehensive plan to unleash one of the biggest homebuilding programmes this country has seen in a generation” Nick Clegg“Todays major boost to housing and planning will make it easier to build a home, easier to buy a home and easier to extend a home. A boost that will get Britain building again. Building thousands of affordable homes and generating thousands of new jobs.”

Ed BallsLabour commitment to spending £3 billion on new homes

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Homes for Britain

40 organisations connected withhousing and construction promotinghousing as ‘a driver for growth,mobility and strong communities’

Mark PriskLaunching the campaign at the Conservative party conference “delighted to support this initiative and strongly support the principle of building more homes”

John Cridland, Director General CBI“The single most important thing the government can do to get the economy going is to get housebuilding going. We need the housing equivalent of the Olympics”

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Prime minister’s stimulus package 

Announcement 6 September pledged

£40 billion equity guarantee for infrastructure

£10 billion equity guarantee for private and affordable rented housing

Extra £200 million equity finance to stimulate building for rent

Extra £300 million for affordable and empty homes

Planning holiday and Section 106 changes around non-viability

Accelerate the release of public land via the HCA

Additional support for first time buyers

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Prime minister’s stimulus package 

In order to

Generate 70,000 new homes including affordable and starter homes

Generate 15,000 new affordable homes

Fast-track the planning process for new development

Support 140,000 jobs in the construction sector

Support investment in new and existing homes

Support the government’s aim of a market led boost for the economy

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Initial response

New money for affordable housingInsufficient detail. Strings attached? Will it be worth it?Expressions of interest only been sought to date Planning relaxationsBacklash of concerns about what might go up?

Section 106Is there slack in the planning system to reduce time taken?Will appeals be any quicker?How many stalled sites will come forward to be renegotiated?

Scrapping S106 entirely resisted for now  

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Housing associations in Hertfordshire

Hertfordshire Chief Executive’s Group

Aligned in the Hertfordshire Housing Consortium with local authority heads of housing

B3 Living Housing AssociationHightown Praetorian & Churches Housing AssociationHoward Cottage Housing AssociationNorth Hertfordshire HomesOrigin HousingRiversmead Housing AssociationSouth Anglia HousingThrive HomesWatford Community Housing Trust

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Economic impact in Hertfordshire 

 Spend in the local economyCollective turnover £290 millionAmount spent on property maintenance £87 millionAmount spent on suppliers £125 millionStaff salaries - largely spent in local economy £63 million

JobsNumber of employees 1,800Number of apprentices and trainees 35

Homes for Hertfordshire workersAffordable homes provided 52,000Proportion of affordable homes in the county 60%Households we house 10%

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Indirect impact on the local economy

Approach to Procurement

Strategies to make it easy for smaller local firms to tender for work•Advertise in Hertfordshire eg Supply Hertfordshire Journal•Buyers events•Toolkit to assist bidding for work•Our own pre-qualification standards as alternative to Constructionline to bid•No minimum turnover - assess risk relevant to type and value of work being sought

OJEU tendering evaluation criteria includes•Commitment to skills and training•Encouragement of local employment•Helping local communities thrive

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Indirect impact on the local economy

Housing the workforceHigh private sector rents 37% rise in last five years – likely to be 27% higher by 2017 on current trends – discouraging modest income workers who drive the economy from settling in high value areas such as Hertfordshire RegenerationRedevelopment of shops, community facilities, improving neighbourhoods – encouraging and retaining investment

Contribution to employment and skillsContribution to Hertfordshire labour market – recycling skilled workersMinimum of £2.9 million on training

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Stimulating supply 

Public land release

Easy economic impact for government to release this

Government owns 40% of UK land

Enough government owned brownfield land to build two cities the size of Leicester

Government commitment to stimulate release – little to show

Contribution local authorities can make

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Stimulating supply Certainty

Rents – commitment to current RPI based regime only till 2015

Flexibility on use of assets – to encourage investment in new homes

Government grant? Yes or no.

Chancellor’s Autumn statement

Spending Review 2015