News analysis Councils and builders encouraged to work in tandem

6 Dec 07
If the government was looking for someone to crack the whip over the house-building industry, John Callcutt was probably not the right man.

07 December 2007

If the government was looking for someone to crack the whip over the house-building industry, John Callcutt was probably not the right man.

He was certainly better placed than most to speculate over whether private builders' objectives coincide with those of a government striving to provide 3 million extra homes by 2020, However, it was unlikely that the former chief executive of leading developer Crest Nicholson would deliver any damning criticism of an industry that he knows so well.

After leaving the company in early 2006, Callcutt was briefly chief executive of the regeneration agency English Partnerships before being invited by the Department for Communities and Local Government to explore how house building can be speeded up.

Rather than strongly criticise developers or the much-maligned planning system, his review, published on November 22, attempts to give the industry a firm push in the right direction. More importantly, it also provides the government with extra leverage to demand more from all players in the field – regardless of whether they are motivated by profit.

Housing minister Yvette Cooper responded to the report by announcing a new legal definition of what constitutes a 'substantial start' by developers. This is designed to avoid long delays in construction after planning permission is granted.

In particular, Cooper hopes to speed up development on public sector land, including up to 900 disused sites being examined by English Partnerships, through new 'fast-track' contracts.

Buoyed by the news that Callcutt had cleared house builders of excessive land-banking, the Home Builders' Federation broadly welcomed the measures, claiming that in 97% of cases construction starts within three months.

But it warned that fast-track contracts might make sites less attractive to private firms. 'Anything like that is entirely within the public sector's gift, but there may be implications in terms of the price that the development industry can reasonably pay,' says John Slaughter, the HBF's director of external affairs.

Callcutt says developers have little option but to accept the new definition of when they must start building, or they would, in effect, be admitting that the current system is abused. Nor should fast-track contracts, which will also affect registered social landlords which buy up public land, be too controversial.

'Most developers and housing associations will be happy, providing that they can price it in before they commit themselves,' he says.

Figures compiled by the HBF and the Royal Town Planning Institute show that private builders own, on average, between 2.5 and 2.7 years' worth of land that is awaiting development. 'We didn't think that was excessive,' adds Callcutt.

Nevertheless, his review suggests that developers should set out the status of land holdings more clearly in financial and shareholders' reports.

This recommendation was accepted by Cooper. 'We want to stamp out any potential for hidden land-banking by making sure that land assets are completely transparent in financial statements,' she said. She is also keen on Callcutt's plan for an independent customer satisfaction survey on new homes.

Under Callcutt's proposal, builders who fail such surveys would be automatically barred from receiving public grants or bidding for public land. The Office of Fair Trading is to look further into the idea of independent surveys on behalf of the DCLG.

Once again, the HBF seems unconcerned. Surveys carried out by the federation show that about three-quarters of people moving into new homes are satisfied with the quality, with the remainder split between those who are dissatisfied or unsure.

In spite of calling for independent surveys and a new integrated house-building inspectorate, Callcutt warns against excessive regulation.

Minded that the government is demanding higher design standards, greater energy efficiency and wants all new homes to be zero carbon-rated by 2016, he stresses that house building must remain attractive to the private sector.

Higher standards are needed, he says, to ensure that planners and builders do not repeat the mistakes of previous decades, leading to a new generation of homes having to be knocked down again within 30 years.

'The new inspectorate is not there to impose more regulation but to rationalise it and make it production-friendly,' he says.

'We need simpler and better regulation that is more joined-up but, in spite of everything, costs are going to go up.'

The vital role of local authorities in encouraging house building is acknowledged in the report. Callcutt wants greater incentives for public and private sector bodies to work together, with councils selecting preferred development partners for urban sites.

His review describes the historic relationship between councils and developers as being one of 'mutual suspicion and mistrust'. But, he adds, experience in housing market renewal pathfinder areas and elsewhere suggests this is slowly changing.

Martin Wheatley, housing programme director at the Local Government Association, agrees that councils should redouble efforts to work closely with developers so that place-shaping can be carried out 'with an eye to commercial reality' on all land – not just public sector sites.

While planning committees' responsibilities must be preserved, councils should set out in local development frameworks where house building will be encouraged and start an early dialogue with developers, he adds.

According to Trevor Beattie, director of corporate strategy at English Partnerships, Callcutt's 'perceptive' conclusions will help to reassure the industry while encouraging councils to smooth the development process on local authority and other sites.

The Homes and Community Agency, which is due to takeover EP's regeneration work in 2009, will expect councils to take on a more active development role alongside private developers and reduce the tensions involved in new house building.

'If you empower local authorities, working with competitively chosen preferred developers, you are more likely to get a solution to these tensions quickly,' says Beattie.

The National Housing Federation said Callcutt should have gone further and recommended tougher measures to ensure all homes meet zero carbon standards by 2016. At present, only homes supported by government grants (most of which are built by housing associations) are required to meet the code for sustainable homes.

Five steps to speed up house building — the government's response to the Callcutt review

  • Tougher rules to reduce delays after planning permission is granted, including a new definition of a 'substantial start' by developers
  • Fast-track contracts that stipulate how rapidly homes are built on disused public land
  • Possible independent customer satisfaction surveys on new housing
  • UK Green Building Council to advise on new body to co-ordinate the introduction of zero carbon standards for all new homes by 2016
  • New industry standard to increase transparency by showing how much land developers hold for future house building


Did you enjoy this article?