Thirty organisations representing builders, housing associations, local government and planners have jointly written a letter to the Government expressing concerns that the proposed ‘Infrastructure Levy’ won’t work. The National Federation of Builders (NFB) is one of those signatories.
Richard Beresford, chief executive of the NFB, said: “Over the last decade, the NFB and HBA have attended tens of meetings with the Government, civil servants and those conducting levy reform roundtables and our view has been consistent; we welcome levy reform to get rid of onerous section 106 but if planning reform, which includes more land coming forward, is not implemented first, then we risk creating unintended consequences that harm 99% of builders and likely decrease levy revenues.”
The proposed ‘Infrastructure Levy’ is expected to replace section 106, which is negotiable so creates delays and comes with unnecessary legal costs. On the surface, this is welcomed but the new proposal impacts the cashflow of developers due to early payment and land arrangement complexities, permits politicians to decide ‘integral’ infrastructure via planning conditions, continues to create avenues for legal challenge and is not focused on delivering more social housing.
Head of housing and planning policy for the House Builders Association (HBA), the NFB’s housebuilding division, goes into more detail: “Smaller builders already can’t cope with the cost of development and now the Government is expecting them to pay in advance for homes that are unsold. This is a cashflow nightmare.
We also foresee land access issues because planning reforms do not bring more land forward or force councils to allocate smaller deliverable sites. Our expectation is existing land pipelines will need to be exhausted before all landowners are comfortable with absorbing levy costs and this could take decades because without housing targets, there is no pressure to build out allocated sites.
For smaller builders who don’t have land pipelines and deliver on smaller sites of up to one hundred homes, landowners will know they hold the cards and so any allocated or outline permissioned sites they own will be fiercely competed for, often by non-housebuilders, who will simply assume they can make a site viable. However all too often on these sites end up not being viable, so sites end up not being delivered. This triggers a ‘call for sites’, where councils make up the lost numbers, often using large sites that SMEs cannot afford and do not submit.
SMEs will therefore continue to be squeezed out of opportunities and many with leave the industry, as is already happening. This is because making a loss in the hope that the broken planning process enables you to make profits elsewhere is housebuilder suicide.
They levy proposal also ignores that due to underinvestment by service providers, councils and statutory consultees, new development funds infrastructure works such as highways, grid reinforcement and climate related ambitions which won’t be part of the sites GDV analysis. This will push up contribution costs. The Government hasn’t even proposed obligations to ensure infrastructure works forced on developers through conditions and utilities are completed in a timely manner.
Much more can be said, such as why the infrastructure levy is being proposed for non-infrastructure purposes, but it’s worth ending with social housing.
If we want more social and affordable homes, expecting the market to deliver it is clever politics but terrible policy. The answer is to use more land and ensure planning policies support delivery. The current system relies on developers to build or fund social homes, when we know councils borrow more cheaply, own lots of land, write their own planning policies and don’t pay the same planning contributions. It’s time to explore why they can’t, or won’t deliver the social homes they demand, rather than assuming the market is the right mechanism for delivery.”
To view the letter that was sent to DLUHC click here
Notes to editors:
Rico Wojtulewicz is available for interview in conjunction with this written piece, for more information please get in touch
- NFB is the longest standing and most representative construction trade body representing 21,000 employees and 6.6bn turnover (FY 2020)
- The NFB represents builders, contractors and house builders across England and Wales. Founded in 1896, its members range from the sole trader to large, billion pound construction companies, with turnover ranging from below £500,000 to £1.1 billion. The NFB provides advice, training, and business services to ensure members stay up to date.
- The NFB campaigns on the issues that affect the construction industry such as procurement, skills, sustainability, and funding. It represents the industry to government and industry forums and is an active media commentator and policy influencer.
- For further information please contact the NFB press office on 03450 578 160 or email firstname.lastname@example.org