10 May 2023
Aldous calls for action to help small and medium-sized house builders facing planning delays and rising costs

Peter Aldous calls on the Government to ensure sufficient sites are available for smaller house builders, planning authorities are properly staffed, Homes England has the resources to provide finance and calls for zero rating of VAT for conversion and refurbishment work, to put such projects on a level playing field with new build.

Peter Aldous (Waveney) (Con)

It is a pleasure to speak under your chairmanship, Mr Robertson. I congratulate the Backbench Business Committee on granting this debate, and my hon. Friend the Member for Northampton South (Andrew Lewer) on securing and leading it.

Before I came to this place, for 27 years I practised as a chartered surveyor in Suffolk and Norfolk. Much of my work focused on the small and medium-sized house building sector, helping to secure planning permissions for sites and then selling them. Today, my interaction with the sector is less direct, although the conclusion I have reached is that it is now in a far less healthy state than it was. Some might say it is fighting for its very survival, and everyone in every area is far worse off for that.

It is important to highlight the advantages of a vibrant SME house building sector. Those businesses not only build much-needed homes, but do so with ingenuity, providing well-designed and bespoke properties, often on sites that present construction challenges that larger house builders shy away from. As they are deeply embedded in the local communities where they live, they have a sense of pride in the homes they build, which enhances the local street scene. They also have a significant positive impact on the local economy. They employ apprentices, engage architects, buy from local builders’ merchants and work with other local businesses such as electricians, plumbers and landscape gardeners.

At a time when we need to be boosting economic growth, there is an urgent need for a vibrant local SME house building sector right across the UK. Against that backdrop, it is concerning that the sector is not in rude health. In March, a report commissioned by the House Builders Federation, in partnership with Close Brothers Property Finance and Travis Perkins, found that planning delays and rising costs are crippling SME house builders. The conclusions are stark. Securing planning permission is the major barrier to growth. Those house builders cannot find sites. Local authority staffing shortages are exacerbating the problem. Rising material and energy costs are also a major concern. As we have heard, more than two thirds of the house builders are impacted by the nutrient issue, which has stricken development in over a quarter of local authority areas in England.

Finally, the sector as a whole is unhappy with the Government’s current approach on housing. The SME housing sector in the north Suffolk and Waveney area is still there, but it is dwindling. The faces are getting older and more wrinkled, and there are fewer new entrants, with many put off by the three barriers of planning, access to finance, and the legal complexities and bureaucracy associated with running a building company.

On a daily basis, my inbox is full of emails from people looking for a home in which they can live securely and comfortably. I liaise with the local council, which invariably does its best to assist. However, local councils are not magicians. They cannot conjure houses out of nowhere. It is in that context that we urgently need to revive the SME house building sector.

That brings me to the solutions. I have several suggestions. First, we must ensure that there are sufficient sites available for SME house builders. There is a concern that the abandoning of targets for local areas could lead to a reduction in the number of sites coming forward for development. Although it is early days, it should be noted that the number of housing projects granted planning permission in the last quarter of 2022 fell below 3,000 for the first time since that dataset was started in 2006. The number of projects for which planning approval was obtained in the whole of 2022 was under 12,500, compared with 21,000 in 2017. That situation needs to be monitored closely, to ensure that there is not an unintended and undesirable consequence of this change in national planning policy.

Secondly, we must ensure that local planning authorities are functioning properly. That is not a criticism of planning officers, who invariably do a good job in difficult circumstances. We must ensure that planning departments are properly resourced and adequately staffed. The planning process must become more streamlined, and we must ensure that suitable sites are made available for SME house builders. In recent years, there has been a move towards developing large garden village-type developments on the edge of towns. Although they have the advantage, from a strategic planning perspective, of being better able to provide the necessary supporting infrastructure, they do result in SME house builders effectively being excluded from the market.

My third point is that, in many respects, one of the solutions to the problem is already there in the form of Homes England, which has the ability to make sites available and to provide development finance through the levelling-up home building fund. Will the Minister undertake to provide Homes England with the resources to increase its work in those two areas, which are major obstacles that confront SME house builders? There is also a need to encourage high street banks to be more responsive and sympathetic to their house builder clients. There may be a role for the British Business Bank to promote such an approach.

My final point is perhaps a left-field suggestion: the zero rating of VAT for conversion and refurbishment work, so as to put such projects on a level playing field with new build. It strikes me that that could solve two problems at the same time: the slow demise of the SME house building sector, which is the subject of this debate; and the decline of our high streets and town centres, which need revitalising and where there is an opportunity to reuse millions of square feet of accommodation, often above shops, right across the country. SME house builders will often start their careers doing conversion work before moving on to new build. This idea could encourage more people into the sector. I ask the Government to give it full consideration.

We have a housing crisis in this country. SME house builders on their own will not solve it, but in the current situation, with the sector in gradual decline, we are seriously restricted in our ability to provide all people with a place that they can call home. We must also have in mind the enormous benefits that a vibrant SME house building sector can bring to local economies. We must set out a route map for the sector, which provides people with the opportunity, in the first instance, to start a business, and then to progress it and perhaps move on to become a regional company and then, if they want to, a national house builder.