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21st November 2014
Author: Ursula Tebbet-Duffin, Research Assistant - DeHavilland
Speaking at an event entitled Glenigan Breakfast Briefing: A Review of Construction and Housing were:
The event was hosted by Glenigan.
Mr Lewis began by analysing the context of the construction sector, highlighting how the economic crash in 2008 had devastated the industry. He stated that house building had been at its lowest levels since 1920s, and said that the Government’s aim was to revitalise the house building industry. He stressed the reforms to planning legislation, which he said were enabling people to build more homes.
He criticised top-down planning quotas and stressed the importance of communities having influence over which houses were built and where, according to their needs. Citing the Neighbourhood Plans, he explained how this process had made people realise that development was desirable and necessary.
Moving on, he also stated that planning decisions and development projects were occurring at a fast rate, stressing that developments were happening in unexpected places. Moreover, he stressed the importance of continuing to support these changes.
Mr Lewis announced that he had no great plans for policy reforms concerning planning either this side of or after the General Election 2015.
Forecasting the dangers of the future, he referred to Labour’s planned “mansion tax” and a proposed increase in Council Tax, claiming that these were bad policies. He explained that Council Tax had never been a wealth tax. He moved on to say that the Government was already dealing with property tax avoidance and had increased Stamp Duty on high-value properties.
He praised the Government’s record of building affordable houses, stating that more affordable homes were being built now than had been built in twenty years. Moreover, he iterated the importance of SME builders developing in their local communities and hailed the Help to Buy Scheme for enabling people who would not ordinarily be able to afford to buy a house.
He praised the Government for dealing with the deficit which, he said, had enabled interest rates to remain at a historic low.
Concerning skills and training, Mr Lewis acknowledged that the lack of skills was an issue for the construction industry. He explained the work he had been doing, in conjunction with the construction industry and the Department for Business, Innovation and Skills, to encourage school-leavers and members of the armed forces to join the construction industry.
Finally, he stated that he was confident that by working together, the UK could have a strong and buoyant housing and construction sector.
In response to a question concerning Government policy on construction in the regions outside of London, Mr Lewis highlighted that investment in housing was spread across the UK and not just centred in London.
He also cited HS2 as a way of devolving power away from London. He stated that investment was occurring in the regions, but acknowledged that it would take a while for this to filter through.
A second questioner asked what measures the Government could adopt to help smaller development schemes to grow sustainably. Mr Lewis stated that he would be announcing a policy development concerning this issue before Christmas.
In response to a question concerning the quality of housing, Mr Lewis said that the majority of house building and construction was of a high quality. He acknowledged that the main reasons why people did not like estates being built was because they did not integrate into the adjacent settlements, either aesthetically or socially.
Mr Wilén explained that he would be giving an overview of Glenigan’s forecast for the construction industry. He highlighted that the public sector had been constrained due to the Government’s drive to reduce the deficit, and that the real growth had been in the private sector, business investment and in the housing market. Meanwhile, the public sector was very constrained with very little growth.
He observed that investment in social housing had been small and that investment in affordable housing was also limited. Mr Wilen rejected the Government’s positive statements regarding the growth of affordable housing.
Moving on, analysing health, Mr Wilén stated that overall, the sector was not faring well and was suffering from reductions in funding. However, he went on, the outlook for education was more positive than in the health sector.
Turning to civil engineering, Mr Wilén highlighted key infrastructure investments such as Crossrail and the Northern Line Extension, and stated that there had been sustained growth in the sector since 2008. He emphasised the fact that investment in these projects derived mainly from the private sector rather than public finance.
Concerning the consumer sector, he explained that whilst there had been an increase in consumer confidence, real household incomes were still under pressure. He predicted a closer alignment between earnings and consumption.
Referring to the housing market, Mr Wilén cited stricter mortgage regulations and the proposed “mansion tax” as reasons why the market had dampened. He noted that London had a different housing market to the rest of the UK due to the scale of international investment, but noted that Help to Buy had been popular both inside and outside the capital.
Referring to the retail, Mr Wilén acknowledged the structural changes underway in this sector, such as supermarkets returning to the high street and the rise of internet shopping. He also cited construction projects such as the Westfield development in White City.
He also highlighted issues with supply and demand in the field of office construction.
In summary, Mr Wilén stated that the Government was looking to the private sector to drive growth due to the financial constraints imposed upon the public sector. He cited improved consumer confidence and a growing housing market as positive developments.
Mr Herbert introduced the Middle East construction sector, stating that the IMF’s economic outlook forecasted a stabilisation of markets. The UAE was a stable place to invest, he added.
He explained that the economic downturn had not hit the UAE until 2010, and that Dubai was the cornerstone of the building market in the UAE. In terms of forecasting, Mr Herbert said that he expected the UAE to have the largest projects and construction market in 2014, overtaking Saudi Arabia.
Focusing on Dubai, Mr Herbert stated that the city had been awarded Expo 2020, which had generated positive sentiment even though recovery since 2011 had been gradual.
Moreover, Dubai was a non-oil economy and was a safe haven for capital in a region which had been ripped apart by civil unrest. This had contributed two per cent of GDP growth, he observed.
Debt constituted 102 per cent of GDP, which was concerning, Mr Herbert highlighted. He also noted that Dubai’s construction and transport sector accounted for 97 per cent of known future projects.
Finally, Mr Herbert affirmed his confidence in the UEA as a place to invest and develop construction projects.
Mr Chapman affirmed that market activity was increasing and that 40 per cent of the UK construction sector was public whilst 60 per cent was private.
He referred to the Government’s strategy which required all information concerning centrally funded projects to be submitted in a digital form, and suggested that a “technological revolution” was taking place, given the high number of digital devices people now owned.
He defined BIM as being about people understanding a building through the use of a digital model, and referred to the importance of providing information about an object’s geometry, behaviour and presentation.
To summarise, he highlighted that there were major changes occurring in the construction industry which should be embraced, and argued that technology could be used to help businesses, both large and small.
Responding to a question concerning Saudi Arabia, Mr Herbert stated that the Saudi Government was a more cautious spender than the UAE’s Government, which accounted for the fact that the UAE was overtaking Saudi Arabia is terms of construction growth.
Responding to a question concerning housing, Mr Wilén claimed that growth was filtering out to the regions and away from London.
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