Philip Barnes – Blog

THE ECONOMIC CASE FOR HOUSING AND CONSTRUCTION

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The 20th December was the day the world was supposed to end. It was also the last working day before Xmas and it sure felt like armageddon was looming as the office struggled to meet the various, “can we have it done by Xmas please” deadlines. So we slaved away completing work which wasn’t then looked at for at least two weeks. Thanks Santa.

More accurately I should say thanks Andrew Adonis because much of our recent work has involved presenting arguments to the Adonis North East Economic Review being undertaken for the North East Local Enterprise Partnership (NELEP). One key project involved working with the National Housing Federation and the Housebuilders Federation looking at the economic case for a much stronger focus on building more houses to deliver regeneration and growth. Some of the statistics which emerged were frankly, remarkable.

Together housebuilders and housing associations employ more than 10,800 people and train approximately 280 apprentices in Durham, Tyne/Wear and Northumberland. In 2012 the sector achieved turnover in excess of £1billion in the NELEP area. In 2012 alone 400 acres of brownfield land was remediated, 3500 new trees were planted and over £31million was invested in transport infrastructure and new community facilities. Its worth remembering that the NELEP area is only 7 local authorities.

Our report to Adonis urges NELEP to work with local authorities, developers, lenders and others to create a regional “Deposit Pot” which can be used to enable first time buyers to get onto the housing ladder thereby stimulating the market and our economy. The report also recommends a series of measures to improve our planning system.

We estimate that if NELEP follows our advice then, by 2018, over 5,000 extra jobs would be created on top of the 10,800 existing jobs in the sector. This new employment would, in turn, slash £74.5 million each year from the Jobseekers Allowance bill. £965m of extra money would be generated in the wider economy and the local councils in the NELEP area would receive an extra £22million each year from the Government in New Homes Bonus at a time when arts and libraries are being considered for closure. So masses of new jobs, more government money and more private sector spending into the area yet the Treasury saves money. Sounds compelling to me.

Part of the work has also involved dispelling inaccurate myths and misconceptions about housebuilding. Firstly that it is a low pay, low value sector in the NELEP area. In reality the average sector salary is £28,000 – way above the regional average. Secondly the myth that the area doesn’t need new homes because it is losing population and as an industry it doesn’t drive economic growth. Again the reality is that the population of the NELEP area is forecast to grow by around 7000 people per year or 137,000 new people by 2030. They all need a home.

In terms of driving economic growth, each volume housebuilder supports, on average, 140 supplier businesses whilst good quality new homes will actually attract new footloose entrepreneurs and wealth generators to the NELEP area. The recent Newcastle University case study of Wynyard comprehensively proves this.

Surely any realistic picture of economic success in 2030 must include a housing stock which is modern, high quality and fit for 21st century families. At present we have far too many outdated older terraces, flats and rented properties.

We have also recently been working with Developing Consensus (DC) in relation to the role which the property and construction sector can help drive inward investment. DC is a coalition of developers, property agents, architects and economists working together with the sole aim of making Greater Newcastle more attractive to inward investors. Again the work threw up some amazing figures. In 2012 alone, during deep recession, the sector employed approximately 10,000 people – 5,000 on site, with a further 5000 in support businesses such as architects and quantity surveyors. And we estimate that the new commercial buildings developed in 2012 will accommodate 12,000 employees across various economic sectors. Without those new modern buildings there is no guarantee those jobs would have been created.

The property sector’s “asks” of the Adonis Review are threefold. Firstly to direct funding and investment towards improving the connectivity of the region. A direct flight to the US and a high speed train link to London are the priorities. Secondly to prioritise the faster release and delivery of major new economic development sites at Newcastle Airport, The 2 Ports, Team Valley, Tyne Tunnel and the A1/A690 junction. And finally to support Lord Shipley’s call for a Combined Authority across the NELEP area with powers over transport, planning, housing and economic development.

All in all plenty of bedtime reading for Lord Adonis this January and February. It is perhaps timely for him to remember that housebuilding alone employs more people in the area than motor manufacturing and call centres combined. With the potential to easily grow new jobs by over 46% by 2018 the case is clearly strong.

Author: philipbarnesblog

Group Land and Planning Director for Barratt Developments PLC. FRTPI, FRICS

One thought on “THE ECONOMIC CASE FOR HOUSING AND CONSTRUCTION

  1. Pingback: Short term fix or long term solution: Why getting Britain building matters for all of us |

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