Planning matters

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The Economic Impact of House Building

The Economic Impact of House Building

Sarah Fabes 13 Aug 2018
The Government has set out its stall for tackling the housing crisis, as emphasised most recently by the new revised National Planning Policy Framework (NPPF), which whilst covering all land use planning matters, was nevertheless firmly focused on boosting housing supply. But new housing doesn’t just address the housing crisis. It has an economic benefit too. Lichfields was commissioned to undertake research on behalf of the Home Builders Federation (HBF) to quantify the economic contribution of house building, and in particular, quantify the ‘economic dividend’ that could be realised by delivering the Government’s broad ambition for c.300,000 new homes per annum. Our analysis updated a similar report we prepared for the HBF in 2015. Our 2018 report - The Economic Footprint of House Building in England and Wales – was launched on the 24th July, the same day Government finally released the new NPPF. Our report details the key economic implications and benefits of new house building activity within England and Wales. It highlights how the delivery of 224,000 new homes last year in England and Wales resulted in significant contributions: The investment and expenditure spent on new land for housing development amounted to nearly £12 billion (£11.4 billion in England and £500 million in Wales). In 2017/18 house building generated £38 billion of economic output to the Great Britain economy. The number of people directly employed in the construction of domestic buildings in England and Wales equated to 239,000 in 2016. The majority of these jobs (224,500 or 94%) are based in England, with the remaining 14,500 (6%) based in Wales. The industry contributes to the Exchequer through a range of taxes such as Stamp Duty Land Tax, Corporation Tax and Value Added Tax (VAT). The house building industry also provides significant contributions towards infrastructure development and the provision of affordable housing. Across England, over £804 million of S.106 contributions are made each year towards funding these facilities and services, with a further £37 million of contributions made in Wales. Financial contributions are also invested in providing education facilities, sport and leisure facilities, community facilities and open space. New housing development also offers an opportunity to increase local expenditure as residents spend their money on goods and services in the local area. But these already will significant benefits will increase further if annual house building was to increase to just over 300,000 to broadly match the Government’s ambitions for England and projections for Wales. This would result in the following benefits: Our analysis shows that boosting house building will be good for our economy as well as helping to address the housing crisis. Our footprint report for the HBF builds on Lichfields’ track record of economic impact assessment and support to our clients in helping them to maximise and clearly evidence their contribution to economic growth. Both on individual projects and across their corporate footprint, we work with some of the largest and most successful companies in the property sector including commercial developers, housebuilders, retailers and industry bodies, to help them assess their economic contribution. To find out more, have a read of our new report and get in touch with Sarah Fabes.

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Draft NPPF: business as usual?

Draft NPPF: business as usual?

Ciaran Gunne-Jones 16 Mar 2018
The National Planning Policy Framework (NPPF), consulted on in 2011 and published in 2012, came as the UK economy was emerging from the deepest recession in a generation. Today, that period of recession continues to cast a long shadow in terms of impact on the public finances and productivity levels, and is now complicated by the economic uncertainties created by Brexit. In his Spring Statement earlier this week, the Chancellor Philip Hammond summed up that there is “light at the end of the tunnel”, but the latest Office for Budget Responsibility (OBR) forecasts point to a prolonged period of somewhat sluggish growth ahead (see Lichfields’ analysis). In that context, the Government has chosen to make limited substantive change in terms of directing planning policy for the economy and business through its recently published draft NPPF. An “economic objective” remains the first overarching objective of the planning system (paragraph 8, point a). However, the wording has been broadened to expressly refer to the need to, “support growth, innovation and improved productivity” (emphasis added). Productivity is a concept rarely explored in any great detail in plan-making or decision-taking, but the added emphasis seems appropriate given the national imperative on the issue. In line with the draft NPPF’s new structure, economic considerations (including the rural economy) now have their own chapter (6). In the current NPPF, “building a strong, competitive economy” is the first element of delivering sustainable development – tellingly, it now follows the chapter on delivering a sufficient supply of homes. In terms of content, however, the wording of the draft chapter looks familiar when compared to paragraphs 18-22 of the current NPPF. In line with the wider amendments to the current NPPF, the text has been reduced and simplified. The widely-cited line that the planning system should do, “everything it can to support sustainable economic growth” (paragraph 21 of the current NPPF) disappears, but the general direction – and note the further reference to productivity – remains clear: “Significant weight should be placed on the need to support economic growth and productivity, taking into account local business needs and wider opportunities for development.” (paragraph 82) Also notable is the specific reference to the Government’s Industrial Strategy White Paper. This is not surprising, and is sensible; as written in an earlier blog, Government very much sees the Strategy as cutting across all areas of policy-making. In the same vein, planning policies should now have regard to Local Industrial Strategies (paragraph 83, point a). The Industrial Strategy, and how it is manifested locally, is therefore set to become more influential in plan-making and a potential material consideration. Local authorities and sub-regions will therefore want to be proactive in bringing forward Local Industrial Strategies not only to help realise growth opportunities in their area but also given the weight they might carry in making future planning decisions. On employment land more specifically, the NPPF currently states that, “planning policies should avoid the long term protection of sites allocated for employment use where there is no reasonable prospect of a site being used for that purpose” (paragraph 22). This no longer appears in the economy chapter, but now features in expanded form in chapter 11 on “making effective use of land”. The sentiment is largely the same but the test has been sharpened: regular reviews of allocations are required and, even prior to plan reviews, applications for alternative uses should be supported where unmet needs for development could be provided for. Furthermore, in “areas of high housing demand”, the use of existing employment (and retail) land for homes is supported where this does not “undermine key economic sectors or sites”. Taken overall, the draft NPPF looks very much like ‘business as usual’ when it comes to planning for the economy – there’s little in the way of new detail or prescription. As they start to come forward, Local Industrial Strategies will need to give consideration to how local plans can help deliver wider economic objectives, particularly improving productivity. The Government appears to view employment land as something of a sacrificial lamb in the quest to meet housing needs (in contrast with the much stronger policies to protect employment land proposed in the draft London Plan, as detailed in recent research by Lichfields). It’s also less clear how well the approach proposed nationally sits with the Government’s clearly stated intentions to support economic growth and productivity. Ultimately, local authorities will need up-to-date and more comprehensive evidence to inform their judgments about the need for, and relative importance of, the employment land in their areas, particularly in the face of added pressure for release to other uses. Economic evidence looks set to remain key to planning decision-taking. See our other blogs in this series: National Planning Policy Framework review: what to expect? Draft revised National Planning Policy Framework: a change in narrative NPPF consultation proposals – what could they mean for town centres? NPPF consultations – what could they mean for designers? Draft NPPF: heritage policy is conserved… Draft NPPF: implications for aviation? Draft NPPF: more emphasis on healthy and safe communities Lichfields will publish further analysis of the consultation on the draft revised NPPF and its implications. Click here to subscribe for updates.

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