GVA Chief Executive sets out wish list ahead of Autumn Statement.

Tuesday, 22 November 2016

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Gerry Hughes, Chief Executive at GVA sets out his wish list comments ahead of Wednesday’s Autumn Statement.

Commit funding now, not later

“It is hard to see how the Chancellor will present his first Autumn Statement in a way that is helpful to real estate. He remains significantly constrained by wider economic and even political circumstances, beyond his own control.

“Infrastructure investment into roads and rail will form a large part of his announcement, partly designed to ease commuter gridlock. But funding this and other ambitious “high value infrastructure” will present a challenge as tax-revenue is reduced. We fear the Chancellor could therefore use one of the Treasury’s older tricks of announcing the funding now, but deferring it’s availability until 2019 or even later. We would urge Government to avoid this, be bold and press on. Investment follows investment, and if an example can be set with larger scale infrastructure, then this will assist in ensuring that the smaller quick-win projects can commit and follow.”

More streamlined planning policy needed

“Automatic planning consents on brownfield land was a welcome addition to policy designed to speed up housing delivery. However we believe this only addresses a small part of the challenge we face as a nation to deliver 240,000 homes per annum.

“This policy alone shows us that the Government listened to concerns focused upon achieving more effective delivery, but if we are to meet housing targets, and targets we continue to fall short on, the redevelopment of suitable brownfield sites is only part of the answer. Difficult choices over releasing appropriate Green Belt sites for housing and other uses will need to be made. Avoiding the issue will not address the supply-side issues. Nor will it assist in raising economic productivity.

“Furthermore, the Government needs to consider how it might help with viability concerns in relation to some brownfield sites, for example, to address high remediation costs. Automatic planning consents may remove one barrier, but it still remains a real challenge in some areas to secure high quality, commercially viable development without financial support.

“We still have some way to go to ensuring that the Government’s intention to promote housing growth is translated into local action. It is up to the local authorities to recognise – and embrace – this change by delivering significantly more housing supply in a positive and pro-sustainable manner to underpin regional economic growth. This will mean a cultural change in some quarters, but failure to do so will mean a stagnation of growth.”

Tapping into pension funds

“With the expected release of the housing white paper alongside the Autumn Statement on Wednesday, we would welcome the Governments proposal to tap pension funds to support social housing delivery. Housing offers reliable, inflation-linked returns that pension funds need to match their outgoings. Where Government has struggled is in de-risking projects to make them investable. Unlike Heathrow’s third runway, housing with planning consent is low risk and the build-out period significantly shorter. These quick-win projects present huge opportunities to make hay whilst we wait for big-ticket projects to be delivered, which is the case of Heathrow will take well over a decade.”

Government to focus on Inclusive Place-based growth

“Inclusive growth, whereby economic and social policy are brought closer together and delivered hand-in-hand, needs to, as Stephanie Flanders of the RSA Inclusive Growth Commission put it, become the working definition of economic success in the UK. We want to see evidence from Government that this approach is adapted and placed right at the centre of how our core cities throughout the UK can grow. In the context of real estate, government needs to think of physical and social infrastructure investment in the same way. Philip Hammond has conveyed the need to focus on “high value infrastructure”, which we welcome and support. But if the scale of investment in skills and social cohesion is not matching that of the investment spearheading big physical projects then the longer term economic success of those programmes will suffer.

“Models for economic success and regeneration of inner city areas has not fully benefitted all the people living there. Nor has it reduced the social problems we expected that sort of social improvement to come with rising employment and economic growth. In fact they’ve become more entrenched.”

Read more GVA Autumn wishlist comments: