Week commencing 29 January 2018

In today's bulletin

• 200,000 homes target for first wave of infrastructure funding
• Right to Buy has become unsustainable

• HS2 launches £1.8 billion contract race
• Brexit threatens UK energy supply

Property, Planning and Regeneration

200,000 homes target for first wave of infrastructure funding

Approximately 200,000 homes could be unlocked by the first £866 million released from the Government’s Housing Infrastructure Fund, ministers have claimed. Funding for 133 council-led projects across the UK was confirmed on 1 February by the Secretary of State for Housing, the Rt Hon Sajid Javid
MP, and the Chancellor of the Exchequer, the Rt Hon Phillip Hammond MP. The investment is the first wave of funding from the Government’s £5 billion Housing Infrastructure Fund, which aims to accelerate housing delivery by funding infrastructure projects including new roads, cycle paths and land remediation.

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Right to Buy has become unsustainable

Councils cannot keep up with the current rate of Right to Buy sales and must be given additional powers to manage their stock of social housing, the Local Government Association (LGA) has said. New analysis released on 2 February shows that, since the Government raised the limit on discounts in 2012,
the average reduction has increased 132 per cent to £60,000 in 2016/17, with sales rising 409 per cent in the same period. The LGA, which represents 370 local authorities in England and Wales, says councils must be allowed to set discounts locally and retain sale receipts in full if they are to keep pace with the replacement of lost stock..

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Housebuilders embrace innovation

Housebuilders are increasingly investing in modern building techniques to boost construction output, a new survey by Lloyds Bank has found. Published on 26 January, the third annual Housebuilding Report revealed that 82 per cent of building companies claimed to be more focused on innovation than
ever before, with 68 per cent already investing in new methods such as modular housing construction. The report also confirmed that Brexit and a skills shortage remained key industry concerns, with 51 per cent of firms committed to setting up apprenticeship schemes.

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Construction sector lacks confidence in hitting housing target

Confidence that the Government’s overall housing strategy is enough to meet housebuilding targets is low amongst sector workers, the latest RICS Construction and Infrastructure Market Survey has found. Released on 1 February, the survey assessed industry sentiment on policies included in the Autumn Budget
and Housing White Paper for lifting delivery to 300,000 homes per year. Most respondents (37 per cent) agreed that a £1.1 billion fund to unlock strategic sites was the most effective strategy for boosting delivery, whereas 18 per cent advocated lifting borrowing caps for local councils.

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Subdued start to the year for UK construction companies

Growth in the UK construction sector slowed to a four-month low in January while new orders declined, IHS Markit’s Purchasing Managers’ Index (PMI) has found. Released on 2 February, the survey data suggests that housebuilding – the construction sector’s major growth driver – has slipped
into decline after 16 months of continued expansion. While many firms attribute a current lack of new business to market uncertainty, confidence of future growth improved with many firms now anticipating new project wins later in 2018. .

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Loss of greenfield land to construction accelerates

An area of greenfield land the size of Glasgow is built on every year in England due to a record number of new developments, an investigation by The Times has found. Since the relaxation of planning rules in 2012, an average of 170 sq km of development has taken place each year on greenfield land,
which is classified as “previously undeveloped” space including farmland, gardens and forests. According to the investigation, the rate of development between 2013 and 2016 was more than double the 25-year average, with greenfield sites supplying 54 per cent of land used for development.

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“Surprising” pick-up for house prices in January

House prices benefited from unexpected growth in January despite a squeeze on incomes and slowing retail sales, achieving a new record high average UK value of £211,756. Nationwide Building Society’s House Price Index found that growth accelerated from 2.6 per cent in December to a 10-month high
of 3.2 per cent in January. The index also predicts that housing market activity will slow only modestly in 2018, since unemployment and mortgage interest rates are expected to remain low by historic standards.

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Transport

HS2 launches £1.8 billion contract race

Two contracts worth more than £1.8 billion have been put out for tender as HS2 begins its search for rail systems, track and mechanical and electrical engineering contractors. HS2 Ltd launched the bidding process on 30 January, with successful bidders to deliver Phase One (London to Birmingham) and Phase 2a (Birmingham to Crewe)
of the high-speed rail project. The first contract, worth around £1.55 billion, will oversee construction of the line’s main infrastructure, including the overhead catenary system (OCS) and works in train stations. The second contract, worth circa £330 million, is for the tunnel works required.

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Elizabeth line to unlock 180,000 homes

The Elizabeth line could deliver significant regeneration in London and the South East including the potential for 180,000 additional homes by 2026, new research by property consultancy GVA has found. The Crossrail Property Impact and Regeneration Study 2012 – 2026, published on 30 January,
suggests the line could also generate 4.4 million sq m of commercial office and retail space and more than 300,000 new jobs. Figures released in 2012 initially forecasted that the Elizabeth line, due to open in December 2018, would help deliver 57,000 new homes.

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Rail group announces plans for 7,000 new carriages

More than 7,000 new railway carriages will be brought on to Britain’s railways by 2021, according to figures released by the Rail Delivery Group on 29 January. The group argues that this represents an investment in rail
by the private sector of almost £14 billion. Around 4,000 of these new carriages will be used to replace outdated rolling stock, while the additional carriages will allow 6,400 extra services each week by 2021.

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Highways England urged to limit stretches of roadworks

The Government is exploring ways to reduce delays for motorists in the UK with Secretary of State for Transport Rt Hon Patrick McLoughlin reportedly
urging Highways England to make stretches of roadworks no more than two miles long.

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Energy and environment

Brexit threatens UK energy supply

Post-Brexit UK may be more vulnerable to energy shortages caused by extreme weather and generation outages, a report by the House of Lords’ EU Energy and Environment Sub-Committee has found. Released on 29 January, the Brexit: energy security report states that the maintenance and construction
of the UK’s secure energy system is reliant on European investment. It suggests that leaving the bloc may jeopardise the construction of future nuclear generation sites, including Hinkley Point C, if access to specialist workers is curtailed. The committee has called on the Government to set out how it will work with the EU to anticipate and manage these challenges.

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Energy UK sets out vision for post-Brexit energy relationship

Energy UK is calling for regulatory alignment with the European Union post-Brexit and continued cooperation on climate change, stating that a comprehensive energy and climate chapter should form part of any future trade agreement. In its paper Brexit and the future EU-UK energy relationship,
published on 2 February, the trade association says the main objectives for the industry should be continued participation in the Internal Energy Market and the Single Energy Market in Ireland, as well as collaboration to tackle climate change. Energy UK argues these principles are vital for ensuring security of supply while keeping costs down for both UK and EU consumers.

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