Week commencing 4 January 2016

In today's bulletin

• Housing and Planning Bill takes step forward
• Government to build 30,000 affordable ‘starter homes’

• New projects authority launched to support infrastructure pipeline
• 2015 a record year for wind energy generation

Property, Planning and Regeneration

Housing and Planning Bill takes step forward

The Government’s Housing and Planning Bill was debated long into the night by Members of Parliament on 5 January. As part of the Report stage – a chance for MPs to consider amendments to a Bill – new clauses were discussed in a packed House of Commons, with the decision to hold the debate after 9pm proving controversial. One of the most far-reaching new clauses was proposed by the Rt Hon Sadiq Khan MP, Labour member for Tooting and the party’s candidate for Mayor of
London, which would allow local authorities to require that a proportion of new housing is marketed exclusively to local first-time buyers. Although it was ultimately voted down, the proposal does shed some light on Mr Khan’s priorities for the upcoming Mayoral race. The second day of the Bill’s Report stage and its third reading are scheduled to take place on 12 January.

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Government to build 30,000 affordable ‘starter homes’

Also included in the Bill and announced on 4 January, the Government is to take a more active role in housebuilding by directly commissioning thousands of new affordable starter homes. The Government insisted that work would start this year on the first tranche of 13,000 homes on four sites outside London as part of its new policy to directly build homes on publicly owned
land, which it argues will speed up the construction process and aid smaller building firms. Also announced on 4 January was a £1.2 billion Starter Home Fund to help fast track development on brownfield land with the aim of providing at least 30,000 new starter homes and up to 30,000 properties for private sale on 500 new sites throughout the country by 2020.

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Housing Zones get funding boost

In addition, 19 of the 20 existing Housing Zones announced in the 2015 Budget are to receive nearly £6.3 million in Government funding to help tackle the nation’s housing shortage. Announced on 5 January, the majority of the funding will go to councils to support the redevelopment of brownfield
sites, with councils partnering private developers to deliver the housing. The funding is part of the government’s wider strategy to deliver one million homes by 2020.

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Nearly half a million homes approved and not under construction

A record 475,000 homes with planning permission in England have yet to be built, according to a Local Government Association (LGA) study, published on 7 January. Undertaken by industry experts Glenigan, the study suggests that the number of unimplemented planning permissions has increased
by nearly 20 per cent in the past two years. The LGA has used this new research to call on the Government to give councils more power to invest in new homes and force developers to build housing more quickly.

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London construction costs among world’s highest

London has been revealed as the world’s second most expensive city in which to build. The 2016 International Construction Costs Index, which analyses the relative costs of construction in 44 major cities, found that London had the highest construction costs of those in Europe and was only
outpaced by New York in the worldwide rankings. Published by Arcadis in December 2015, the report attributed London’s high construction premiums to the failure of contractor capacity to keep pace with the rapid rise in bidding opportunities, created by strong demand from domestic and foreign investors.

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December rebound for construction sector performance

The latest Markit / CIPS UK Construction Purchasing Managers’ Index (PMI) has revealed a recovery in construction industry performance in December, after it reached seven-month lows in November. Published on 5 January, the seasonally adjusted index registered 57.8 in December, a 2.5 point rise
on the previous month. The sector’s improved performance was predominantly driven by a rapid increase in commercial construction activity, which grew at its fastest pace since October 2014. Industry-wide new business volumes for the month also experienced strong growth.

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House prices rise by lowest values in a year

UK house prices rose by 1.6 per cent in the last quarter of 2015 compared with the preceding three months, with quarterly rates of change now sitting below two per cent for the second consecutive month. The latest figures from the Halifax House Price Index, published on 7 January, also show that
year-on-year house prices rose by 9.5 per cent in Q4, the fastest annual growth in nine years. Home sales and mortgage approvals also both increased in the last part of the year, though housing supply fell for the tenth month in a row.

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National Infrastructure Commission consultation launched

The future governance, structure and operation of the National Infrastructure Commission is currently the subject of a consultation launched on 7 January. The Commission will advise on the UK’s most complicated infrastructure challenges by adopting a more long-term approach to the country’s infrastructure needs. Providing independent and reliable analysis of future
challenges, it will initially report on three key projects ahead of the 2016 Budget: the state of northern transport; significant investment in London’s transport infrastructure including Crossrail 2; and a review of energy infrastructure to ensure future demand is met. The consultation will operate for ten weeks from 7 January to 17 March.

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New projects authority launched to support infrastructure pipeline

A new Infrastructure and Projects Authority was launched by the Government last week to provide expert support for the management and delivery of major transport schemes. Announced on 6 January, the organisation combines existing bodies, Infrastructure UK and the Major Projects
Authority (MPA), to offer financial and commercial support to upcoming projects, as well as providing independent assurance of schemes including Crossrail and the Thames Tideway Tunnel. The Authority will report jointly to the Chancellor of the Exchequer and the Minister for the Cabinet Office.

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Major Government projects rated ‘in doubt’ or ‘unachievable’

A third of major Government projects are ‘in doubt’ or ‘unachievable’ if significant change does not occur, according to a progress report published by the National Audit Office on 6 January. Delivering major projects in government 2016 highlights that the number of projects rated as ‘in doubt’ or
‘unachievable’ has increased since 2012, although the report does note that the new Infrastructure and Projects Authority has taken some positive steps towards improving the delivery of projects.

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Energy and environment

Six-year programme of flood defence upgrades promised

The Secretary of State for the Environment, Food and Rural Affairs, the Rt Hon Liz Truss MP, has promised to spend six years and £2.3 billion upgrading the UK’s flood defences in the wake of major flooding across the north of England. In a statement delivered to the House of Commons on 5 January, Ms Truss also unveiled a national flood resilience review, which will examine
expenditure, infrastructure resilience and the efficacy of current forecasting and modelling efforts. Kerry McCarthy MP, the Shadow Secretary of State for the Environment, Food and Rural Affairs, responded to the statement by calling for an independent review and a “long-term co-ordinated response” to flooding.

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2015 a record year for wind energy generation

2015 was a record year for wind energy generation, according to official statistics from National Grid and published by RenewableUK on 5 January. Last year saw onshore and offshore wind farms
supply 11 per cent of the UK’s total electricity was generated by wind – up from 9.5 per cent in 2014.

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Other News

UK’s private sector growth increased in last quarter of 2015

Growth in the UK private sector picked up in the last three months to December, according to The Confederation of British Industry (CBI). Published on 4 January, the latest CBI Growth Indicator, which evaluates economic activity across a number of different sectors, indicates that the economy is
set to grow around 20 per cent over the next three months, well above the long-run average of 10 per cent. Commenting on the results, Carolyn Fairbairn, CBI Director-General, said that, “the UK economy has finished the year strongly, with business services acting as a lightning rod for growth”.

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