There has been some very welcome news in recent weeks in relation to further funding made available for affordable housing development, which has now been well documented. There are also clear signs of a renewed recognition of the mutual interdependence of government, housing providers and local authorities undertaking the task of increasing the delivery of new affordable homes across the country. Housing supply appears top of the agenda again, its big news and an even bigger issue.
In the words of leading economist of his time E. F Schumacher, often small really is beautiful.
What does all this mean for the North West though, is it enough, and how do we make the best of it? There is currently a raft of funding programmes in operation by Homes England for the delivery of new housing. There is also plenty of private investment supporting a growing PRS sector across the region.
Securing as much of this investment as we can into the region is naturally important, but the critical X factor will be in keeping that money right where it is invested, in the local economy for as long as possible, recycling it over and over before it lands in a shareholder’s pocket. Let’s be clear though, there is absolutely nothing wrong with shareholders per se, and it would be wrong to imply otherwise, but if the money invested here in our region can take the long way around before leaving the North West we will all be better for it.
In housing development and construction, much of the answer lies with the Small and Medium Enterprise (SME). During the planning and construction of new houses, SME’s are much more likely to employ local trades and utilise local supply chains as well as the whole supporting cast of local consultants, architects and engineers to bring about the completion of new housing schemes.
The positive economic externalities created by construction SME’s in this way can have an incredibly compounding regenerative effect; often far greater than a national public limited company could. There is a fair amount of work already underway to remove barriers to SME’s, but we need to do a lot more to manage our exposure to the handful of national operator’s scenario. The story of Carillion is a vital, if unfortunate, lesson into why big is not always best, and there is a compounding negative string of externalities when big businesses like Carillion go bust.
The Government’s Home Building Fund and the subsequent Housing Delivery Fund are well-intended measures which acknowledge the value of SME’s contribution to the stability and sustainability of local economies, but they will need to drive deeper to have real impact. A sensibly calculated risk sharing offer would be a great start, and would most certainly accelerate construction.
There is no question that the crises in housing supply is now huge, and we require correspondingly proportionate solutions. However, there are simply too few SME contractors today that will build a scheme of ten units or so, and much fewer than only ten years ago. This is not a good sign, and we should respect and support those SME’s left that are willing to do so by directing investment towards them where we can, as the contribution they can also make to the local economy is as big. In the words of leading economist of his time E. F Schumacher, often small really is beautiful.
Chris Curtis is a Chartered Surveyor with over 20 years of experience in the housing development sector. He is a Non-Executive Director of R-Haus Living Ltd and leads the day to day management of Stanley Investments Ltd, a land buying & housing development company based in the North West.