Examination of Witnesses (Questions 140-147)
MR BRIAN SALMON, MR ALISTAIR CHANT, MR MARTIN JEWELL AND MR PETER COBB
TUESDAY 25 JUNE 2002
140. Are you able to grow your market? Are you able to encourage more and more people to live in high density housing or do you really think that demand is still out there which predominantly wants rows of semis on greenfield sites?
(Mr Cobb) I think we are at a cusp where perhaps a lot of consumer perception is still lagging behind where some of the development industry is moving towards. My personal belief is that we will get there but, if you take a snapshot at a moment in time today, then you are going to be disappointed. If we are having this conversation in five to seven years' time and we still have the same problem, then we all ought to be disappointed.
141. I represent the City of Chester and Chester's fastest selling units of accommodation are one and two bedroom houses. That is the reality. Perhaps Chester is more like the south-east than the north-west. I think what we are trying to get at is, is the problem the existing residents in an area who would much rather that the vacant site that comes up at the end of their street be used for ten three or four bedroom houses than 100 one or two bedroom apartments? Is that not the real problem? Then it is those local residents who put the pressure on local councils who then influence the planning process.
(Mr Cobb) There is always a fear of change and, if you can moderate and reduce the scale of change, then obviously the level of fear is going to reduce, but also I think the problem is parallelled in inevitablyand this brings us onto all sorts of other related discussions on planning gain issuesin that the more development you are concentrating in an area, you are obviously putting a load on infrastructure as well. You are putting a load on schools, you are putting a load on doctor's surgeries, libraries and everything else, which is all part of the response that the planning system has to make as well as affordable housing. One of the problems that we are faced with is having to mediate in a number of conflicting demands as to which is the most popular issue of the day. At this moment in time, we are discussing affordable housing as clearly the most germane but, to a lot of existing residents and members of local planning authorities, it may well be that the doctors' surgeries are of more overriding concern to them and we find ourselves having to moderate that argument.
142. Regarding the issue of lack of skills in the industry, which has been mentioned before, would you tell us what you think Government can do and also is the industry capable of responding? I just draw your attention to a bit of experience in my own constituency. We had problems on a particular housing development with a very well known housing builder and, when we were exploring what had gone wrong, we found that no one on the site, apart from perhaps the foreman and the clerk of works, was actually employed by the builder. They are all contracted out and subcontracted out and subcontracted out again to other firms, which resulted in a minimum number of staff. How are you going to train people if they are not employed in the first place?
(Mr Cobb) The nature of the construction industry's base now is entirely as you describe; it is all subcontractor related. For our own part, we have a directly employed staff of about 700 people but we are indirectly employing about 10,000 people and the majority of those are coming through precisely that process you describe of subcontractors. Clearly, their issues are more immediate. There is unquestionably a problem in terms of developing within the industry apprenticeship or trainee systems. The industry is very fragmented. Although it probably pulls together at moments in time, essentially it is in competition with each other both for its raw material and for purchases of its own product. So, it is very difficult to create a cohesive response within the industry.
143. If you are asked by Government to comply with very strict rules on the number of people that you personally could train, that would be the only way forward, would it not?
(Mr Chant) I think what we are finding is that, on some of our major schemes where we are there for a period of time, either through direct legal agreements or through informal agreements with local authorities, we structure local labour training initiatives where the local authority works quite closely with the people who want training in a skill base and we will then provide the facilities and support on site in order that our subcontractors can take the time to train these people and they can be given placements. So, it is starting to happen, but again the difficulty is that, when you start to broaden that out to smaller scale developers who are not involved in big schemesand I do not know the statistics but we are probably looking at the quantum of work being done by the major developers compared to the small or medium developersit may be disproportionate. I think that the Government have taken the initiative through the skills base training which is starting to happen through legal agreements with councils but not to the level it needs to.
144. Is there anything else that the Government can do?
(Mr Cobb) I think the Government have a role through education and further education, if they can, to actually take away the stigma that it is actually not fashionable to be working in the building industry.
145. So, change the fashion and put a training levy on you all?
(Mr Cobb) If that training levy is actually used for what it has been taken away from rather than put into some collective pot and sprayed out for another purpose, then I think it will be difficult to argue against that.
146. Given the levels of crisis with the lack of affordable housing, would you be willing to support the proposal that all developments, not just residential developments, should include a provision for affordable housing?
(Mr Cobb) I have a particularly strong view on this, so I will answer it first, if I may. If the provision of affordable housing is going to be, as I see it in part at the moment, a taxation, then, for that taxation to be equitable, it has to apply to everybody in the same manner. At the moment, it applies only to people who are building housing. What we are getting potentially is a situation where a land owner, who is concerned with only one thing which is getting the maximum value for his site, could well be put into a position of choice in the future. He may well be able to let that site go for residential development or the taxation on that development might be so punitive that the residual land value he gets makes it better to let it go for a retail supermarket, if he were allowed to get it, or an office building.
147. That is an argument for saying that all development
(Mr Cobb) I am coming to your point precisely, which is either that you apply it equitably and uniformly across all forms of development or you take it away from being a taxation, in which case we come back to it being funded from the public purse.
(Mr Salmon) I have one point on that. We do quite a lot of mixed use developments where we have a small amount of offices and the way the market is at the moment, the residential aspects quite often cross-finance the ability to have the other uses there in the first instance when we are trying to get new tenants in and that sort of thing. We have an example down in Portsmouth at Gun Wharf where we have offices which are very, very difficult to let because it is not a good location for offices market-wise in that part of the world. We are having to cross-finance those units to a very, very low rental value in order to make it work. So, if you have the cost added to those other uses, that would create more problem for us.
Chairman: On that note, can I thank you very much for your evidence.