Redrow chief blames complex planning system for shortage

The builder refuted economists’ claims that Government mortgage schemes are fuelling an unsustainable housing boom.

The Government has been criticised by economists and industry players for its launch of the ‘Help to Buy’ scheme in March, which provides loans to help people buy homes with small deposits.

Business Secretary Vince Cable entered the debate this week, warning of the risk of a house price bubble and suggesting that the second part of the scheme, due to take effect in January, be rethought.

Redrow’s chief executive Steve Morgan said: “I’ve seen some pretty silly things written in the last week or two and stated by certain politicians.

“The real issue is not whether Help to Buy is fuelling a new boom. The real issue is that we’re not building enough houses and we’re not building enough houses because we’ve got an antiquated planning system that’s so bureaucratic.”

He declining to name the politicians he was referring to.

The Government has tried to speed up planning approvals by giving local authorities more decision-making powers, but Mr Morgan said the process has to be further streamlined and councils should be given time limits on making decisions.

Mr Morgan said the group has 16,600 plots locked in the planning system that could deliver around 120 new developments, but said only a “minority” are expected to progress in the next year due to the complex approval process.

“We had one site in the north west where we built several hundred houses a few years ago and had nine conditions. We just had a site on the opposite side of the road recommended for approval with 103 conditions. They just take such a long time to clear these conditions before you can start,” said Mr Morgan.

Economists have said the UK needs 250,000 homes a year to keep up with population growth, with demand far exceeding supply.

Private housebuilders completed 88,000 homes last year, data from Savills showed.

Redrow has a number of schemes in Yorkshire including sites in Guiseley, Wakefield, Halifax, Cottingham in East Yorkshire and Easingwold in North Yorkshire.

Earlier this month, it said the expansion of its Yorkshire division had created 13 new jobs across Yorkshire and North Lincolnshire.

The Wakefield-based office has taken on new staff across its business including construction workers, sales consultants, designers, apprentices and trainees.

Mr Morgan was speaking yesterday as the builder reported a 63 per cent jump in pre-tax profits to £70m in the year to June 30. Mark Hughes, analyst at Panmure Gordon, said: “The progress that this company has made in recent years is remarkable.”

A spokeswoman for the Department for Communities and Local Government claimed planning approval rates were running at a 10-year high, with nine out of 10 applications getting the green light.

She said: “Our reforms have condensed the previous 1,300 pages of advice into a clear 50-page guide and turned the 7,000 pages of practice guidance into a single online resource. These reforms have been backed by business as the right way to support the construction industry and help build the homes the next generation needs, while conserving our countryside.”

Return of the dividend

Redrow reported a 15 per cent jump in completed sales to 2,827 and said private average selling prices rose 11 per cent to £227,300 as it sold more large family homes.

Redrow announced plans to reinstate shareholder dividend payments, proposing a final dividend of 1p a share. It last made a payment in March 2008.

Redrow said the Government’s Help to Buy initiative made a “significant contribution” to forward sales, up 42 per cent by value over the year, although it has only led to three per cent of private completions so far since launch in April.

The group said private reservations are up 54 per cent at 784.