Alarming attitude to construction

Jun 17 2010 by Bill Midgley, The Journal

ACCORDING to reports, the number of new houses built this year will be at the lowest level since 1946.

This shows a lack of achievement when the population is increasing – perhaps to as high as 70 million over the next 20 years.

It is not so long ago that housing was a key issue in any general election campaign yet this time around little was heard of what is likely to develop into a major social problem within a few years.

The problems of young people ‘getting on the housing ladder’ are well known with parental help often the key factor, while the waiting lists for local authority and other social housing to rent continue to grow.

Whether house prices fall again in the near future depends on the economy. Two factors will play a major part. Firstly, the basic laws of economics in supply and demand. Secondly, inflation.

The Government seems to have accepted inflation is with us, unlike other major economies.

That will result in Government debt being paid off in depreciated money, but it will also feed through into wage demands and increasing housing prices.

That is tomorrow’s problem. In the meantime, we still have a shortage. A problem remains that of the banks’ unwillingness to lend to the construction industry.

As chairman of a body established to build social housing, we will complete at least 300 units before the end of next year, talks have taken place with the major lenders to ascertain their interest and willingness to provide finance.

Far too many blank refusals to look at the position reflects the closed mind of bankers too used to making profits from speculative involvement elsewhere, such bankers often employed by organisations in which the Government has a large stake yet where there appears to be little governmental direction.

It also has to be said the company which I chair is owned by a local authority and the financing needs are usually on a loan to value ratio of less than 50%. The banks have a part to play in economic regeneration and their attitude towards construction is alarming. I have little doubt that some tens of thousands of small businesses in the region have their own stories of frustration. The Government should stop arguing, and deal with the problem.

Bill Midgley is a North East business executive