1.  THE OVERALL SCALE OF HOUSE BUILDING REQUIRED

  There is clear evidence that far too few new homes have and are being built, not least from the current level of house price inflation. The CBI does not, however, possess the expertise to predict the scale of house building that is now required.

  The House Builders Federation has estimated that over the past 20 years there has been a house building shortfall of some 30,000 homes per year. They also estimate that building at current rates, only 60-65% of likely housing need will be accounted for over the next 20 years and that 80,000 additional homes per year are required to repair the housing deficit.

  On this basis the problem appears significant and the CBI is pleased that the government is seeking radical solutions. Without action parts of the UK are likely to suffer from increasing social problems such as overcrowding, occupation of poor standard housing, increasing use of temporary accommodation and rising homelessness. Moreover, the economic problems of affordability, house price inflation and staff shortages could deepen and become more acute, especially in areas of high growth.

  To address these problems it is clear that the supply of housing must be significantly increased. In our view the best way to achieve this will be to make house building an easier and more attractive undertaking. The most commonly cited obstacle working to constrict house building has been the land-use planning system and effective reform is essential if the 80,000 additional homes each year are to be built and the housing problems repaired.

2.  ARE PROPOSALS LIKELY TO SIGNIFICANTLY REDUCE HOUSE PRICES

  In many areas demand for housing now outstrips supply and the result has been rapid house price inflation. Until a resurgence in the supply of housing is felt in the market—and especially in London and the South East—it seems likely that the problems of affordability and labour shortage will continue.

  With additional house building in place we could start to see a reduction in the level of house price inflation, although the scale of the problem appears such that an absolute reduction in house prices maybe unlikely as a result of these proposals alone.

3.  THE GEOGRAPHICAL DISTRIBUTION OF NEW HOUSING, INCLUDING PLANS TO CONCENTRATE DEVELOPMENT IN THE SOUTH EAST IN FOUR GROWTH AREAS

  The greatest demand for new housing will be generated in areas of the country with large, growing populations and buoyant economies. In our opinion, new housing should be distributed in these areas and it is right that the Government has located the four growth areas in London and the South East. This is where demand for new housing is strongest but also where the shortage of housing is most acute.

  The Thames Gateway is therefore well positioned to help address the housing problems in the capital, and as a large brownfield site regeneration would provide environmental as well as social and economic benefits. Milton Keynes, Ashford, and in particular, Cambridge/Stanstead are all areas with good economic potential which could be undermined by the housing shortage. All of these areas should benefit from designation as growth areas, and if 200,000 new homes can be built in these areas, as the Government estimates, they could make a valuable contribution to solving the general problem of housing under supply and its related effects.

4.  WHETHER PROPOSALS WILL PROMOTE HIGH QUALITY SUSTAINABLE COMMUNITIES WHILST AVOIDING POORLY DESIGNED URBAN SPRAWL

  Given the likely demand for new homes over the next 20 years, the development of high quality sustainable communities are essential for the country's prosperity. Good design, however, should not be seen as a set formula for development and it is important that the Government avoids any rigid or prescriptive approach to house building.

  As outlined in the CBI submission for affordable housing, house builders must be given the freedom and flexibility to innovate and local councils and RSLs should be encouraged to co-operate and work with the private sector in order to harness their expertise.

5.  THE EXTENT TO WHICH DECISIONS RELATING TO HOUSING, INCLUDING NUMBERS, TENURE AND DENSITY, SHOULD BE TAKEN BY CENTRAL OR LOCAL GOVERNMENT

  As well as increasing the overall supply, it is important that the right type of housing is built to meet local needs. It is therefore essential that decision-making is sensibly balanced between central and local government.

  To allow local authorities to set their own house building targets would risk perpetuating the housing shortage. Local communities do not generally wish to see new homes built in their area and central government must ensure that housing targets are met. It is right therefore that the Secretary of State should insist that local authorities deliver sufficient local housing to meet the national need.

  Decision-making regarding tenure and density should be market-led. For a house building project to be economically viable it is essential that local housing need be taken into account and that potential demand is assured. Local authorities could then work with the private sector to ensure that demand is met as completely as possible.