Redrow brands planning system a ‘bureaucratic mess’

Picture: PA
Picture: PA
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REDROW chairman and founder Steve Morgan today branded Britain’s planning systems as a “bureaucratic mess” that had caused the current housing shortage.

Morgan has 16,600 plots locked in the planning system that could deliver around 120 developments, but he said only a “minority” were expected to progress in the next year due to the UK’s complex approval process.

The house-building boss also dismissed suggestions that UK government mortgage schemes such as Help to Buy were fuelling a housing boom.

The coalition government has been criticised by economists and industry players for the launch of Help to Buy in March, the first part of which provides equity loans to help house hunters south of the Border to 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, should be rethought.

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

Redrow’s boss declined to identify the politicians to whom he was referring.

But he added: “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.”

Acknowledging the problem, the UK government has tried to speed up planning approvals by giving local authorities in England more decision-making powers but Morgan said the process had to be further streamlined, and give councils time limits on making decisions.

“We had one site in the north-west, we built several hundred houses a few years ago and had nine conditions,” he said.

“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.”

Economists say Britain 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, according to data from estate agency Savills.

Redrow said Help to Buy had made a significant contribution to orders for houses.

The builder today posted a 63 per cent jump in pre-tax profits to £70 million in the year to 30 June, allowing it to reinstate its final dividend at 1p. The company last delivered a payout for shareholders in March 2008 as the credit crunch bit.

Morgan said it might take another two years for the housebuilder to reach normalised profit levels, as about a third of its completions were from low-margin land.

A normal level was an operating margin of between 16-17 per cent, compared to the current 12.2 per cent level, he said.

Mark Hughes, an analyst at Panmure Gordon, said: “The progress that this company has made in recent years is remarkable.”