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					  Issue 05.43


      1. 2004-based Population Projections
      2. In-Migration rises
      3. The Barker Report - progress report
      3. Planning Gain Supplement
      4. Infrastructure Audit (Housing Development) Bill
      5. The Natural Environment and Rural Communities Bill
      6. Alterations to the London Plan published
      7. Thames Gateway Masterplanner
      8. 2012 Olympics
      9. Infrastructure and the Growth Areas/MKSM
      10. Pathfinders
      11. Future Residential Development Land Supply
      12. PPS 25
      13. Affordable Housing
      14. Section 106 Agreements
      15. Empty Homes
      16. Second Homes
      17. Building Regulations - Part L
      18. Planning Delivery Grant
      19. School Playing Fields
      20. Green Belt development - 1999 – 2005
      21. Sewers and Drains
      22. Planning Inspectorate
      23. Circular 05/2005 – guidance
      24. Lyons Inquiry and council tax revaluation
      25. Environment Agency - commercial property searches
      26. Design for Manufacture Competition
      27. CEO of Sustainable Communities Academy appointed
      28. New Permanent Secretary, DEFRA
      29. New Deputy Governor, Bank of England and other senior civil servant appointments
      30. Transport Statistics 2005
      31. East Surrey Holdings
      32. Building for Life Standard
      33. The Economy
      34. The Market

1. 2004-based Population Projections

On 20 October the Office for National Statistics issued new population projections prepared by the
Government Actuary showing that the projected total population of the United Kingdom at 2031 is 2% higher
(1.3m) than the 2003-based projections.
The UK population is projected to increase by 7.2 million between 2004 to 2031, from an estimated 59.8
million in 2004, to 60 million in 2005, 65 million in 2023 and 67.0 million by 2031. This is equivalent to an
average annual rate of growth of 0.42%. Beyond 2031 the population will continue to rise but at a much
lower rate.
The new projections show that:
       the projected total population of the United Kingdom at 2031 is 1.3 million (2.0%) higher than in the
        previous (2003-based) projections because of higher assumed levels of net migration, higher short-
        term birth rate assumptions and slightly higher life expectancy assumptions
       the population is projected to continue rising until 2074, the end of the projection period. In the
        previous projections, the population was projected to peak around 2050 and then start to fall.
       of the 7.2 million increase between 2004 - 2031 43% is expected to be the result of natural increase
        and 57% the result of net migration
       the number of children aged under 16 is projected to fall by 4.0% by 2014 and then to rise slowly to
        the late 2020s
       people of state pensionable age should increase by 9.3% by 2010, reaching 15.3 million by 2031
        and 17.5 million by 2050
       by 2031 the number of those of state pensionable age is projected to exceed the number of children
        by almost 4 million
      the population of Scotland is projected to increase slightly until 2019 and then fall, Wales to increase
       beyond 2031 at a very low rate, while England is expected to grow more strongly.
The 2004-based projections replace the interim set of 2003-based projections published in September 2004.
Full  results   of    the   2004-based       national   population      projections   can     be    found    at

2. In-Migration rises

New Total International Migration estimates issued by the Office for National Statistics on 20 October
showed that 223,000 more people migrated to the United Kingdom than left in 2004. It estimated a net inflow
which was 72,000 higher than the previous year and the highest since the present method of estimation
began in 1991.
The estimated number of people arriving to live in the UK for at least a year increased from 513,000 in 2003
to a record 582,000 in 2004. The estimate of people leaving the UK to live elsewhere was 360,000, similar to
the last two years.
Fuller consideration of accession migration beyond 2004 is included in the National Population Projections,
released 20 October 2005:

3. The Barker Report - progress report

In a Written Answer of 14 October Yvette Cooper said that the Government would set out its final response
to Kate Barker's recommendations by the end of 2005. Progress in implementing Kate Barker's
recommendations had already been made, viz:

       the merger of regional planning bodies and regional housing and the strengthening of independent
        evidence and analysis to support regional planning bodies
       the creation of a Community Infrastructure Fund, as recommended by Barker. An extra £50 million in
        2006–07 and £150 million in 2007–08 would be available to finance transport projects needed to
        sustain housing growth
       the Chancellor had allocated funds which, with additional PFI funding and efficiency gains, should
        provide an extra 10,000 new homes for social let annually by 2007–08
       Consultation on changes to planning policy guidance on housing (PPG3) ended on 9 September;
        responses were currently being collated.

3. Planning Gain Supplement

RICS response: RICS has published its analysis and conclusion about the Planning Gain Supplement
proposed by Kate Barker, which it dismissed as unworkable because:

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       it would not tax planning gain because it is assessed on whole market value;
       a tax based on values which are not the actual values of the land to be taxed is unjust since the
        consequences are unpredictable;
       it will be payable when there may be no money arising to meet it;
       it lacks cross party support, a major factor in the failure of earlier attempts to tax development value;
       to create a fair scheme which taxes planning gain, a system similar to earlier, failed, versions would
        be required, with all the consequential problems

RICS proposed that a tariff approach within the S.106 framework will achieve the goal of funding
infrastructure. It observes that the concept of planning obligations is well established and carries cross party
If a tax system was chosen method, a development gains tax as in the Finance Act 1974 would be preferred,
but it would direct revenue to central government, and not to local authorities.
The paper can be downloaded from:
British Property Federation response: BPF has also registered its concern about the Planning Gain
Supplement and has issued a position paper on planning tariffs called, “Don’t Kill the Goose - the case for
Tariffs, not Tax”.
BPF is opposed to the Planning Gain Supplement but, recognising the Government is determined to find a
means of financing infrastructure provision, is recommending an across-the-board system of tariffs which, it
says, would be „fairer, easier to collect and likely to contribute resources for infrastructure far more easily
than another botched attempt at a form of development land tax’. The paper can be downloaded from

4. Infrastructure Audit (Housing Development) Bill

On 19 October Francis Maude introduced a Private Members‟ Bill which would require a full audit of existing
or planned infrastructure in areas of significant housing development to ensure that any new housebuilding
was matched with adequate infrastructure. The Bill was given its first reading and granted a second reading
in 2006.

5. The Natural Environment and Rural Communities Bill

The Natural Environment and Rural Communities Bill, which brings together most functions of English
Nature, the Rural Development Service and the Countryside Agency under the umbrella of a new
body, Natural England, has been sent to the Lords where it was given its first Reading on 13 October. The
Bill also proposes the strengthening of the safeguards surrounding Sites of Special Scientific Interest

6. Alterations to the London Plan published

Following the completion of the 2004 London Housing Capacity Study, the Mayor has now issued his
proposed draft alterations to the London Plan housing provision targets for London and individual boroughs.
Since the publication of a new housing capacity study in July this year further data has been used to refine
the housing figures, resulting in proposed alterations to the Plan, reducing capacity downward to 310,900
homes (31,090 p.a.) over the ten year period 2007 to 2017, from 31,505 dwellings p.a, with consequential
minor changes to Borough targets.
From April 2007 the new minimum target of 31,090 homes p.a will be required from all sources, although it is
proposed that individual Borough Development Plan Documents should seek to exceed it.
The suitability of housing development in terms of location, type of development and impact on the locality is
to be assessed and new sources of supply identified, having regard to:

       major development in Opportunity Areas and in the London parts of the Thames Gateway and the
        London-Stansted-Cambridge-Peterborough growth areas

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       the redevelopment of low density commercial sites to secure mixed use residential development
       change of use of surplus industrial/employment land to residential or mixed use development, while
        protecting land supply for projected employment growth and required waste facilities
       redevelopment in town centres
       the intensification of housing provision through development at higher densities where consistent
        with the principles of sustainable residential quality and the targets for density location and parking.

It notes that “The target figure is for net additional homes, and includes additional dwellings provided through
development and redevelopment, and conversions from residential and non-residential properties, together
with long-term vacant properties brought back into use and household spaces in new non-self-contained
accommodation. They are net of losses through redevelopment and conversion, through change of use and
demolition of residential property and any properties falling into long term vacancy” and that ”The delivery of
these targets is dependent on adequate funding for transport infrastructure, social infrastructure and
affordable housing. This funding should ensure that development is sustainable and provides an appropriate
mix of provision in terms of type and affordability in accordance with the policies set out in this Plan. Delivery
will also be affected by market factors. Consequently these targets will be reviewed on a five yearly basis”.
It goes on, “The housing targets are based on a 10 year average, and so annual output in a borough over a
10 year period will not be constant. In accordance with Government guidance on regional and local
planning, boroughs will be required to demonstrate a housing output trajectory for achieving the annual
average over the 10 year plan period.
Finally, it notes, “In setting the monitoring target to 2016/17, the Mayor has taken account of the relationship
between London and the rest of the South East, and the Barker report on housing supply. He will continue
to work in close collaboration with the Regional Planning Bodies for the South East and East of England to
ensure a consistent approach to addressing the needs of inter-regional migration and household growth”.


       20 October 2005 - 20 January 2006 - formal consultation on the proposed Alterations
       w/c 6 March 2006 - Preliminary Examination in Public (EiP) meeting
       2 June - 3 July 2006 - Alterations EiP
       October 2006 - Receipt of Panel Report
       November 2006 - Publication of Panel Report and GOL notified of intended alterations
       February 2007 - Publication of London Plan Alterations (Waste and Minerals, Housing Provision

The      Alterations  and      accompanying      Sustainability  Appraisal    can     be     found    at The deadline for responses is 20 January
2006. They should be sent to

7. Thames Gateway Masterplanner

A team headed by Arup with Stephen Taylor Architects, Turner & Townsend, Steer Davies Gleave, Savills
and Capita Symonds has been appointed to masterplan development within the area of the London Thames
Gateway Development Corporation.

8. 2012 Olympics

In Written Answers of 14 October the Secretary of State for Culture, Media and Sport, Tessa Jowell, said that
the public sector funding package, agreed with the Mayor, was £2.375 billion. The further regeneration of
the Lower Lea Valley, including remediation, and the underlying infrastructure, services and utilities, would
be met by other contributions from both the public and the private sector.
In accordance with the Memorandum of Understanding between the Government and the Mayor of London,
the cost of any increase in funding over and above the public sector funding package would be met by a
sharing arrangement to be agreed, as appropriate, with the Mayor of London and through additional National
Lottery funding.

                                                   Page 4 of 12
On the basis of a planned precept of £550 million the 2012 Olympics were expected to cost the average
Band D council tax payer in London £20 per year over a period of around 10 years. The Memorandum of
Understanding between the Government and the Mayor of London provided for this period to be extended
should it be necessary to raise the further £75 million for which the agreed public sector funding package
allowed, to take the total precept to £625 million.
In a further Written Answer of 18 October Tessa Jowell said that, in the unlikely event of an overspend
occurring in staging the Olympic and Paralympics games, the responsibility would be discharged through an
appropriate sharing arrangement to be agreed between Government, the Mayor of London and the National

9. Infrastructure and the Growth Areas/MKSM

In a Written Answer of 14 October Yvette Cooper said that, depending on its scale and pace, growth would
require potentially major upgrades to utilities‟ infrastructure with significant lead-in times (often three to five
ODPM‟s objective was to encourage adequate long-term planning by the utilities to avoid delivery of growth
being constrained or prevented by the late programming of investment. The role of the public sector was
principally to help ensure that the utility companies were properly equipped with the information needed to
plan for growth, as well as providing maximum certainty around the magnitude, timing, and location of
Public consultation and examination of growth plans for the Milton Keynes/South Midlands sub region
involved a number of the major utilities or their representatives and the sub regional growth strategy was
published in March this year. To follow this up local authorities and delivery agencies in the growth areas
liaised with the utility companies to ensure that, as sub-regional plans and Local Development Framework
information became available, the utility companies could update their plans for investment.

10. Pathfinders

On 14 October Yvette Cooper said that the nine housing market renewal Pathfinders had only been
allocated funding to the end of March 2006. In total the programme should deliver 3,000 new homes by that

11. Future Residential Development Land Supply

Savills research paper No.4 (Autumn 2005) - “Future Residential Development Land Supply” - examines
sources of future housing land supply.
It notes that land prices have risen by 762% over the last 20 years, that planning policies restrict the release
of greenfields, the number of plots held by major housebuilders has scarcely changed since 1999 and
calculates that strategic land holdings are probably largely greenfield.
It goes on to examine the likely sources of future land supply, taking into account the Government‟s
preference for brownfield sites, and concludes that ODPM‟s estimates of available brownfield land, as
identified through NLUD, are “unduly optimistic” and “unlikely to be realised, even in the long term” because
NLUD makes “sweeping assumptions” about what can be developed for housing. Savills conclude that, of
the 64,000 ha of brownfield land identified by NLUD, 26,000 ha are still in use and cannot be redeveloped
until existing owners are relocated, usually to other brownfield sites. Only 38,000 ha are actually vacant, not
all are suitable for housing.
It estimates that 27% of land on the NLUD database is actually housing land and that true supply stands at
447,737 units, under half of ODPM‟s estimate, much of it in areas of relatively low demand in the North. In
the South it estimates genuine brownfield land supply at 30% of ODPM‟s figure, added to which long lead
times and problems in bringing such land forward will make it difficult to deliver in under 10 years.
Finally, Savills note that recent increases in brownfield housing have largely been city centre flats.
Oversupply in some areas and fewer buy-to-let investors are, it concludes, likely to lead to the amount of
brownfield development falling. It concludes that this “politically unpalatable fact has to be faced” and
alternative sites found. The Research Report can be found at

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12. PPS 25

In Parliamentary Questions on 19 October John Prescott said a draft of new PPS 25 would be issued for
consultation later this year, strengthening and clarifying planning policy on development and flood risk and
requiring that all factors that could contribute to future flooding be taken into account.
ODPM was introducing a much more risk-averse policy on flooding and had told local authority planning
bodies that they should take the advice of the Environment Agency into account.

13. Affordable Housing

South West: in Parliamentary Questions on 19 October Parliamentary Under-Secretary of State, Jim
Fitzpatrick, said ODPM accepted and acknowledged the acute need for affordable housing in the south-west,
and had increased capital funding by 48%, the highest funding increase of all the English regions, which
would support the provision of up to 9,500 additional affordable homes over the next two years.
The Government was interested in innovative new ways to provide affordable housing and understood that
English Partnerships was exploring the possibility of piloting a community land trust model in Stroud.

South East: in a Written Answer of 19 October Yvette Cooper said that increasing the supply of affordable
housing in the South East was dependant on improving levels of housing supply. ODPM was therefore
working with local authorities to make sure that housing completions were to planned levels.

14. Section 106 Agreements

The number of houses built from 2000/1 (the first year such information was centrally collected) to 2003/4
through S.106 Agreements, including social housing for rent and other types of affordable housing such as
shared ownership, was:
Number of dwellings
            2000–01 9,305
            2001–02 10,300
            2002–03 12,595
            2003–04 16,380
From: Local authority Housing Strategy Returns to ODPM [Source: Parliamentary Written Answer, 14

15. Empty Homes

The total number of vacant domestic properties by tenure in England at 1 April 2004 was as follows:
              LA - 57,500
              RSL- 43,300
              'Other" public sector - 7,400
              Private sector (non-RSL) - 585,600
              Total - 693,800
The total figure has fallen by around 10% since 1997 (Source: Parliamentary Written Answer of 14 October)

16. Second Homes

In a written answer of 18 October Yvette Cooper said that the Estimates from the Survey of English Housing
showed that, in 2003–04 to 2004–05, there were about 293,000 English households with second homes in
Great Britain. This was likely to understate the actual number of second homes in Great Britain as some

                                                Page 6 of 12
households had more than one additional home. Data from the Survey of English Housing did not
separately identify second homes in Northern Ireland so an estimate for the United Kingdom was not
[Note: on 6 July Jim Fitzpatrick, Parliamentary Under Secretary at ODPM, confirmed that only 300,000 of the
empty homes had been vacant for more than 6 months]

17. Building Regulations - Part L

In Parliamentary Questions on 19 October Yvette Cooper said that the proposed changes to Part L were
“substantial and stretching”. She denied that they would make it impossible to build houses with chimneys,
but said it would be a challenge for chimney manufacturers.
Cooper noted that Articles 3, 4, 5 and 6 of the Energy Performance of Buildings Directive would be
implemented in April 2006 in changes to Part L, and added that it was right that ODPM should go further and
look at a wider review of existing buildings; a range of measures should be taken into account, including
incentives and Home Information Packs.
She confirmed that the new Code for Sustainable Development would be published before the end of the

18. Planning Delivery Grant

In a written answer of 12 October Yvette Cooper said the total expenditure on Planning Delivery Grant since
its inception and planned future level was:

             Year       £m
             2003–04    50
             2004–05    130
             2005–06    170
             2006–07    135
             2007–08    120

19. School Playing Fields

In a Written Answer of 18 October Minister for Culture, David Lammy, said that there had been a net overall
gain in school and community playing field provision in 2003–04 and a reduction in the number of playing
field losses to non-sporting developments, compared with figures for 2002–03. Government would explore
ways in which the legislation could be tightened further so that even more playing fields could be protected.

20. Green Belt development - 1999 – 2005

In a written answer of 11 October Yvette Cooper said that ODPM had granted planning permission to 143
called-in applications or appeals involving development on Green Belt land between 1 April 1999 and 30
September 2005. Of these, 73 were in accordance with local planning authorities' resolutions to grant
permission prior to the call-in of the application by the First Secretary of State.
Planning permission for development on green belt land had been refused for a further 279 called-in
applications or appeals in the same period. Of these, 112 were in accordance with local authorities' decisions
to refuse permission.

21. Sewers and Drains

In a Written Answer of 11 October DEFRA Minister Elliott Morley said that the Government intended to
publish a decision later this year on proposals to transfer ownership of private sewers and lateral drains from

                                                  Page 7 of 12
property owners to local water companies, but did not rule out the need to consult further on the scope and
form of a potential transfer.

22. Planning Inspectorate

The Deputy to the Chief Executive of the Planning Inspectorate, Sandra Fryer, has resigned after three
months in post. She was responsible for the South and East of England and was the only chartered town
planner in the top tier of management at the Inspectorate announced in the summer. The other new
Directors are Mark Parkinson and Leonora Rozee.

23. Circular 05/2005 – guidance

ODPM has confirmed that the accompanying Good Practice Guidance and the standard legal document on
unilateral undertakings and planning agreements is likely to be issued towards the end of the year. The
“Guidance” will, in practice, be a compendium of good practice examples and “innovative thinking” by local
planning authorities rather than a template which can be followed.

24. Lyons Inquiry and council tax revaluation

Further to David Miliband‟s Ministerial Statement of 10 October about the Lyons Inquiry and council tax
revaluation, ODPM published The Council Tax (New Valuation Lists For England) Bill on 14 October. This
follows the announcement on 20 September that the Government would be extending the Lyons‟ inquiry into
local government funding so that it could consider wider issues concerning the future role of local
government, whilst also postponing the revaluation of council tax in England.
Under the Local Government Finance Act 1992 there must be a revaluation of domestic properties, in
England, for council tax purposes on 1 April 2007, and at 10 yearly intervals thereafter. This Bill removes that
requirement. It provides new powers to set a future date for the revaluation so that it too can be part of a fully
developed package of funding reforms. In his Ministerial Statement David Miliband said the revaluation was
very unlikely to take place during this Parliament.
Copies of the Bill can be found at:

25. Environment Agency - commercial property searches

The Environment Agency has launched a new service, the Commercial Property Search Report, which gives
information on the environmental status of commercial development sites in England and Wales using
information gleaned by the Environment Agency on flood risk, subsidence liability and ground contamination
and is on offer from the watchdog's Property Search organisation.

26. Design for Manufacture Competition

In a Written Answer of 18 October Yvette Cooper confirmed the total number of homes, and affordable
homes, to be built on each of the Design for Manufacture Competition sites.

       Oxley Park, Milton Keynes, Phase 2 site: 145 homes, of which 43 should be affordable housing
       Oxford Road, Former Territorial Army Centre, Aylesbury Vale:100 homes, of which 30 should be
        affordable housing
       Upton, Northampton, Site D2: 165 homes, or which 36 should be affordable housing
       Allerton Bywater Millennium Community, Leeds, Yorkshire:150 homes, of which 30 should be
       School Road, Hastings:12 homes, with affordable housing level to be determined
       Horns Cross, Stone, Dartford: 37 homes, of which 11 should be affordable

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       Former Rowan High School site, Merton, London:180 homes, all of which should be affordable
       Former Renny Lodge Hospital, London Road, Newport Pagnell: 60 homes, of which 20 should be
       Former Park Prewett Hospital, Kingsclere Road, Basingstoke:137 homes, of which 47 should be
       Former Linton Hospital site, Maidstone. F Total of 123 homes, of which 43 should be affordable.

27. CEO of Sustainable Communities Academy appointed

On 14 October ODPM announced that Dr Gill Taylor, currently Chief Executive of Burnley Borough Council,
had been appointed as the Chief Executive of the Academy for Sustainable Communities. The Academy for
Sustainable Communities was one of the recommendations of the Egan Skills Review of Skills and is based
in Leeds, hosted by Yorkshire Forward.
Chris Murray, Interim Chief Executive of the Academy for Sustainable Communities, will complete his year's
secondment and return to CABE in January 2006.
The UK will be proposing that the Academy is host to an EU Skills Symposium when EU Ministers meet in
Bristol in December to discuss 'sustainable communities'

28. New Permanent Secretary, DEFRA

On 13 October the Prime Minister announced that Helen Ghosh had been appointed Permanent Secretary of
the Department for Environment, Food & Rural Affairs. She joined the Department of the Environment in
1979 and held a series of policy and Private Secretary roles through the 1980s and early 1990s.
Subsequently, at the Government Office for London, she worked as Director for East London Regeneration.
In 1999 she moved back to Whitehall, working in DETR and DWP on cross-cutting policy and delivery

29. New Deputy Governor, Bank of England and other senior civil servant appointments

On 17 October it was announced that Sir Andrew Large, Deputy Governor, Financial Stability at the Bank of
England, will be replaced by Sir John Gieve from 1 January 2006. Sir John was passed over for the most
senior post in the civil service, that of Cabinet Secretary, which went to Sir Gus O‟Donnell. With Sir John at
the Bank of England, both Deputy Governors will be former Treasury mandarins (the other is Rachel Lomax).
The departure of Sir Andrew, who has been seen as a hawk on interest rates, could affect the balance of
hawks and doves on the Monetary Policy Committee at a time when the debate between the two has been
fierce. Sir John‟s views are not known. Sir John Gieve will be replaced as Permanent Secretary at the Home
Office by Sir David Normington, previously Permanent Secretary at the Department for Education and Skills.
In recent months the Permanent Secretaries of 10 Whitehall departments have either retired, moved on or
been replaced (three of the most recent have been reported in INSIGHT, namely Peter Housden at ODPM,
Sir Brian Bender at DTI and, as this week, Helen Ghost at DEFRA - see above). The others are Work and
Pensions, Defence and Northern Ireland. The post of Permanent Secretary at DfES remains to be filled).

Comment: with Sir Gus McDonald moving from the Treasury to the Cabinet, and the new Permanent
Secretary at the Treasury, Nick Macpherson, closely associated with a number of Gordon Brown’s flagship
policies, this puts two “Brown-ites” into very senior positions within the civil service. The Financial Times has
noted that Sir Gus McDonald has been able to reshape the civil service over the last few months in a way
that few of his predecessors have been able to do.

30. Transport Statistics 2005

On 20 October the Department of Transport issued its annual compendium document, Transport Statistics
Great Britain 2005, which includes freight, public transport, roads and traffic and modal comparisons. It can
be found at

                                                   Page 9 of 12
31. East Surrey Holdings

The takeover of East Surrey Holdings, which owns Sutton and East Surrey Water and Phoenix Natural Gas,
by Kellen Acquisitions (a vehicle created by Terra Firma, Guy Hands‟ private equity company) will proceed
after the Takeover Panel refused to allow the bid for the business to lapse on 17 October. It is thought that
Sutton and East Surrey will be sold on quickly.

32. Building for Life Standard

On 14 October 8 new Building for Life Awards were announced by CABE. Winners were Cala, Persimmon,
Bryant, Linden South East, George Wimpey North East, St George South London and Bellway Homes
CEO of CABE said the schemes were “head and shoulders above the majority of what is being built and
were evidence that the big companies can produce housing of an exceptional quality”.
Building for Life is a partnership between the Home Builders Federation and CABE in association with
Design for Homes, the Civic Trust, English Partnerships and The Housing Corporation.

33. The Economy

Public Sector Borrowing Requirement

Data issued in 20 October by the Office of National Statistics showed that in the first half of the current
financial year (2005/06)

       the public sector current budget was in deficit by £14.6 billion;
       public sector net borrowing was £22.9 billion, £0.7 bn lower net than in the same period in 2004/05.

Consumer price and retail price indices, September

On 18 October ONS issued data on consumer prices for September, showing that the consumer prices
index (CPI) rose by 2.5%, up from 2.4% in August, whilst, in the year to September, the all items retail prices
index (RPI) rose by 2.7%, down from 2.8% in August.
The largest downward effect on the RPI annual rate came from housing costs, particularly mortgage interest
payment, due to lenders passing on August's quarter point cut in the repo rate, and last year's quarter point
increase in the repo rate dropping out of the 12-month comparison. There was also a large downward effect
from depreciation with house prices used to calculate this component rising by less than a year ago.
(Mortgage interest payments and house depreciation costs are not included in the CPI).

Small Business Start Ups

Figures from DTI show that 181,400 firms registered for VAT last year, and 179,400 de-registered, marking
the lowest rise in VAT registered firms since 1995 (0.1%). Last year, firms that achieved an annual turnover
of more than £56,000 were required to register compared to over 4% in 2003. Of the 500,000 businesses
which start up every year, about two thirds fail within the first three years of trading.
The Federation of Small Businesses, said: “There are a large number of small businesses, but the growth
level is static. A number of businesses are choosing not to increase their turnover so they can avoid the VAT
man. The Government needs to hugely simplify the VAT regime so this false barrier is removed.”

Retail Sales – September

Data issued by ONS on 20 October showed that the three-monthly growth in retail sales volumes in
September was the lowest since May this year with annual growth the lowest since the start of 1996.

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34. The Market

Mortgage lending - September

BBA: on 20 October the British Banking Groups issued data for September showing that net mortgage
lending in September rose by an underlying £5.0bn, up on both August and the average over the previous
six months but BBA said that credit card lending continued to be very subdued, consistent with the current
picture of weak consumer spending.

CML: on 20 October the Council of Mortgage Lenders issued data for September showing that gross
mortgage lending rose by 4.3% to an estimated £28.1 bn in September, up from £26.9 bn in August. CML
said that recent months had seen strong growth in mortgage lending, boosted by high levels of remortgaging
as people take advantage of lower interest rates and switch to cheaper deals. CML said it believed the Bank
of England's Monetary Policy Committee would delay further cuts in interest rates until it was clear that
inflationary pressures were easing. It therefore expected lending activity to level off during the coming
Note: CML’s monthly figures no longer provide the information previously provided because, in future, most
UK mortgage lenders will voluntarily report details of their transactions and it is likely to take a few months
before the new reporting arrangements bed down. Until then only a few summary statistics can be issued.

BSA: on 20 October the Building Societies Association reported that building societies had made gross
advances of £4,147 m in September, compared to £4,022 m in the same period in 2004, whilst net advances
stood at £1,200 m, down from £1,415 m in September 2004. Approvals (loans agreed, but not yet made)
rose to £4,071 m compared with £2,806 m in September 2004.

RICS Survey – September

The stock of unsold property rose last month, partly reversing August‟s fall. The average stock of unsold
homes on estate agents‟ books fell by 5% compared with April but was 11% higher than in the same period
in 2004.
The number of new instructions fell in September for the first time in 18 months whilst sales moved up
slightly but the ratio of sales to unsold stock fell to 29.9% from 30.3% in August, well below the long term
average of 37.1%. New buyer inquiries rose in September for the fourth consecutive month in the longest
run of rising inquiries in two years.

Bellway - results for 2004/5

On 18 October Bellway published results for the year to July 31 2005.
Sales: 7,001 homes were sold (an increase of 5.9%), 53% through the northern divisions and 47% through
the southern. Sales of social housing grew faster than for-sale. The Group sold 828 homes to housing
associations (262 higher than the previous year). This was biased towards the southern half of the country,
particularly North London, South East and Thames Gateway divisions, but the production of social housing
was also expected to grow in the Group northern sector, thereby helping to deliver a steady supply of land.
The northern divisions increased output by over 300 homes during the year. Bellway said that, at a time
when many local authorities were imposing housing moratoria its two North West divisions had built over
1,200 homes. The two Midlands divisions had produced 1,000 homes between them. Bellway has 17
operating divisions, nine of which traded at less than the optimum economic scale, allowing the existing
structure to generate greater volume growth in future and deliver better overhead recovery.

City Solutions: The first stages of regeneration projects was undertaken by City Solutions, which then
handed it over to the relevant local division to progress through the development stages.

Sales Incentives: sales incentives had been used on more and more occasions to support the targeted
selling rate, including discounts, part exchange and other inducements. These additional selling costs had
impinged on margins but were at an acceptable level.

Labour and Build costs: labour costs had been more difficult to control but the supply from countries which

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had recently joined the EU as increasing and this should help moderate costs. Timber frame construction
had been used on 25% of homes completed, helping to mitigate build costs where speed could produce a
cost saving.

Land Bank: the group's land bank with planning permission had increased 22,500 in the year, compared with
20,700 the previous year. It had acquired 8,800 new plots, 1,800 more than were sold. A large percentage
of those acquired were from the medium term land pipeline. Two sites were in East London (664 plots), one
in Canterbury (450 plots) and 580 plots in the North West. The company had 12,000 plots in its medium
term land bank, including its share of the joint venture at Barking Riverside with English Partnerships.
Infrastructure: since January 2005 the Group had agreed to pay £1.1m for education facilities, £400,000 for
sports and community centres and £7m for public open space and recreation areas. Other payments would
be made for nature reserves, riverside walkways and highways.

The future: in the first two months of the current financial year reservations had increased by 4%. This
improvement came from a small increase in outlets. Although outlets would increase towards the end of the
second half of the current year 2005/6 was unlikely to benefit significantly from them. Bellway did not expect
an increase in sales rate per site and therefore only a small increase in the sales was anticipated.

In a trading update of 13 October Ultraframe reported that full-year like-for-like sales fell by 25% but it
expected to stem the decline in 2006. The slowdown in the housing market and weak consumer spending
had adversely affected its core UK market, together with competition from "low- priced market entrants".

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