Housebuilder lambasts cheap homes plan

The head of Britain's biggest privately owned housebuilder launched a stinging attack yesterday on John Prescott's efforts to encourage the industry to provide new homes for less than £60,000.

The head of Britain's biggest privately owned housebuilder launched a stinging attack yesterday on John Prescott's efforts to encourage the industry to provide new homes for less than £60,000.

Keith Miller, the chief executive of Miller Group, said the Deputy Prime Minister was "looking through the wrong end of the telescope" if he believed the initiative would increase the supply of affordable homes, arguing that greater availability of cheap land and simpler planning rules would have a much greater impact.

"The main problem the industry faces is getting hold of the land in the first place and then getting housing developments through the planning system," he said. "Building homes at the lowest possible cost is not really the issue when the cost of the land per plot is likely to exceed £60,000 anyway.

"The Government and other public bodies are sitting on a lot of land which is not doing much. If it was prepared to put up that land for nothing we might take a look at the Prescott initiative. We need more land released in order to stabilise the price and a freeing up of the planning system."

He added: "Asking us to build homes for under £60,000 produces nice headlines but it's a much bigger problem. Mr Prescott is looking through the wrong end of the telescope. Consumers want housing close to where they work but we can't get that because land is not being released in the areas of the country that people want to live."

Mr Miller said that if Mr Prescott wanted to pose a real challenge he should ask what steps his government was taking to implement the recommendations of the Barker report which called for a simplified planning system.

Redrow has announced plans to build one-bedroom starter homes for less than £50,000 but few other housebuilders have followed its lead.

Britain built only 160,000 houses last year but Mr Miller said that number needed to increase to 250,000 to cope with the growth in population and rising immigration. House builders, he added, could shave only 2 to 3 per cent off construction costs at most because lack of land was forcing them to build on inner-city brownfield sites, where clean-up costs were high and planning procedures lengthy.

Mr Miller was speaking as his company reported its 11th successive year of increased earnings, with pre-tax profits up 31 per cent last year to £52.5m. The bumper profits, driven mainly by the booming housing market, enabled the company to pay a £6.6m dividend to the 50 or so members of the Miller family who own the business.

The Edinburgh-based company is Britain's 11th biggest housebuilder. It sold 2,500 homes last year and aims to increase that to 3,500 by 2007. It is also one of Scotland's biggest participants in the private finance initiative, having built the country's first PFI project, the Skye Bridge.

Mr Miller said the group had no interest in going public because it was much cheaper to finance the business if it remained privately owned.