The government's recognition that there is an annual shortfall in housing of around 70,000 per year within the private sector, is a big step forward, says the Royal Institution of Chartered Surveyors (RICS).

The shortfall in private house building depends upon the “affordability” target the government wishes to achieve, with as many as 120,000 extra private homes required to bring house price inflation down to the European average in real terms. (NB. EU average from 1971-2001 is 1.1%, UK average is 2.4%).

But key workers and others who are unable to afford market value housing are only likely to see a short-term improvement if the government substantially funds the extra 17,000-23,000 homes required in additional social housing. The Barker view puts the costs of extra social housing at up to £1.6 bn, which would be required in addition to the £1.4 bn spent in 2003/04.

Market-based proposals to raise private housing supply are welcomed to make building more responsive to local demand conditions. However, the proposals will only be effective over the long-term, with it being many years before a rise in supply is sufficient to make private housing more affordable.

The proposed new tax (Planning Gain Supplement), which is designed to capture windfall profits by landowners, involves enormous practical problems. The government has promised full consultation and this will be needed if the proposed tax is to prove more workable than previous attempts to tax windfall gains.

One measure mooted in the Barker report that could curtail house price rises is the idea of a property value tax in place of the current council tax. However, such a tax has the potential to see Middle England revolt and is unlikely to be taken up by the government, says RICS.

Re-locating 20,000 good, long-term, stable jobs outside London brings great regeneration opportunities and will help to reduce the disparities between the south east and the rest of UK. Many more jobs would be created by this move.

RICS maintains that to be truly effective, senior positions have to move as well as junior positions.

The government's pledge to maintain firm and substantial increases in public investment is good news for the UK construction industry. Spending rose 19% last year, and is forecast to rise 17% this year and 18% in 2005. The construction industry has benefited remarkably from such increases, as this has boosted the demand for building work. With indications that activity in industrial and commercial building is reviving once again, the construction industry is set for another buoyant year.