The Competition Commission is planning to break open the UK cement market and force industry giants to sell-off parts of their business.

The watchdog is worried that “co-ordination” between industry giants Lafarge Tarmac, Cemex and Hanson is “likely to be resulting in higher prices for all cement users.

”The Commission said it was considering measures to increase competition in the cement market, including forcing major producers to divest cement plants and ready-mixed operations.

Other measures being considered include the formation of a cement buying group and banning price announcement letters to customers.

Professor Martin Cave, Chairman of the Competition Commission inquiry group, said: “We have provisionally found some serious problems with the way the cement market operates in GB.

“In a highly concentrated market where the product doesn’t vary, the established producers know too much about each other’s businesses and have concentrated on retaining their respective market shares rather than competing to the full.

He added: “Strikingly, despite low demand for cement over recent years, prices and profitability for the GB producers have still increased.

“Established information channels such as price announcement letters can signal their plans, and tit-for-tat behaviour and cross-sales can be used to prevent or retaliate against any moves to disturb the overall balance between the different players in this market.

“Our finding does not mean they are explicitly colluding or operating a cartel because there are already several ways of communicating each other’s intentions without the need for specific discussions.

He added: “Our initial assessment is that these problems could have cost GB consumers around £180m over the period 2007 to 2011, and we also believe this could be an underestimate.”

The commission is required to publish its final report into the cement market by 17 January 2014.

Councils are calling on the Chancellor to lift restrictions on the amount they can borrow to fund house building in next month’s spending review.

Local authority leaders are urging the Chancellor to give the construction industry a shot in the arm by removing unnecessary restrictions on council investment in new housing.

Research shows that councils could build up to 60,000 new homes over the next five years if they were allowed to invest in housing under normal borrowing guidelines.

This would deliver a 0.6% boost to GDP and create new jobs and reduce the benefit bill by increasing the provision of much-needed new social housing. Earlier this month London mayor Boris Johnson’s London Finance Commission called for borrowing caps to be lifted for local authorities in the capital.

Council housing leaders said this could strengthen the case for a rethink of the caps when chancellor George Osborne announces his spending review on 26 June.

Government figures released last week show that the numbers of new homes completed in the first quarter of this year continues its downward trend.

The Local Government Association, which speaks on behalf of more than 370 councils in England and Wales, said thousands of 'shovel-ready' sites could be kick-started into action if a Government-imposed block on council investment in housing was lifted.

Councils have not been able to invest in new housing on such a scale since the early 1990s.

Cllr Mike Jones, Chairman of the LGA's Environment and Housing Board, said:"Councils have excellent credit ratings and want to use our assets to help kick-start the housing recovery but our hands are being tied.

"At a time when housing waiting lists are rapidly expanding, levels of house building are languishing and the economy is still struggling, it makes no sense for Government to continue preventing local authorities from investing in the new homes the country badly needs.

"Councils, the markets and the construction industry all agree that the housing borrowing cap is unnecessary and only serves to hinder the housebuilding recovery.

"The Chancellor has an unrivalled opportunity to create jobs, provide more homes and help the economy without having to find a single extra penny. New homes are badly-needed and councils want to get on with building them. The common sense answer is for the Treasury to remove its housebuilding block and let us get on with it."

Research carried out last year for the LGA showed that the investment would be very low-risk and paid many times over by future rents on new homes.

Under the current rules, councils would be able to borrow no more than £2.8bn to invest in housing – enough to build 15,000 homes.

Without the cap, councils could borrow up to £7bn to invest in housing over five years, under existing prudential borrowing rules.

Seasonally adjusted house building starts in England rose 4% in the first three months of the year compared to the previous quarter.

According to the latest Government figures private homes starts led the recovery, jumping 7%, while starts by housing associations managed a more modest 1% increase.

Housing starts are now running at 27,370, up more than 15% on the first quarter a year ago.

The picture for completions, which tend to always lag in a recovering market, was less rosy, down 8% at 24,900 in the first quarter.Annual housing starts in the year to March totalled just 101,920, down by 3% compared with the year before.

Completions were also down, falling 8% to 108,190.

Simon Rubinsohn, RICS chief economist, said:“In addition to benefiting from the impact of the Funding for Lending Scheme, developers have also been able to take advantage of various other government initiatives including First Buy and NewBuy.

“This has been reflected in the sharper rise in private sector starts.
“By way of contrast, the picture amongst both housing associations and local authorities is altogether flatter.

“Government has extended its support for the new build sector through the introduction of Help to Buy.

“By opening up the shared equity product to a greater range of purchasers, the intention is to stimulate a greater level of development.

“While RICS expect this to be reflected in a higher level of new build over the balance of this year, there remains a question mark as to how much additional activity will be stimulated specifically by this programme.

RICS expect housing starts to climb to around 115,000 in 2013.

This still leaves the level of house building way short of projected household formation and suggests that rather more will need to be done to address this key challenge for the country.

Southern house builder Bovis Homes saw year-on-year private net reservations leap by more than a quarter in the year to May.

The 26% jump to 989 homes was fuelled by an 11% rise in the average number of active sales outlets to 91 and average private sales rates rising 14% to 0.57 net reservations per site per week.

It added that sales pries were also modestly ahead of management expectations.

In a trading update, Bovis said sales had been encouraged by the launch of the government’s “Help to Buy” scheme drawing in more visitors to its sales outlets.

As of May 10, the house builder held 1,238 private sales for 2013 legal completion against 1,013 during the same period last year.

Bovis said that the first few weeks of the government’s Help to Buy initiative had been “encouraging”, lifting visitor numbers.

David Ritchie, Bovis’ ceo, said: “"The on-going success of the group's growth strategy has driven strong trading in early 2013.  

“Homebuyer sentiment has been improving and, with the recently announced Government initiatives, sales rates have increased ahead of management's expectations.”