Despite the government’s stated ambition to 'build baby build' they seem to be putting so many obstacles in the way that you begin to wonder whether they are serious or indeed they understand how the industry works. In January more than 300 construction firms became insolvent in England and Wales and the outlook for the year ahead looks uncertain. If that’s not bad enough the employers increase in National Insurance contributions is about to kick in and make no mistake for contractors who employ direct labour as well as material manufactures, transport firms, etc. it’s going to be a big blow. At a time when many contractors are struggling with thin margins this could be the straw that breaks the camel’s back. In addition, the Employment Rights Bill is looming which if implemented will make flexible working the default position and give an employee the right to claim unfair dismissal from day one.
So, how’s the 1.5m homes in five years target doing? Latest figures show that house building has declined with the sharpest fall outside the pandemic since 2009. How many homes have been built so far and how many are going to be finished by July, which is now only 3 months away should give us a measure of how many will be built over the remaining 4 years. During the last 6 months of 2024 a little more than 100,000 homes were built. The planning system is still disjointed, the Building Safety Act is a hot potato and where are the workers and the planners? The Royal Town Planning Institute reports that local authorities have lost 25% of their planners over the last 5 years with some commentators branding the proposed shake up in the planning system as a 'red herring'. In addition, on the back of the Building Safety Act, the autumn will see the building safety levy introduced. The Building Safety Act is already responsible for major delays in higher risk buildings approvals but in addition it will see developers in England, Scotland is currently discussing introducing a similar levy, pay a fee on new housing developments which require building control approval. The levy is expected to raise £3.4bn over the next ten years ostensibly to fund remediation, irrespective of whether contractors have actually built anything that’s unsafe and is thought will be particularly punitive for SME home builders. The House Builder’s Federation have warned government on the potential negative impact on their ‘Build baby build policy’. In response the government has denied it will have any effect.
As well as increased legislation and red tape another factor holding back construction output is lack of skilled workers across all trades. So, could inclusivity be the solution? The past few weeks have seen wide coverage of Women in Construction and the need for construction to embrace diversity. According to the Office of National Statistics while the number of women in professional roles has increased by over 50%, in contrast the numbers of women in skilled trades has fallen by nearly 20% and continues to decline. It appears as though the government has at last woken up to the crisis of skills as it announced as part of the emergency budget a £600 million package over the next four years to and I quote ‘get young people into well paid, high skilled, jobs in the construction sector’ with 60,000 extra skilled workers promised. Two points occur to me, firstly you have to convince Gen Z that their future career lies on a cold and oft muddy building site and the other is, will companies be able to afford to take on additional staff ?
Duncan Cartlidge
Comments