Building News is an information portal for all professional building specifiers. Here you can find all of the latest construction news from around the UK and the rest of the world.

Sharp fall in migrant workers shows UK is already changing ahead of Brexit

The UK labour market is already changing ahead of its exit from the EU as the number of EU migrant workers fell rapidly over the last year, according to the latest labour market figures compiled by The Resolution Foundation

The figures show that the number of EU migrant workers in Britain fell by 4.5 per cent (107,000 workers) in the year to September 2018 – the sharpest fall since records began in 1997.

Britain’s pay recovery is gathering momentum too, with nominal pay growing by 3.2 per cent in the three months to September. This is the strongest growth since December 2008, though still well below the pre-crisis average of over 4 per cent. Above-target inflation means that real pay grew by just 0.9 per cent.

Stephen Clarke, Senior Economic Analyst at the Resolution Foundation, told buildingspecifier: “The sharp fall in EU migrant workers over the last year shows that Britain’s labour market is already changing ahead of its exit from the EU, and long before its post-Brexit migration plan is in place.

“Firms who employ a large share of migrant workers need to think now about adjusting to a lower migration environment, in terms of the workers they employ, what they produce and how they operate.

“The other big labour market shift that is still to come is a proper pay recovery. Yet we see further encouraging signs off the back of a tightening labour market. Nominal pay growth reached its highest level in a decade.

“However, a sustained pay recovery rests on stronger productivity and today’s sobering growth of just 0.1 per cent shows that this is still some way off.”

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Government plan to address long-term housing challenges

Homes England recently set out how they intend to improve housing affordability through a new five-year Strategic Plan – helping more people access better homes in areas where they are needed most. Buildingspecifier takes a look:

The government plan, which runs up to 2022/23, outlines an ambitious new mission and the steps the national housing agency will take, in partnership with all parts of the housing industry sector, to respond to the long-term housing challenges facing the country.

The new plan sets out far-reaching delivery objectives:

  • Unlock public and private land where the market will not, to get more homes built where they are needed
  • Ensure a range of investment products are available to support housebuilding and infrastructure, including more affordable housing and homes for rent, where the market is not acting
  • Improve construction productivity
  • Create a more resilient and competitive market by supporting smaller builders and new entrants, and promoting better design and higher quality homes
  • Offer expert support for priority locations, helping to create and deliver more ambitious plans to get more homes built
  • Effectively deliver home ownership products, providing an industry standard service to consumers

Speaking about the updated plans, Communities Secretary Rt Hon James Brokenshire MP said “This government is committed to delivering 300,000 homes a year by the mid-2020s and help more people get on the housing ladder. Homes England is at the heart of these plans.

“I welcome their comprehensive vision that sets out how through their powers and expertise they will maximise Government investment to deliver the homes communities need.”

Sir Edward Lister, Homes England Chairman, added “Ultimately, we need to disrupt the housing market. Homes England plans to be bold, creative and think big. We hope the whole of the housing sector – big and small, up and down the country – will join us for the next five years and beyond.”

Nick Walkley, Homes England Chief Executive, concluded “The new Homes England is all about making homes happen – and our new 5-year plan sets out our ambitious new approach. We are committing to boosting housing supply, productivity, innovation, quality, skills and modern methods of construction to help make a more diverse and resilient market. In return, we are calling for partners and the wider industry who share our ambition to challenge traditional norms and build better homes faster.”

The five-year Strategic Plan follows the Budget announcement of seven more strategic partnerships with housing associations, which will deliver an additional 13,475 affordable homes by March 2022.

The new partnerships will secure a total of £653m in funding from the Affordable Homes Programme, delivered through Homes England, including homes for social rent in areas of high affordability pressures.

This is in addition to the first eight strategic partnership deals announced in early July, bringing the total number of additional affordable homes that will be delivered to 27,755.

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Price-hikes on skips and diesel prove problematic for builders

According to the latest construction industry research, nearly two-thirds of builders have had to pass skip price increases on to clients and a fifth have had to pass on diesel price rises, making home improvement projects more expensive for home owners. Building Specifier delve into the details provided by experts the Federation of Master Builders.

The key results from the FMB’s research into skip prices are as follows:

  • Three quarters of builders have said that the price of skips has risen over the past 12 months
  • The average cost of an eight yard skip has gone up by £24 over the past year, meaning an additional cost of £360 for the average extension
  • Nearly two-thirds of builders have had to pass skip price increases on to clients, making home improvement projects more expensive for home owners
  • Three quarters of builders said that skip price rises have squeezed their margins

The widely-reported hike in diesel prices is also starting to bite and is having the following impact on small and medium-sized (SME) construction firms:

  • Nearly half of construction SMEs have made lower margins on projects
  • Nearly a fifth (17%) have been forced to raise the prices they charge clients
  • More than one in ten have had to turn down jobs they would have normally accepted as they are too far away
  • 10% have taken steps to reduce vehicle use

Commenting on the research, Brian Berry, Chief Executive of the FMB, said “The increase in the price of skips and diesel is bad news for builders and home owners alike. Nearly two-thirds of builders have had to pass skip price increases on to clients and a fifth have had to pass on diesel price rises. This has made home improvement projects more expensive for home owners. What’s more, the impact of the rising price of skips could have an impact on our communities through a rise in fly-tipping. No matter how much the price of skips might increase, there is never any excuse for fly-tipping and any individuals found doing so should be severely reprimanded. In 2016 and 2017, more than one million incidences of fly-tipping were dealt with by councils in England and the last thing anyone wants is for this number to increase.”

“The increase in the price of skips and diesel have come at a bad time for the UK’s builders. The cost of doing business is rising more generally for construction firms. Wages and salaries are all rocketing because of the ever-worsening skills shortages in construction. What’s more, material prices have been rising because of the depreciation of sterling following the EU referendum. Looking ahead, material prices are expected to cause an even bigger headache going forward, with recent research from the FMB showing that almost 90 percent of builders believe that material prices will rise in the next six months. We are advising builders to price jobs and draft contracts with this plethora of price rises in mind to avoid a further squeeze on already razor thin margins.”

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OPINION: Materials handling industry is at the mercy of Brexit

Building Specifier caught up with a leading expert in materials handling who warns of the impact Brexit will have on his industry.

Paul Casebourne, who has years of experience in creating engineering solutions and runs the Materials Handling Hub, believes that the industry has been forgotten as one of the potential casualties of the UK leaving Europe.

He claims the industry is already suffering as a result of the uncertainty about the country’s relationship with the EU.

The materials handling industry currently accounts for some of the biggest imports and exports in the UK, with machinery and vehicles accounting for a combined worth of £55b.

Half of this business is done with Europe and Mr Casebourne believes that if it is more expensive to trade with EU states post-Brexit, the outcome could be catastrophic.

He also warned “there are at least two major global materials handling companies who await the results of the troubled Irish Border question where skills are drawn from both sides of the divide.”

“The UK currently benefits from the free movement of goods within the EU. This means imports from other EU member states have no import duties, taxes or customs clearance,” he said.

“More to the point the harmonisation of engineering standards requires representations if we are to keep up with international projects. We currently have EU rights to be included in tenders within the EU, I have heard of no plans to make up ground in this respect.

“Forty years of work in the balance and not a word of comfort from the political structure.”

Casebourne also expressed his concern on the situation in the UK around export and import duties.

“Following Brexit, the UK will be back to custom clearing its EU imports as well as paying taxes and import duties on them and it’s possible that some goods will require an import license after Brexit,” he said.

“The extra tier of administration simply makes it harder to compete and adds unnecessary delays to international trade.

“Companies will have to revert to commercial invoices which determines the import duty they have to pay – all of which can have a huge impact on a business.”

Paul Casebourne

Mr Casebourne believes that while many industries have expressed their concern about what Brexit means now nobody seems to have looked at the impact this will have – and that it is already having – on the materials handling industry.”

Mr Casebourne, who has worked in the industry for more than 40 years and supplies equipment to a range of industries and also creates bespoke solutions, added that “we’ve already seen a number of big projects put on hold and people are reluctant to invest in new equipment.”

“Across the board business is not as good as it could be in the industry and the uncertainty about the future is not helping” he added, who via his Materials Handling Hub website shares best practice and brings together customers and suppliers.

“The whole situation really is intolerable at the moment while we are neither in or out. The UK has launched itself headlong into a 20-year project with no plan B, in fact without any plans at all whilst still handcuffed to the EU, powerless to put the plans in place that we need to get on with investing in our future.”

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Over 600,000 homes lay vacant across England alone

  • New study has found that 605,891 homes were unoccupied last year.
  • Liverpool has the biggest problem with vacant homes, with over 10,000 homes remaining empty in 2017.
  • A third of empty homes throughout the country are empty for longer than six months.

A new study has revealed the shocking extent of England’s empty homes crisis, with more than 600,000 homes remaining vacant.

The study, conducted by Good Move, has found that a third of empty homes are classed as long-term vacant, after being empty for more than six months.

The city of Liverpool takes the crown for the most vacant properties, with a staggering 10,512 properties laying empty last year. The data comes despite efforts by Liverpool City Council to reduce the amount of vacant homes with a free matchmaking service to introduce buyers and sellers of empty homes, in a bid to bring more empty homes into use.

Birmingham follows closely behind, with 10,386 empty homes. The city famous for its Bullring accounts for 17% of West Midlands’ total number of vacant homes.

The Yorkshire city of Leeds has the third highest number of empty homes throughout the country, with 10,263 properties vacant. Leeds’ empty homes equates to 14% of Yorkshire and the Humber’s empty homes.

The North West has the most vacant properties, with 102,847 homes laying empty across the region, and 38% of those being vacant for longer than six months. Liverpool has the most empty homes in the North West, and the country as a whole, with 10,512 vacant properties in 2017.

Following closely behind the North West is the South East, with a staggering 86,693 vacant properties last year. Of the 86,000 empty homes, 29% of those are vacant for longer than six months.

The top five cities with the highest number of empty homes are:

CityNumber of vacant homes (2017)As a % of all housing
Liverpool10,5124.70%
Birmingham10,3862.40%
Leeds10,2633.00%
Durham10,0264.20%
Bradford8,7514.10%


England regions by number of vacant homes:

RegionNumber of vacant homes (2017)As a % of all housingLong-term vacant*
North East43,6173.60%17,106
North West102,8473.20%39,344
Yorkshire & The Humber73,7283.10%27,009
East Midlands52,5622.60%18,553
West Midlands62,9192.60%20,996
East of England58,8312.20%17,983
London62,3661.80%20,237
South East86,6932.20%25,378
South West62,3282.50%18,687
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Government call for green innovations to beat climate change

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Britain’s best innovators and researchers are being invited to pitch their ideas to help tackle the effects of climate change on towns, cities and the countryside as part of modern Industrial Strategy.

Business and Energy Secretary Greg Clark recently announced 4 new research programmes to boost the UK’s resilience to climate change, develop digital environments, promote clean air and investigate how to use our land to boost health outcomes.

The £60 million funding pot was announced during the first ever Green GB Week – a government-led week of campaigning to encourage businesses, communities, funders and academics to renew their efforts to confront the global challenge of climate change.

Business Secretary Greg Clark said “Companies are capitalising on the UK’s world leading position in the greener economy as we transition to a greener, cleaner economy and is one of the greatest industrial opportunities of our time.

“The UK is a world leader in tackling climate change, cutting our emissions more than 40% since 1990 while growing our economy. When you combine Britain’s leadership, innovation and determination it is an unbeatable combination – exactly what our Industrial Strategy and Green GB Week are supporting and encouraging.”

UK Research and Innovation Chief Executive, Professor Sir Mark Walport, said “The recent IPCC report is a timely reminder of the challenges we face in tackling climate change. Storm Callum has highlighted the impact that extreme weather events can have on our communities.

“It is vital that the evidence generated by research is used effectively to navigate and mitigate the effects of climate change, and new technologies are developed to support a move to a low carbon economy.

“The Strategic Priorities Fund is important in supporting UKRI’s mission, allowing us to bring collective expertise from a wide range of disciplines and sectors to bear on addressing important matters affecting all of society.”

The programmes, administered by UKRI, will bring together a broad range of research disciplines, ranging from mathematics and biology to climate science and technology development to:

  • produce better data on climate risks to the UK
  • build a digital picture of our natural environment for greater monitoring and analysis of the impact of climate change
  • cut air pollution and protect vulnerable groups from its effects
  • use our land better, for the benefit of the environment and communities
  • develop ways for the UK to adapt to climate change

Chief Scientist of the Met Office, Professor Stephen Belcher, said “These programmes will allow the Met Office and our partners to make real progress in two areas of significant environmental impact: air pollution and climate change.

“Working together with other world-leading scientists from the UK’s academic community, we will be able to deliver tools and services which will benefit the lives and livelihoods of people across the UK.”

Competitions for the programmes will open in the coming weeks. Researchers and innovators can visit the UKRI website for updates.

The funding comes as part of the Strategic Priorities Fund, delivered by UKRI to drive an increase in high quality multi- and interdisciplinary research and innovation. It will ensure that UKRI’s investment links up effectively with government research priorities and opportunities. Further programmes will be announced in the coming months.

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Builders back the high street

In this weeks Autumn Budget, Chancellor Philip Hammond outlined positive steps that need to be taken in order to address the housing crisis and breathe new life back into our high streets. This is not only great news for the builders who will carry out the works, but also for residents of the countless forgotten towns and cities across Britain, whose people stuggle to make a living and get by on empty high streets dominated by boarded up windows and To Let signs.

Commenting on the Budget 2018, Brian Berry, Chief Executive of the FMB, said “It is important that the Chancellor has recognised the importance of investing in our high streets. He has announced a £675 million Future High Streets Fund to allow councils to rejuvenate town centres. It is estimated that as many as 300,000 to 400,000 new homes alone could be created by making use of empty spaces above shops on our high streets. This is space just waiting to be turned into residential accommodation. There is a pressing need to re-invent many of our town centres in light of changing patterns of retail and leisure. The Government should be applauded for its ambition to safeguard the life of our high streets.”

“We would urge councils to take this opportunity to look again at how they can work with local builders and developers to make better use of existing town centre building, and facilitate the development of wasted space above shops. A recent report titled Homes on our High Streets from the FMB puts councils at the heart of the solution and suggests some practical ways for them to facilitate the development of wasted space above shops. Retail will always be an important element of vibrant high streets, but there is plenty we can do on a small scale to help convert unused and under-used space in to attractive residential units. This will both boost the supply of new homes and help breathe new life back into our high streets. What we must avoid is perfectly good space lying empty and achieving nothing in terms of boosting the local economy or housing individuals.”

“We are also pleased that the Chancellor has today announced £1bn to guarantee capacity to support lending to the SME housebuilding sector. This will be implemented by the British Business Bank, working with Homes England. Many small-scale house builders continue to experience real difficulty in accessing the finance they need to build homes, and it is often the smallest scale builders that experience the greatest problems. This new funding will help to speed up the delivery of homes and lead to a more diverse and resilient housing supply.”

Is your town struggling to survive? Tweet us a picture of your town’s lonely highstreet and copy in @PhilipHammondUK; let’s show the government where this money needs to be spent!
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Autumn budget – industry comment

This week Chancellor Philip Hammond delivered his autumn budget to the chamber. Touching on key issues such as the housing crisis, skills shortages, Brexit, apprenticeships and planning reform, the latest budget included much for the construction sector to sit up and take note of.

The Chancellor has previously promised 300,000 new homes a year by mid-2020s. Will the range of measures signalled in the latest Budget be enough to achieve that ambitious target? Are enough steps being taken to address some of the key issues facing the construction industry? Buildingspecifier.com catches up with thought leaders from across the sector to see what they have to say in response:

Modular construction

Brendan Sharkey, head of construction and real estate at top 15 accountancy firm MHA MacIntyre Hudson, believes that the future of construction is modular . He said “One of the most impactful things Philip Hammond could do to support the industry is to target tax relief at small to mid-tier firms to encourage them to adapt productivity enhancing approaches like modular construction.”

“Modular construction is the future for large parts of the industry, as the government itself frequently tells us. This technique removes the weather from consideration, and brings factory-style efficiency and better quality control into the production process. Larger construction firms already use modular production, but it needs to percolate down the food chain. One way to ensure this happens would be for the Chancellor to put his money where the government’s mouth is, and to offer extra plant and machinery relief for small to mid-tier businesses who want to invest in modular development.”

Infrastructure

Rob Oliver, Chief Executive of the Construction Equipment Association (CEA) commented: “The pre-announced commitment of some £30bn to roads repair and maintenance is extremely welcome. This is not only good news for motorists but will provide an additional boost to the plant hire sector. The hope is that the money will be invested in machines and methods which make those repairs effective long term – not just commissioning low cost, short-term, sticking plaster solutions.”

“The Chancellor specifically recognises that the investment in road, rail and infrastructure is set to power the economy forward. This is good news for the construction industry that is at the centre of this.”

“Interesting to see increased funding for the Transforming Cities programme – up to £2.4 billion. This will help facilitate some long needed local development projects.”

Home ownership

Kevin Roberts, Director, Legal & General Mortgage Club said “The first Stamp Duty exemption has already helped 121,000 first-time buyers. This extension to Shared Ownership properties of up to £500,000 is very welcome news for buyers up and down the country – even better to hear that it will be applied retrospectively for homeowners since the last Budget. The Government clearly recognises the benefits of Shared Ownership as a genuine option for individuals, couples and families who want to become homeowners. Hopefully, this exemption will now bring about even more awareness of the scheme and make it as widely recognised as other high profile tenures such as Help to Buy.”

Refurbishment

In response to this week’s Autumn Budget, specialist insurer Ecclesiastical is urging the government to reconsider reducing VAT on repairs and approved alterations to listed buildings.

Faith Kitchen, Heritage Director at Ecclesiastical said “We’re disappointed the government hasn’t considered reducing VAT on repairs and approved alterations to listed buildings in the Budget.”

“We strongly support organisations such as the Heritage Alliance and the Listed Property Owners’ Club which have argued the VAT on repairs gives an unfair tax advantage to developers and penalises owners of historic buildings, many of whom are private individuals, who are facing higher repair and maintenance costs.”

“As the UK’s leading insurer of Grade I listed properties and with over 130 years’ experience we are passionate about protecting the country’s historic and iconic buildings and structures. Reducing VAT is vital to help organisations and owners of listed properties protect such an important part of the nation’s heritage.”

“We need to do more to support the custodians of Britain’s heritage properties, and while unfortunately this hasn’t been addressed in today’s Budget, we urge the government to reconsider reducing VAT to 5% on repairs and approved alterations to listed buildings.”

Skills gap and apprenticeships

Duncan Green, managing partner leading property, construction and infrastructure consultancy Pick Everard said “I am pleased to hear that Mr Hammond has announced a £695m initiative to help small firms hire apprentices. I believe that apprenticeships for both males and females in construction are crucial to the future of the industry, especially because of the skills gap, and training needs to remain a top priority if we’re to see real change in the UK’s infrastructure.

“Essentially, skills and training are how we will see the high wage, high skill economy of the future.”

Housing

Paul Butterworth, Partner, Ashfords LLP Real Estate Team commented “The problems in housing do not merely mean that someone doesn’t have a roof over their head, but it is vital that other areas which affect those in need, such as mental health provision are also recognised as part of the problem. Therefore, the Chancellor’s specific mention of mental health provision being part of the NHS 10 year plan and the expansion of children’s social care have to be good news in providing funding for support services. There will always be arguments as to whether this is new money or simply filling a hole which has arisen following austerity. It is at least a recognition of the need for a joined up approach to the issues faced by those most in need.

“The £675m “Future High Streets Fund” mentions facilitation of redevelopment for under used commercial into residential property. This is likely to mean a change to allow for permitted development rights, rather like the policy of allowing conversion of offices to residential without the need for a specific planning consent.

“A further £500m for the Housing Infrastructure Fund again underlines the importance of housing and offsetting from developers the costs of infrastructure on major schemes to help unlock housing developments.

“The extension of SDLT exemption on shared ownership properties valued up to £500,000 purchasing a £300,000 share, sorts out an anomaly in the tax system whereby they were caught by an SDLT hit whereas buying 100% didn’t give rise to this. It’s interesting that this is applied retrospectively so is this going to be claimed via the individual tax code.

“All in all a reasonably positive housing budget, not necessarily adding anything new but follows the trend from previous budgets.”

Investors

Melanie Leech, Chief Executive, British Property Federation said “The Government should be careful in how it targets these measures that will be consulted upon in early 2019, as an additional surcharge on large-scale overseas investors could put investment in housing delivery at risk. We estimate that 22,000 build-to-rent homes, 15 per cent of the sector’s pipeline, are reliant on funding from overseas investors such as pension funds. Making it more expensive for these institutions to invest won’t help deliver these much-needed homes.

“A new tax relief for commercial property owners is a real surprise. This move brings the UK more closely in line with the many other countries that already provide tax relief for the cost of building commercial property, making the UK more attractive to invest in. It makes investing in new and refurbished buildings cheaper from a tax perspective, and is a welcome move.”

Planning

The CLA represents landowners, farmers and rural businesses across England and Wales who together, manage more than 10 million acres of rural land. The organisation has reacted to the Chancellor’s Budget.

On Sir Oliver Letwin’s review of build-out rates, CLA President Tim Breitmeyer said “We are pleased the Letwin Review does not remove the financial incentives for landowners to bring land forward for the building of much needed homes.

“However, we are concerned that planning authorities would be given the ability to unilaterally decide where large scale housing development should take place, backed up by the threat of compulsory purchase, irrespective of the wishes of the landowner. Compulsory purchase should only ever be a last resort. The primary focus should be on establishing effective partnerships with local landowners, not seeking to forcibly remove their property.”

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Experts warn that planning system is failing those in greatest need

Councils in the most deprived areas of England are meeting only a fraction of their requirements for affordable housing because the planning system is not set up to deliver homes for people in the greatest need, according to a recent report.

Between 2016-17, Blackpool, Knowsley and Pendle—whose residents take home some of the lowest incomes in the country—saw no new affordable housing delivered through the planning system and less than 7% of their requirement met by other means. On the other end of the spectrum, affluent areas including the Vale of White Horse were able to deliver 96% of their affordable housing using the planning system.

The planning system is one of the main drivers for delivering affordable housing in England, with 70% of councils saying they rely on it substantially to allow them to meet housing need. Local requirements for affordable housing are usually set as a percentage of overall housing delivered on a scheme. Councils have said deprived areas are being left behind by the current system because only high-value areas can meet developers’ profit expectations and still deliver affordable homes.

Figures show that although over half of councils have set a minimum threshold for genuinely affordable housing using their local plans, only 2% actually manage to achieve it.

Developers have traditionally managed to bypass local requirements for affordable housing by first submitting a scheme that meets the threshold, but later backing out of their commitment, claiming unworkable profit margins. The government attempted to address this problem earlier in the year by restricting the use of viability testing to only ‘particular circumstances’, although councils aren’t convinced that this will curb the problem. One official claimed that the changes will simply create new issues, which local authorities will struggle to react to.

The report also finds that councils often specify much lower numbers of affordable housing in their local plans than necessary because they believe that setting a level which meets their true requirement would deter developers from investing in their areas. This has seen deprived areas setting their target as low as 5% of new affordable housing—when the actual need is sometimes as high as 84%­—but still seeing no new homes created for lower-earning residents.

Planning for Affordable Housing, which was funded by the Nationwide Foundation, makes a series of recommendations about what needs to change to the planning system to deliver more affordable housing for people in need across the country, and highlights the critical role that innovative councils are playing to secure more affordable homes.

Henry Smith, projects and policy manager at the TCPA, said “Although housing costs are often lower in more deprived areas of the country, they’re still out of reach for many local people. This research shows that the housing crisis truly is a national problem and not only limited to major cities and those living in the south east.

“Councils are being put in a difficult situation where they’re forced to furiously attract development to meet a five-year target imposed on them by the government, but at the same time negotiate with developers to make sure that what is actually affordable to people most in need.

“Many councils are responding to these difficult circumstances by acting in new and innovative ways, such as fast-tracking planning applications—considered a barrier by many developers—for schemes which meet higher levels of affordable housing. However, to truly make a dent on these numbers the government needs to immediately increase grant levels for councils and housing associations to enable them to deliver genuinely affordable homes. It is also essential that the government creates a definition of affordable housing, which links affordability to income and people’s ability to pay, rather than an arbitrary portion of the market rate.”

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