UK Investors Brace for Thousands in Costs

Abolition of Multiple Dwellings Relief: UK Investors Brace for Thousands in Costs

UK property purchasers are being forced to increase their minimum purchase quantity or create buying groups to receive the benefits of buying in the UK 

David Hannah, Group Chairman of Cornerstone Tax, discusses how the abolition of Multiple Dwellings Relief restored a historical injustice in Stamp Duty Land Tax (SDLT)

 

The abolition of Multiple Dwellings Relief (MDR) following Chancellor Jeremy Hunt’s Spring Budget, has brought into sharp focus the additional costs for investors when they purchase multiple properties in the UK. Property buyers now have to pay an increased amount of tax, with investors now having to purchase six or more units in order to reap the benefits of SDLT relief. David Hannah, Group Chairman of Cornerstone Tax, asserts that  the UK government has generated another block to stopping the property market from making a recovery.

Currently, a property buyer purchasing three apartments from a developer at £350,000 each, would have to pay £46,500. However, once MDR is abolished in June, that same investor will have to pay £77,750. Property buyers in the UK who are eager to buy six units and pay the 5% rate of SDLT, will in effect have to pay £47,250 each which is less than the £77,750 they were being asked for, only slightly more than the £46,500 that they would have paid for under MDR. In reality, had the price been £400,000 each, the six units would have been cheaper than MDR.

The chart below shows the benefit that can be obtained by applying the rule of six on multiple purchases, as well as how the effect increases dramatically as the average price per dwelling increases.

 

As a result of this, purchasers of multiple units will either have to increase their minimum purchase quantity to six or, conceivably team up with other multiple purchasers into buying groups. This will enable them to buy six units collectively and to ensure that they receive the benefits of the non-residential rate and pay no surcharges whatsoever. The consequences of the abolishment of MDR, is that the Chancellor has, therefore, restored a historical injustice in Stamp Duty Land Tax. The UK’s Treasury and HMRC may well not see an increase in tax take but in fact a decrease, once these perfectly valid commercial arrangements become mainstream.

 

David Hannah comments:

“Multiple Dwellings Relief was first implemented as means to incentivise bulk purchases and provided developers with a suitable avenue for delivering low-cost homes. At a time when demand for affordable housing has skyrocketed, the government should look to create fresh incentives for developers, instead of abolishing old ones.

“The decision by the Chancellor to increase the tax that developers are forced to pay from 1-2% to 5% will have a seismic shift across Britain’s construction sector, leading to project abandonment and further increases to asking prices as supply continues to lag behind an overwhelming demand for affordable housing. Don’t be fooled, this is a stealth tax increase with a paper-thin justification laced over the top of it.

“The Chancellor could have used this opportunity to reform the private rental sector, measures including the abolition of the second home surcharge from rental sector investors and reinstating full relief on mortgage interest payments would have both reduced the costs of purchase, whilst also allowing landlords to freeze, or potentially cut, rents.”

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Consider other ways of boosting the supply of homes

Propertymark encourages the UK Government to consider other ways of boosting the supply of homes

 

The UK Government has two main aims: constructing more homes while protecting the environment, yet they are also considering how they can utilise brownfield land, which is land that has previously been developed on.

 

The Secretary of State for Levelling Up, Housing and Communities, Michael Gove, stated in February that he intends to further his plans to help local authorities build more homes on brownfield land in England. The proposals, which were put to public consultation in February, consist of amendments to planning policy and the way the Housing Delivery Test works to support the development of brownfield sites, as well as revisiting the threshold for referral applications to the Mayor of London.

 

Responding to the Department’s consultation, the professional body urged the Department to consider their main concerns, such as 1.1 million new homes receiving planning permission, but they have not been constructed yet. 

 

Propertymark also shared concerns that an overemphasis on using brownfield land to meet housing targets could lead to the development of poor-quality housing in areas where people would not move it. As an alternative, Propertymark proposed to the Department that they should initiate an infrastructure first approach, where homes are built with all the community assets they need, such as shops, transport links and access to schools. This would create new communities that people would want to live in.

 

There should also be amendments to national planning policy which would encourage or incentivise smaller developers on smaller sites to offset the obstacles regarding tiny brownfield sites.

 

Another aspect of the consultation addressed the Housing Delivery Test (HDT), which is a tool local authorities use to identify the number of homes required and delivered in their jurisdiction. If local authorities fail to meet the number of homes required, there are consequences, such as the need to produce an action plan if the local authority fails to meet 95% of its HDT score. The UK Government is considering requiring all London boroughs that are subject to urban uplift to also prioritise brownfield development is they fail to meet 95% of their HDT score, a requirement that would not apply to any other local authority that met 85% of its HDT score. While Propertymark believes all local authorities should be incentivised in general to reach 100% of their Housing Delivery Test, local authorities should have the flexibility to meet housing demand through other means if they believe brownfield developments will be of poor quality.

 

Propertymark argues that local authorities should ultimately base development decisions on what would lead to the largest number of new homes that people would want to live in. Prioritising brownfield development would not work in every situation, therefore a flexible approach should be prioritised.

 

They further encouraged that local authorities should approve developments that build a larger number of homes per year, rather than longer developments so they can respond quicker to the current housing supply shortage. Also to avoid developers with a large number of outstanding development projects and to consider the affordability of the new homes built.

 

Henry Griffith, Policy and Campaigns Officer at Propertymark said:

 

“Propertymark is well aware of the current housing shortage facing the country. In that sense we are supportive of measures introduced to improve the supply of new homes. We fully support this policy where it can open up opportunities to develop brownfield sites that were previously not considered and lead to the delivery of new homes that people want to live in. However, this policy presents a risk that poor quality homes in unappealing areas could be prioritised in order to meet delivery targets. This must be avoided at all costs as it will not lead to communities and areas where people want to live.”

 

A link to the consultation can be found here: https://www.gov.uk/government/consultations/strengthening-planning-policy-for-brownfield-development/strengthening-planning-policy-for-brownfield-development.

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Creative Construction

NEW REPORT PRAISES UK BUILDING AND CONSTRUCTION BUSINESSES FOR INVESTMENT IN CREATIVE ROLES

A new report has praised UK building and construction businesses for their investment in creative roles, with the sector featuring in a list of the top ten industries investing the most into creative teams, with just over 12 in 100 members of staff now working in creative roles.

Analysing data from LinkedIn, the report from brand communications agency Warbox ranks the in-house creative headcount of ‘design’ roles across a number of UK companies in traditionally ‘less creative’ industries, compared to overall headcount, to find which sectors place the highest value on creativity within their workforce.

The building and construction industry appeared sixth in the full list (12.291% of headcount) with the healthcare (17.87%), and homeware and interiors (11.12%) businesses completing the top three.


Top 10 industries for creative hires

Boots, the health and beauty retailer, is an example of a brand that has heavily invested in creative talent. Boots launched its biggest ever campaign in 2023, ‘Our Health Is As Individual As We Are’, which championed women’s health, highlighting the support available for women through creative that was rolled out across TV, out-of-home, print, social media and online.

Closely following the building and construction industry, homeware and interiors came in third place with 11.12 percent – perhaps unsurprisingly as this industry naturally places great importance on design and aesthetics.

Out of the twenty industries analysed, transport and logistics and warehousing and distribution were revealed to have the lowest headcount of creatives in their workforce. This can be attributed to these industries having a greater need for functional labour roles – however, this is not to say that these industries would not benefit from a greater investment in creative roles to combat challenges that an ever-changing economy can present.

Mark Fensom, director at Warbox, comments on the research:

“It’s interesting to see which industries are placing a higher value on creative talent in 2024. Creativity fosters innovation, enabling businesses to adapt to evolving market demands and remain competitive which is key when it comes to running a successful business.

“Even those industries with a perceived lack of need for creative roles, such as building and construction, could benefit greatly from hiring creative talent – it’s important for businesses to realise that creativity can unlock fresh perspectives and offer unique solutions to business challenges.”

You can view the full research here: https://warboxcreative.co.uk/value-of-creative-roles-2024/

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Positive Score Marks for the Construction Industry

 

The UK’s construction industry returned to growth last month after a six-month slump which saw housebuilding suffer against a property market downturn.

The latest S&P Global construction purchasing managers’ index (PMI) scored 50.2 in March, up from 49.7 in February and the highest level since August last year.

Any reading above 50 indicates that overall output in the sector has expanded.

Although only fractional, the positive score marks a shift for builders who have grappled with tougher economic conditions, including rising prices, weaker demand and disruption in their supply chains.

Civil engineering was the best-performing sub-sector in March, with firms saying they were doing more work on infrastructure projects and there was resilient demand in the energy sector.

Improving real wages and expected interest rate cuts are proving to be the right medicine to end the construction downturn.

Rob Wood, Pantheon Macroeconomics

While housebuilding and commercial construction activity was broadly unchanged, the stabilising of residential work reflected the best performance in more than a year.

It indicates that there could be early signs of recovery after a downturn in the housing market, driven by higher interest rates pushing up mortgage costs and the greater cost of living.

Rob Wood, chief UK economist for Pantheon Macroeconomics, suggested that the expectation that interest rates will soon be cut has been a “tonic” for construction firms.

“Improving real wages and expected interest rate cuts are proving to be the right medicine to end the construction downturn, with all major sectors of the industry now showing flat or marginally rising output,” he said.

He added that the PMI survey suggests construction activity will continue to improve.

Tim Moore, economics director for S&P Global Market Intelligence, agreed that the firms surveyed pointed to a rebound in opportunities for work “helped by easing borrowing costs and signs that UK economic conditions have started to recover in the first quarter of 2024”.

But he added that staff hiring was a “weak spot” as companies had lingering concerns about cost pressures and a sense of hesitancy among their customers to commit to projects.

Staff numbers fell last month, albeit at a slower pace than in February.

Builders remain upbeat about their prospects for business activity in the year ahead, but political uncertainty, squeezed margins and financial pressures continued to weigh on optimism.

 

Source: The National

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Setting the Stage for Dramatic Construction

Architect PRP’s Space Studios in Manchester, for client Manchester Creative Digital Assets,

has 80,000ft2 of stages and support facilities. Credit: Andy Marshall

There’s drama in construction as the industry prepares to meet movie makers’ requirements for bigger, more flexible production facilities
Sky Studio’s new facility at Elstree & Borehamwood by UMC Architects, at nearly 600,000ft2, reflects the demand for new studio space in the UK. Credit: Tomasz Kozak

It is perhaps a paradox of the movie industry that its magical worlds are created in buildings that are essentially big boxes. Those dream factories have become slightly less of a rarity in the UK landscape in the wake of streaming and government support for production here.

The new era of studio development has brought larger stages of 10,000-20,000ft2, to enhance flexibility in use, and more diverse facilities. ‘We’ve seen a trend for more production-style hubs, more campus style studios where there’s a mix of large stages, space for virtual production and also more rooms for tenants and even for training,’ says Samantha Perahia, head of production UK at national agency the British Film Commission (BFC).

Sky Studio’s new facility at Elstree & Borehamwood by UMC Architects, at nearly 600,000ft2, reflects the demand for new studio space in the UK. Credit: Tomasz Kozak

According to property consultant Knight Frank’s 2023 report on the UK film and tv studios market, one million square feet of stage space was developed in 2022-23, with newbuild, converted and demountable stage space helping to meet feverish demand. Since then, numerous factors have affected global production, not least the long-running actors’ and writers’ strikes in the US. With the strikes resolved, production is ramping back up at studios, says Perahia, but she still describes this as an ‘extraordinary moment’ for the industry. Strikes, pandemic and a changed economic context mean, she says, that ‘the film and tv industry is readdressing its own needs and looking at quality over quantity’.

That could be reflected in development activity. Knight Frank estimates that, taking a mid-point between high and low-growth future scenarios, around 2.6m sq ft more studio space will be needed by 2028.

‘Now I think we’ll find that there’s less of a race and further development of stage space can be planned over a slightly longer time frame, allowing for additional considerations, such as environmental measures, etc,’ says Jeremy Pelzer, senior stage space strategy advisor at the BFC.

 

The film and tv industry is readdressing its own needs

and looking at quality over quantity

Campus complexity

Studios can be complex and costly projects, ‘not because of what they look like on the outside, but because of what happens on the inside to make them energy efficient and perform acoustically’, explains Graham Mackfall, director at UMC Architects. They are also large in scale, with the 585,000ft2 Sky Studios Elstree campus in Borehamwood, Hertfordshire, having six sound stage buildings containing 12 sound stages, two production support buildings for activities including costume-making and set construction, an amenity building and a multi-storey car park.

Sound stage buildings need to be flexible to adapt to the requirements of production company occupiers, by allowing for internal division walls to be reorientated or removed totally. During Sky Studios Elstree’s development, says Mackfall

‘they had an occupier that needed a certain-sized space, so even before we’d finished construction of one of the sound stage buildings, we didn’t build a wall intended to divide one particular space’.

This is just one factor differentiating a sound stage building from the industrial buildings the practice specialises in, he points out.

‘In an industrial building, we would have a hit-and-miss portal frame, which gives you decent open span space and works for logistics. But a studio will have a latticed-truss design because there are a lot of services to hang, and there’s a requirement for walkways and gantries at high level to allow lighting – hung from runway beams running perpendicular to the trusses – to be controlled.’

Another consideration is the acoustic performance of the structure and facade, taking into account outgoing sound from the studio and local noise such as traffic from nearby roads. At Elstree, the steel frame is mostly clad in built-up systems, with insulated composite panels and glazing featuring on offices and public-facing elevations. The facade treatment of public-facing buildings responds to the context, with Sky’s campus occupying a semi-urban site, facing Borehamwood and an access road.

‘We have to make the buildings functional, but also as architecturally pleasing as possible,’ says Mackfall. The welcome to the site is expressed by a feature arch, flanked by two buildings, echoing Hollywood studios.

The scale of the Elstree project made it viable for the architect to work with manufacturers to develop bespoke details which included design of division walls between studio spaces and the acoustic and thermal lining of external walls and roofs.

‘Standard products didn’t really hit the criteria we wanted,’ says Mackfall, ‘because, in the case of Sky, a key driver for the brief was creating the most sustainable film studio development in Europe at the time.’

UMC Architects’ first work with the film industry was at Elstree, where it found itself part of a large cast, with Legal & General as client, Sky as occupier with its own brief and occupier-side design team in Arup, and UMC itself novated to main contractor BAM Construction. Since completing the project last year, the architect has secured more work in the sector, where it is applying its learning and research.

That research includes looking at enhancing sound stage flexibility further by adopting large acoustic sliding or folding internal doors and exploring roof design options. Discussions with clients are also focusing on developing even more flexible spaces, with Mackfall talking of creating ‘the ultimate flexible big box in an urban location’, which could begin life as a logistics building and readily convert to studio space.

Logistics meets studio

Similar discussions are taking place elsewhere.

‘We previously might have been approached by clients who were new to the [film production] sector to build to a recognised industry standard. Then, if the market fell away, the stages could be used for logistics or similar uses,’ says Alistair Weir, partner with PRP. Now, he continues, ‘there’s ever more competition, and constructing to this “standard”, where margins are tight, is challenging, so the current trends are less design-led than viability-led.’

That has led to the increased interest in creating future-proofed stage spaces, which can be enhanced as needed. ‘For many productions, a “warehouse-plus” specification would be quite adequate,’ says Weir. ‘Productions are familiar with adapting stage spaces at their own cost to suit their specific requirements with regard to acoustic and building services performance, where these are not delivered by the base build.’ When filming ends, these added extras remain in place, enhancing the stage specification by stealth in a way that is ultimately more sustainable, he says.

There are many examples of disused warehouses being converted to stage space. Around a decade ago, the architect worked with Manchester City Council and its studio developer/operator/manager Manchester Creative Digital Assets (MCDA) to convert a 250,000ft2 former Sharp distribution warehouse in the city into stage space with supporting creative, digital and media office and event space.

‘Generally, those spaces are quite easy to convert for stage use,’ says Weir. ‘The infrastructure that’s there for manufacturing or warehouse spaces is typically tall, column free and with flat slabs designed for the load of high bay racking – characteristics not dissimilar to those that would be required for stage space.’ The biggest challenges, he says, are the acoustic improvements required to the envelope and often the lack of load capacity in the roof.

Client and architect followed the Sharp Project with the purpose-built Space Studios, which has 80,000ft2 of stages and supporting facilities. ‘The demand that the Sharp Project had for studio space effectively led the development of Space Studios Manchester,’ says Rob Page, managing director of MCDA. Development is set to continue, with planning consent secured for another 40,000ft2 of purpose-built stages at Space Studios.

The biggest challenges are the required acoustic improvements

to the envelope, and lack of load capacity in the roof

 

Flexibility is key to the studios’ success, says Page, which includes ‘making sure that, as well as traditional sets, we can accommodate green screen and virtual production set-ups quickly and easily’. With its lighting and equipment, stage space has long been power-hungry. ‘It’s difficult to achieve energy savings against that, due to the high peak demands during filming and the unpredictable way in which stage space is used,’ explains Weir. But, he continues, ‘We’re looking at more sophisticated ways of energy generation on site, whether by photovoltaics or ground source heat pump.’ The Sharp Project and Space Studios have been retrofitted with both, supported by the government’s Public Sector Decarbonisation Scheme. These are expected to generate up to 70% of the power needed on-site in summer.

Sustainability features heavily in new guidance for new and existing studios, developed by the BFC. This initiative, funded by the Department for Culture, Media & Sport, draws on research by consultants including PRP and has already been shared with developers, investors and operators, with sustainability research being showcased at UK-wide round-tables with the production industry.

Round-table participants have shown ‘a clear ambition to make their spaces as green as they can be moving forwards and for new development to be as low impact as it can be’, says Pelzer. For Perahia, the objective of this and all BFC’s work is to ensure UK studio space, ‘stays relevant, competitive and ahead of the game’. It’s an objective investors, developers and designers share.

Source: RIBA Journal

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Building Safety Act: Is the industry ready?


New research by NBS finds half of industry professionals still unclear on duty holder responsibilities for higher-risk buildings

As the six-month transition period for Higher Risk Buildings (HRBs) comes to a close, new research from NBS, the UK’s leading specification platform, shows the industry is still struggling to achieve a consensus on the scope and requirements of the Building Safety Act 2022.

The report reveals half of industry professionals remain unclear on the responsibilities of duty holders for the gateways defined for higher-risk buildings. What’s more, only 20 percent of respondents feel confident they are ‘very clear’ on the differences in responsibilities, if the project is defined as a higher-risk building.

This is a deeply concerning figure. What the research makes clear, is a greater effort is urgently required to ensure a universal understanding of the BSA’s role; particularly, clarifying the lines of responsibility and duties, whilst improving the consistency and quality of documentation and record keeping on construction projects.

Commenting on the findings, Russell Haworth, Chief Executive Officer UKI at Byggfakta Group, NBS’ parent company, said

 “At our Construction Leaders’ Summit last October, Dame Judith Hackitt told the audience, in no uncertain terms, that regulatory change is coming, and it’s unstoppable, so the construction industry needs to be fully prepared. Fast-forward to April 2024, and our research shows many specifiers are struggling to get to grips with the requirements, and this needs to be resolved. All designers must have the correct approach to specifications if the industry is to raise the bar on building safety. This includes getting to grips with the ‘nitty gritty’ of the BSA if they want to operate in the new regulatory landscape.”

Worrying still are attitudes towards the Golden Thread and the critical role it plays for HRBs. For example, just under half of those surveyed (45%) are clear as to how they will manage building information to realise the Golden Thread and just one in ten have a solid plan in place.

CLICK HERE FOR FURTHER INFORMATION ON THE GOLDEN THREAD

Dr Stephen Hamil, Innovation Director at NBS, said

“The level of understanding around the golden thread of information is worrying. As well as providing a continuous flow of information throughout the entire lifecycle of a building, it is necessary to ensure all relevant safety-related information is readily accessible and up to date.”

He stressed the need for robust specifications that will act as a point of reference to demonstrate that designs meet the Building Regulations as part of the submitted plans at the gateways. “However, the Building Safety Act presents a great opportunity for the industry to take back control of both the design process and through proper change control processes ensure that sub-standard construction does not happen. Safety starts with the specification and a well-managed approach to spec writing must form part of the standard design process.”

David Bain, Research Manager at NBS, said “Consistency is the backbone of progress and the stakes have never been higher when it comes to HRBs. These studies serve to highlight ‘trouble spots’ and importantly, offer an understanding of how to take the industry forward as a whole.”

The full report, which provides insight into industry views on the Building Safety Act and its implementation, launches in April 2024.

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Future proof your bathroom with Schlüter-Systems

 

 

 

 

David Naylor, Schlüter-Systems’ Head of Marketing, explains how Schlüter is helping in the creation of waterproof, long-lasting bathrooms.

 

 

 

Schlüter-Systems is well known as an expert when it comes to creating long-lasting bathrooms. Past shortcomings in the design of both new-build properties and retrofits have shown the importance of protecting the fabric of the bathrooms with reliable waterproofing. This is a point underlined by the NHBC’s forthcoming (July 2024) technical guidance that will effectively rule out the use of gypsum plasterboard or magnesium oxide boards as the substrate for tiling in a wet room or where a power shower is fitted.

The changes require the use of substrate boards which are fully resistant to water and, ideally, will mitigate against the creation of condensation within the wall build-up. Schlüter-KERDI-BOARD features an XPS foam core and is faced on both sides with a reinforcement layer and fleece webbing that offers an ideal key for tile adhesive.

Energy-saving and direct cost savings in terms of lower installation costs can be achieved across various product types: for example, intelligent lighting systems such as Schlüter-LIPROTEC are literally plug-and-play, so very quick to fit and set up. There are also products which make it far simpler to create bespoke installations and pieces of fitted furniture such as insulated substrate boards which have been formed to create a ready-to-tile washbasin. Schlüter-KERDI-BOARD-W is a prime example of this.

There is almost always a balance to be struck between cost and top quality, but customers should recognise that the reduced labour times often delivered by high specification products will offset the higher purchase price. And, whether this is perceived as being at the luxury end of the market or not, better quality often translates into enhanced property values.

For the retailer, being seen to have a product offering with durability as the focus can definitely enhance a retailer’s brand identity – being conscientious in what they stock is only likely to improve their reputation with specifiers and property owners; and avoids them potentially missing out on a growing market opportunity.

Lastly, heat pump technology due to replace conventional boilers, the industry needs to change the way it thinks about space heating and its delivery. Both ground and air source heat pumps work more efficiently at lower flow temperatures. Schlüter BEKOTEC-THERM hydronic underfloor heating facilitates the creation of lower temperature circuits, with the pipework clipped into studded boards which offer an improved annual output factor, while also acting as a decoupling layer. Importantly, the system complies with Government energy saving targets and the Energy Conservation Act.

 

The industry can expect to see more legislation from Government and the likes of NHBC, aiming to drive improved performance, with product innovation hopefully keeping pace in meeting those challenges. We are seeing new products such as tiles produced from recycled coffee grounds, while fittings which reduce water and energy usage are going to become increasingly attractive; along with those which require lower maintenance. Then with an ageing population, ergonomics and the avoidance of risks or products that promote hygiene and occupational health considerations have become more important.

 

CLICK HERE For further information

OR call 01530 813396 or visit

 

 

 

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The £9.5m footbridge that is 10 years overdue

 

The tiny bridge has gone £8m over budget and 10 years in construction

A tiny bridge in the UK has been having its building works delayed, so much so that the build is taking ten times as long as that of one of the world’s most famous landmarks.

A new footbridge at a small railway at Theale station in Reading has, in fact, already taken ten times as long to build as the Empire State Building did. The building work is over 10 years overdue, with its budget shooting up to £9.5million.

The New York landmark took a year and 45 days to build. However, the Theale footbridge is slated to finally be finished this year.

The Princess of Wales’s local station, passengers have been frustrated with the snail pace of the bridge’s construction near Reading.

Work on the small pedestrian walkway on the line from London to Bristol was started by Network rail in January 2023 – but the upgrade was initially announced back in December 2011.

The original budget was set at £1.25million. However, this shot up to £9.5million when a new ticket office was built in 2014.

In total, it will have taken 13 years for the station to finally get its new footbridge – equivalent to the length of time it took to build Big Ben.

Sir Alok Sharma, Theale’s MP, previously blasted the nightmare as a “case study” in British bureaucracy and inefficiency.

He told the Telegraph:

“The redevelopment of Theale station is a classic case study in just how slowly even relatively small infrastructure projects are delivered in our country, with resultant cost increases having to be picked up by the taxpayer.

“We have to get much better at untangling the stifling bureaucracy and red tape in our system which holds back the time-efficient and cost-effective delivery of infrastructure.”

Source: Express

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North Sea Oil: Playing its role in reducing greenhouse gas emissions

  • Action required to get on lower emissions pathways
  • Asset electrification and low carbon power identified as key drivers of change
  • Comprehensive plan shows industry path to success

A new emissions reduction plan published  (27 March) by the North Sea Transition Authority (NSTA) has highlighted the need for action across the board on production decarbonisation – including action on flaring and venting and the electrification of oil and gas installations – to ensure the future of the industry and hit net zero targets.

Production emissions reduction is one of the NSTA’s three priorities, alongside energy production and the transition to net zero. Oil and gas still meet around three quarters of UK energy need and, even as demand declines, the UK is likely to remain a net importer to 2050.

The Plan, produced after extensive public consultation and taking onboard feedback, covers four clear contributing factors to decarbonising the industry, and makes it clear that for production to continue in the North Sea, it must also continue to become cleaner.

Industry has done an impressive job in cutting production emissions in recent years, cutting production emissions by nearly a quarter since 2018 and flaring alone as almost halved from 2018 to 2022. However, they still account for around 3% of total UK greenhouse gas emissions and, as power generation was responsible for 79% of production emissions in 2022, electrification or clean power generation can play a significant role in reducing that volume.

Electrification alone could, under the best-case scenario, deliver emissions savings of 1-2 million tonnes in 2030, equal to taking one million cars off the road for a year, and a total of up to 22 million tonnes by 2050.

The Plan places electrification and low carbon power at the heart of emissions reduction and makes it clear that where the NSTA considers electrification reasonable, but it has not been done, there should be no expectation that the NSTA will approve Field Development Plans and similar decisions that give access to future hydrocarbon resources on that asset.

Electrification is not the only option. Other forms of low-carbon power will also be considered if operators can provide evidence of near equivalent emissions reduction. In cases where it is not reasonable that an existing asset is electrified, other low-carbon power emissions reductions strategies must be undertaken.

The Plan also highlights three other emission reduction pathways: investment and efficiency, focus on inventory as a whole, with increased scrutiny of assets with high emissions intensity, and action on flaring and venting.

In relation to inventory, there will be increased scrutiny of assets with high emissions intensity and their cessation of production (CoP) dates. The NSTA recognises that to secure production while reducing emissions overall, it is crucial to look at trade-offs between installations. Closing some low-producing, high-polluting installations earlier could allow higher producing and cleaner new assets to come online while still reducing overall UKCS level emissions.

The Plan emphasises that operators should take action and budget to reduce flaring and venting, with the latter focused on methane, continuing the NSTA’s ongoing work on this. The Plan also sets out a clear requirement that operators monitor and reduce fugitive emissions.

The NSTA will apply the Plan in a reasonable manner, and will not pursue actions that could bring about significant unintended consequences simply because of specific wording in the Plan.

The requirements outlined in the Plan build on existing commitments made by industry, including in the North Sea Transition Deal, with operators having agreed to deliver 50% reduction by 2030, and invest £2-3 billion on electrification. In addition, industry has itself committed to 90% reduction by 2040, and to reach net zero basin by 2050. The NSTA would welcome industry owning and delivering these reductions

Stuart Payne, NSTA Chief Executive, said:

‘Energy production, reducing emissions and accelerating the energy transition are at the heart of everything we do.

‘The Plan strikes the right balance in supporting industry in its work producing the oil and gas which we need and will continue to need in the coming decades, while at the same time playing its role in reducing greenhouse gas emissions.

‘The Plan will help to secure the crucial part the North Sea will play in meeting the UK’s energy needs and provide reassurance that the industry can and does place a very high value in cleaning up production and cutting emissions.’

Source: Energy-pedia

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UK USING MORE LOCAL STEEL

UK government projects use more local steel, the number of companies supplying products for large infrastructure projects is growing.

The culture of steel consumption in the UK is changing towards active consideration of purchasing locally produced steel products. This was stated by the industry association UK Steel.

UK Steel commented on the government’s report on public procurement of steel in 2024, in particular, welcoming the completeness of the data provided.

According to the association, the number of British steel companies supplying products for large infrastructure projects has increased, with a total value of £293 million ($370 million) in 2022-2023.

Last year, transportation projects were the largest buyers of steel, including large contracts for the construction of railways and roads. Awareness of the willingness of steelmakers to participate in large projects last year was helped by the interaction between the Ministry of Transport, UK Steel, and British steelmakers.

However, as the association noted, an order for £16 million worth of steel products could have been closed with British steel, but the contractors ended up purchasing it abroad.

UK Steel also notes that there is still a lot of work to be done to ensure that British steelmakers can demonstrate their potential to support the transition to green energy.

As GMK Center reported earlier, the UK Trade Remedies Authority (TRA) has proposed to extend safeguard measures for 15 steel products for another two years, until June 2026, amid concerns about global overcapacity. The list of products subject to the review included hot-rolled and cold-rolled plates, metal and organic coated plates, rebar, wire rod, bars, etc.

Source: GMK Center

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