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Brexit uncertainty causes another drop in construction output

The Government and Parliament must break the Brexit deadlock and find a way forward warns the Federation of Master Builder (FMB), in response to the latest Construction PMI data, which shows another drop in construction output.

The March 2019 PMI data revealed an Index score of 49.7, up slightly from 49.5 in February, against the no change threshold of 50.0. This points to a sustained decline in construction output, representing the first back-to-back fall in construction output since 2016. While the residential building sector enjoyed an upturn, commercial construction was the worst performing area.

Commenting on the results, Sarah McMonagle, Director of Communications at the FMB, said “The construction industry is being seriously affected by Brexit uncertainty as evidenced by two very worrying sets of results for construction output in the first quarter of 2019. Businesses have been waiting for politicians to come to some resolution for far too long now, and it’s time that this deadlock was broken. It’s not surprising employers are finding it hard to plan for the future, when we don’t even know when, or indeed if, we’re leaving the EU. Today’s results are a reminder of just how vulnerable the construction industry is to political turmoil as confidence among consumers and contractors continues to wobble.”

“Brexit uncertainty and the construction skills shortage have created a perfect storm in our industry. Around 9 per cent of construction workers in the UK are from EU countries, but we know from speaking to small construction employers that many of these skilled workers are starting to return, whether that’s because of strengthening economies elsewhere, or that they simply don’t feel welcome anymore. This is compounding an already severe construction skills shortage, and I’m worried that the Government’s post-Brexit immigration system will make it even worse. For example, the system will not allow Level 2 tradespeople to live and work in the UK for more than 12 months at a time. At the same time, the Government’s figures last week show that the number of Level 2 apprenticeship starts among our domestic workforce is dropping. It’s quite simply not possible to build the homes and infrastructure we need without bricklayers, carpenters and plasterers. The Government and industry must work together to attract more people into the industry, by offering them high quality training with clear career pathways for progression but in the meantime we need sustained access to tradespeople of all skill levels for the industry to continue being open for business.”

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Government will fail to keep housebuilding promise of 200,000 homes by 2020

MP Kit Malthouse has admitted that the Government will fail to keep its 2015 election promise to build 200,000 starter homes by 2020.

In 2016, the Government allocated £1.2 billion to the ‘starter homes’ programme, which aimed to build 200,000 properties exclusively for first-time buyers at a 20% discount on their market value.

When asked how many starter homes had been build since 2016, the housing minister stated: “At the moment, none”.

The National Federation of Builders (NFB) is not entirely surprised at the failure of the starter homes programme. Since its inception in 2015, they have asked ministers and civil servants how we can deliver homes under this scheme, but have not received any response or support.

Whilst many might appreciate Malthouse’s clarification that the scheme is a failure and has built no homes in four years, the lack of transparency remains worrying and feeds into wider concerns that developers have with the Government and local authorities, who do not appreciate how damaging lack of certainty is to SME house builders.

The starter homes programme could have delivered some planning certainty, as it would have added work to local pipelines. But Malthouse’s admission explains why developers were not sure how they could get involved with starter homes.

Richard Beresford, chief executive of the NFB, said “This is bad news for the UK’s housing market and exposes the poor level of trust in relations between the Government and SME house builders. The Government must rethink how it should work with the wider industry, and not just a few volume house builders. It must figure out whether it really wants to build affordable homes or just win plaudits for acknowledging the problem and appearing to try.”

Rico Wojtulewicz, head of housing and planning policy for the House Builders Association (HBA), said “The Government has let SMEs down by promising a scheme that we were best suited to deliver but never engaging with us to deliver it. As refreshing as Malthouse’s honesty is, it comes too late particularly as starter homes were included in the most recent revision to planning policy.

“House builders are doing everything in their power to fix the housing crisis. It would be great if the Government shared our commitment.”

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New study shows architects’ fire protection knowledge lacking

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  • Two years after Grenfell 92% of UK architects unable to define key building fire protection terms
  • A third of architects say their current employer doesn’t spend enough on fire protection training
  • Overall, architects believe they are lacking in fully comprehensive fire protection training

Zeroignition, the fire retardant ingredient technology firm, announced findings from its latest study of architects and specifiers. Architects were asked about their understanding of four common terms relating to buildings and fire. Only 8% were able to correctly define these four basic fire protection terms.

The terms were active fire protection (systems which protect structures and people including sprinkler systems, fire extinguishers, smoke alarms), passive fire protection (whereby the spread of fire is slowed or contained through the use of fire-resistant walls, floors and doors, amongst others), fire resistance (a set of products that prevent fire spreading to other parts of the structure), and reaction to fire (methods designed to help people escape from fire).

While one in three architects (35%) were unable to correctly define the concept of active fire protection, when asked about fire protection options they’d considered in projects, smoke alarms were named by 38% and sprinklers by 33%.

Just over half (52%) of all architects couldn’t give an accurate definition of passive fire protection, where fire protection is ‘built in’. However, 54% did cite fire doors as a consideration, which is part of the passive approach. Passive technologies such as flame retardant treated materials (e.g. firewall) were considered by over a quarter (29%), plasterboard by 21%, and plywood/OSB by 8%.

58% of architects were unable to explain what ‘reaction to fire’ is and almost three quarters (71%) were unable to define fire resistance.

Fire safety

None of the architects interviewed said they’d had comprehensive fire protection training, most had some training and 8% say they’ve had none.

Ian King, chief operating officer, Zeroignition, says ‘Architects are responsible for designing safe buildings. There’s clearly a lack of understanding as to the fire basics which is worrying to say the least. Architects, their employers and the professional bodies need to invest in ensuring this knowledge is bedded in.’

Architects and interior design firm gpad london has looked at fire safety, commenting on their procedures. Jeremy Wiggins, director from the firm says, ‘Fire kills. It’s part of our duty to make sure we design safe buildings. We had a look at the RIBA fire safety consultation and tweaked our processes. We make it part of our design thinking from day one, involving end users and fire consultants as soon as practical. Beyond this we make sure that each project has a named person for fire safety responsibility.

‘We won’t take chances on this, it’s easy for knowledge to become half remembered if you don’t call on it every day and so we refer to checklists when designing as well as running ongoing CPD sessions focusing on it and new innovations.’

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Spring statement: construction industry response

This week Chancellor Philip Hammond delivered his Spring statement 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.

Housebuilding in particular, was very much high on the agenda. 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:

More costs and more delays will hamper house building – Brian Berry, FMB

According to the Federation of Master Builders (FMB), new biodiversity measures will result in more costs and more delays for the nation’s small and medium-sized (SME) house builders, worsening the housing crisis.

In response to the statement, Brian Berry, Chief Executive of the FMB, said “The Chancellor claimed to support housing delivery but actions speak louder than words and the burdensome and poorly thought-through biodiversity targets for developers will bring yet more costs and more delays for builders. Just as the environment for SME house builders starts to improve, these measures could end up stalling our progress. The Government wants to make developers, large and small, increase the biodiversity on their sites by a whopping 110 per cent and for an average site of ten units, the additional cost could be in excess of £2,000. Needless to say, this would also create delays to projects by adding additional hurdles for builders to negotiate during the already bureaucratic planning process.”

“Rather than hampering the building of new homes, if the Government wants to be ‘more green’, it should focus instead on retrofitting the more than 24 million homes that have already been built and which account for around one fifth of the UK’s greenhouse gas emissions. This will not only help reduce the UK’s carbon footprint but will also tackle the scourge of fuel poverty.”

We are likely to see an increase of regulatory measures in the industry, aimed at encouraging homes which are fit for the future – Neil Stewart, Glen Dimplex Heating and Ventilation

CEO of Glen Dimplex Heating and Ventilation, Neil Stewart said “The introduction of the Future Homes Standard for new builds is another positive move towards achieving net zero carbon dwellings in the future and ensuring UK homes benefit now from being highly efficient. The introduction of this new standard is in response to a legal commitment to the Energy Performance of Buildings Directive.

“Along with other legal requirements, such as carbon budgets, we are likely to see an increase of regulatory measures in the industry, aimed at encouraging homes which are fit for the future. As this could cause radical change for construction, industry bodies have been spending time analysing what this actually means and where changes need to happen to our current traditional techniques and processes.

“In February 2019 the Committee on Climate Change released their latest report on UK Housing: Fit for the future?, which suggests a required overhaul of how UK homes are supplied with energy. More recently the SEA’s response to how the Buildings Mission to halve energy use by 2030 can be achieved, highlights the need to future proof todays developments in readiness for the required changes.”

“As we transition to a low carbon, low energy future, we are likely to see a change in the HVAC strategies used in building design. This indicates an increase in the specification of renewable technologies, especially where dominant energy loads can be fulfilled in a  low carbon way. Heat pump technology provides a potential solution, supplying homes with the required energy through recent innovations which are transforming how this technology can be applied.”

Now is the time to invest in our people and our places – Lord Porter, LGA

Responding to the Spring Statement, Lord Porter, Chairman of the Local Government Association, commented: “The Government acted on our calls to find extra one-off funding for councils this year in the last Autumn Budget, including for social care, potholes and high streets. With councils still facing a funding gap of more than £3 billion in 2019/20, it is disappointing that the Chancellor has missed the opportunity to use today’s Spring Statement to provide further desperately-needed funding for our under-pressure local services this year.

“The money local government has to maintain the services our communities rely on is running out fast and huge uncertainty remains about how local services will be paid for into the next decade.

“Last year’s Autumn Budget was the earliest for a number of years but was still held at the end of October. The Government’s plan to publish the Spending Review alongside the Autumn Budget this year could exacerbate the funding challenges facing councils and will severely hamper their ability to plan ahead for next year and beyond. It is vital that the Government publishes the Spending Review much earlier and ensures it genuinely secures the financial sustainability of councils.

“Now is the time to invest in our people and our places.

“Brexit cannot be a distraction from the challenges facing our public services. If we truly value our local services then we have to be prepared to pay for them. Fully funding councils is the only way councils will be able to keep providing the services which matter to people’s lives, continue to lead their local areas, improve residents’ lives, reduce demand for public services, and save money for the taxpayer.”

We welcome the Chancellor’s £3bn affordable homes guarantee scheme to support the delivery of 30,000 new homes. – Terrie Alafat, CIH

Commenting on the Chancellor’s Spring statement, Terrie Alafat, chief executive of the Chartered Institute of Housing (CIH) said “We welcome the Chancellor’s £3bn affordable homes guarantee scheme to support the delivery of 30,000 new homes. A previous scheme that allowed the government to underwrite borrowing by housing associations to fund affordable housing delivery worked well, so it’s good news that it is coming back. We have always said this would be a sensible and positive move. We need to see the details of the scheme, but the key question is whether the homes being funded are genuinely affordable, especially considering that we need 90,000 new homes per year at the lowest social rent.”

The lack of affordable housing is now pushing hundreds of thousands of working families to the brink – James Prestwich, NHF

James Prestwich, Head of Policy at the National Housing Federation said “We welcome the announcement of a £3bn guarantee scheme, which we called for in the Autumn. It will help housing associations borrow more cheaply and therefore build more homes. However, whilst this is an important contribution, we desperately need new money in the next spending review to build more social housing.

This is more crucial than ever in the midst of Brexit uncertainty – the lack of affordable housing is now pushing hundreds of thousands of working families to the brink – the number is rising year on year, many are living in debt, at threat of eviction or homeless.

We need to build 145,000 affordable homes every year to house these people – this is not a one off investment, the government must commit billions of pound every year into building more social housing. We hope, as the Comprehensive Spending Review approaches, the government will see sense and commit the significant investment needed into social housing.”

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It’s time to revive and re-imagine the British high street

The high street is dying but not yet dead and can still be revived and reimagined, says the Federation of Master Builder (FMB) in response to a new report by a Committee of MPs.

In the report ‘High streets and town centres 2030’, the Select Committee for Housing, Communities and Local Government said “The six months over which our inquiry took place appeared to be the most turbulent for the high street so far. Barely a week went by without headlines pronouncing the ‘death of the high street’ or a major retailer announcing a restructuring or a fall in profits.

“An enormous change has taken place in retail in recent years. The traditional pattern of making purchases in physical stores, both in and out-of-town, has been profoundly disrupted by the growth of online shopping. The impact of this on our high streets and town centres in the form of store closures, persistently empty shops and declining footfall is clear for all to see.

“Against this concerning backdrop, we make a set of recommendations to Government, local government, local communities, retailers and landlords to be acted on now. Unless this urgent action is taken, we fear that further deterioration, loss of visitors and dereliction may lead to some high streets and town centres disappearing altogether.”

Responding to this, Brian Berry, Chief Executive of the FMB, said “I’m really encouraged with the visionary approach this report has taken, as it looks at how we need to fundamentally reimagine the ways that we regenerate our high streets in order to adapt to the challenges of modern life. Central to breathing new life into our high street is converting empty or underused spaces above shops into new homes. These kind of homes would be ideal for young families and professionals, and would benefit the high street through increased footfall to the ‘activity-based community gathering places’ which the report wants us to aspire to. The 2017 FMB report ‘Homes on our high streets’ sets out a number of creative ways that we can overcome the challenges laid out by the Select Committee, and which are associated with regeneration projects, including disparate ownership and preserving local characteristics. In this regard, I was particularly pleased with the Committee’s conclusion that the Government must review the planning powers currently available to local authorities, with a view to strengthening them and empowering local authorities to deliver on town centre transformation and, at the same time, the Government’s ambitious housing targets.”

“With a survey of cross-party MPs showing that 90 per cent of respondents recognise the potential of our existing buildings to help solve the housing crisis, I would urge the Government to accept the recommendation to conduct a review of our high streets as quickly as possible. In particular, the Government must deliver on its commitment to review the Compulsory Purchase Order process, which could help speed up regeneration of high streets. However, contrary to the Committee’s conclusion that Permitted Development Rights risk undermining a local authority’s ability to plan for their housing delivery, streamlining the process for upwards development above certain premises would help them meet their targets while maintaining a more rigorous application process for other kinds of developments. What we must avoid is perfectly good space lying empty and achieving nothing in terms of boosting the local economy or providing homes for individuals and families.”

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Theresa May’s offer to delay Brexit spells further uncertainty for construction

The prime minister has pledged that MPs will have three chances to vote on the next stages of the process to leave the EU.

Theresa May promised the House of Commons to hold a meaningful vote on the withdrawal agreement on 12 March. If the deal fails, the Government will ask MPs on 13 March whether they support a ‘no-deal Brexit’. If the House of Commons rejects no-deal, MPs will have the opportunity to vote on 14 March on postponing Brexit until at least 30 June.

The National Federation of Builders (NFB) continues to think that the construction industry needs an orderly withdrawal from the EU, ending uncertainty for businesses. Although the prime minister’s announcement could postpone the imminent prospect of leaving without a deal, it does nothing to dispel uncertainty among construction businesses about the future.

Richard Beresford, chief executive of the NFB, said “While the prime minister appears to be lining up the votes to make no-deal more unlikely, those pushing for a harder Brexit may just decide to cast their unchanged votes at a later date.

“Far from delivering certainty to thousands of construction companies, the prime minister’s announcement may end up delaying a no-deal Brexit by three months.”

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Construction productivity boost could provide £100bn to UK every year

The scale of construction’s productivity gap has been laid bare in the a research report from Mace, which shows that the UK is missing out on more than £100bn of annual economic activity.

Mace’s research report, ‘The Size of the Prize’,  compares the construction sector and the manufacturing sector in the UK.

Manufacturing has seen steady productivity growth over the last twenty years, allowing the sector to deliver more economic growth with the same or fewer number of workers.

Conversely, the UK construction sector has seen productivity flat line for the past twenty years, limiting growth and denying the UK more than £100bn a year of economic benefit.

Mace’s figures show that – had construction kept pace with the productivity gains in manufacturing – the UK would see:

  • An approximate 3% increase in the UK’s overall Gross Domestic Product (GDP).
  • Each construction worker producing £38 an hour of economic activity, compared to £25.50.
  • The capacity to deliver the £600bn national infrastructure pipeline in four years, rather than six.

The tax generated by an additional £100bn of annual economic activity would produce an extra £40bn a year for the Government, enough to eliminate next year’s budget deficit, based on the Spring Budget forecast from 2017.

Mark Reynolds, Mace’s Chief Executive, said “The collapse of Carillion made clear the stark challenges facing the construction sector. Improved productivity is the key to more sustainable growth and stability across the industry. Unless we take swift action, slim margins and below average productivity will prevent the UK’s construction sector reaching its potential.

“It’s clear the UK is missing out on a huge amount of potential growth and infrastructure delivery every year – as well as the increased funding for public services that would generate.

“Now that we have seen the scale of the missed opportunity, it’s more important than ever that we work together to improve productivity across the sector. This means making the best use of the research and development funding available from government, as well as investing effectively to ensure we have the required skills across our workforce.”

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£9m to help build 200,000 homes in new garden towns

A £9 million cash injection to speed up the locally-led building of new garden towns and villages across the country has been announced.

The Garden Communities project is expected to deliver 200,000 properties on large sites by 2050, and the latest funding will help get 21 sites ready for development.

The government project is helping ambitious councils get well-designed homes built on large sites, and the money will help pay for master-planning and technical studies.

Work is already underway on 10,000 properties across the country in garden towns and villages, with 36,000 expected to be underway or completed by 2022.

Housing Minister Kit Malthouse MP said “We have not built enough homes in this country for the last three decades, and we are turning that around as we work towards our target to build 300,000 properties a year by the mid-2020s.

“This £9 million funding boost is giving councils the support and cash injection they need so they can finish planning new developments and get diggers on site.”

The developments being funded include a 2,000 home site for custom and self-builders in Bicester, on land purchased by the council from the Ministry of Defence.

It also includes developments in Basingstoke, Didcot, Taunton, Harlow-Gilston and across Northamptonshire where work is already underway on the first phase of developments.

The funding will be administered by Homes England.

Place | Capacity award | Homes
Aylesbury | £420,000 | 15,000
Basingstoke | £695,000 | 10,000
Bicester | £770,000 | 13,000
Harlow & Gilston | £715,000 | 24,000
North Essex (Colchester, Tendring & Braintree) | £1,000,000 | 43,000
North Northants (Corby, Kettering & Wellingborough) | £725,000 | 33,000
Otterpool Park, Folkestone | £1,250,000 | 10,000
Taunton | £550,000 | 15,000
Bailrigg | £100,000 | 3,500
Culm, Mid Devon | £300,000 | 5,000
Dunton Hills | £100,000 | 3,500
Halsnead | £300,000 | 1,589
Handforth | £150,000 | 1,650
Infinity, Derbyshire | £150,000 | 3,200
Longmarston | £300,000 | 3,500
Longcross | £125,000 | 1,700
West Oxfordshire | £150,000 | 2,200
Tresham | £300,000 | 1,500
Welbourne | £300,000 | 6,000
West Carclaze | £300,000 | 1,500
St Cuthbert’s, Carlisle | £300,000 | 10,000

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Councils warn of ‘severe’ need for affordable homes

A report published today by APSE (Association for Public Service Excellence) and written and researched by the TCPA finds that 98% of UK councils surveyed describe their need for affordable homes as either ‘severe’ or ‘moderate’.

UK councils are becoming increasingly unable to meet demands for affordable housing and 98% now describe their need as either ‘severe’ or ‘moderate’, with only 1% claiming that their need is not substantial.

The survey of 166 local authorities in Britain highlights the pressure on councils to meet the growing demand for affordable housing due to a lack of new homes being built and that many of those that are being built are not affordable to those in need.

The research highlights the cumulative impact of existing housing and planning policies in England—such as the 1 per cent annual rent reductions in the social rented sector and the continued deregulation and reform of the planning system—have reduced the ability of councils to secure genuinely affordable homes available for social rent.

Kate Henderson, Chief Executive of the TCPA, said “Our research reveals that Britain is facing an acute housing crisis with councils across the country increasingly unable to meet the need for affordable housing.

“The government must make tackling the housing crisis a priority. An ambition to increase housing numbers is not enough, we need to ensure that the homes that are built are affordable and well designed.”

By exploring a range of issues faced by councils, this study has identified how local authorities are already taking a more active role in housing delivery through entrepreneurial approaches, such as setting up local housing companies and innovative approaches to partnership working. Over two thirds (69%) of councils surveyed said that they already had or were thinking about setting up a local authority housing company either on their own or in partnership.

Paul O’Brien, Chief Executive of APSE concluded “A new wave of council homes would help support local economic growth, jobs and skills in our economy; housing could be an effective driver for a renewed industrial strategy but to achieve this we need to place local councils at the heart of delivery on housing need. That means the Government must provide the financial freedoms and flexibility for councils to deliver solutions to our chronic housing shortage.”

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Government backs plans to create new homes and jobs over next five years

Plans for public-sector land to be developed, which aim to bring forward 10,000 new homes, 14,000 new jobs and save taxpayers £37million in running costs.

Development plans which could see more than 10,000 new homes built across England and 14,000 new jobs created by 2024/25 are to be brought forward through a £15million government project.

The One Public Estate programme was launched in 2013 to make better use of public-sector sites, free up space for new homes and create jobs.

It encourages the emergency services, local councils and government departments to work more closely together by sharing sites and creating public-sector ‘hubs’ – where services are delivered in one place. So far, the programme has saved taxpayers £24million in running costs, created 5,745 new jobs and released land for the development of 3,336 new homes.

The latest round of the programme will see money and support given to more than 100 local public-sector partnerships across England, to bring forward proposals for a range of new projects on public-sector sites.

These include:

  • £680,000 for projects in Waltham Forest, including proposals to bring forward the redevelopment of the 100-year-old Whipps Cross Hospital and sites in public and private ownership for housing development in the Forest Road Corridor
  • £505,000 for projects in Devon and Torbay, including the regeneration of land around St David’s station in Exeter
  • £405,000 for projects in Northamptonshire, including plans to release land around Kettering railway station for the development of new houses and station improvements
  • £410,000 for projects in Worcestershire, including delivering new housing and regeneration around Redditch station, as part of the Rail Quarter development

The Minister for Implementation, Oliver Dowden, said “Getting the best use out of publicly-owned land can help to regenerate our towns and cities and give people improved access to the services they need.

“This programme shows that when government works smarter, with public authorities coming together, taxpayers get better value for money, new jobs are created and space is freed-up for vitally needed new homes.”

The One Public Estate programme is a joint initiative between the Cabinet Office, the Ministry of Housing, Communities & Local Government and the Local Government Association. It now covers 95% of all local authority areas in England.

Funding for the latest round of the programme will help with the creation of feasibility studies and masterplans for the potential development sites.

It is hoped the work will bring forward savings of £37million in public-sector running costs and allow the redevelopment of a large number of brownfield sites.

The Minister of State for Housing, Kit Malthouse, added “This government is committed to helping more people get on the housing ladder and restoring the dream of home ownership for a new generation. The One Public Estates programme will not only help more people find a home of their own, but also help create jobs and save taxpayers’ money.

“The latest projects to share £15million of funding will make a real difference to local communities and provide better services to residents.”

Lord Porter, Chairman of the Local Government Association, concluded “I’m pleased to see One Public Estate continue to grow from strength to strength. This latest round will see the programme now deliver more than 650 projects in total, all of which support councils to work with the wider public sector to deliver the best public services and place for their local communities.

“The delivery of new homes remains a national priority and with 95% of councils now part of the programme. It’s clear to see that local government remains committed to building the right homes for the places they serve.”

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