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SME’s central to May’s house-building vision

In their election manifesto, the Conservative Party has pledged to 500,000 extra homes by 2022, as well as reaffirming their previous 2015 commitment to deliver a million homes by the end of 2020. As part of this, Theresa May must put SME house builders at the heart of her ambitious plans for housing, according to the Federation of Master Builders (FMB).

In response to last week’s release of the Conservative Party’s manifesto, Sarah McMonagle, Director of External Affairs at the FMB, said “The importance of addressing the country’s chronic shortage of homes is as great as ever, and the Conservative Party’s manifesto seems to appreciate the scale of the challenge ahead of us. A revised house building target of 1.5 million homes from 2015 to 2022 ups the ante on housing delivery again, but these ambitions can only be delivered with an accompanying focus on creating a more diverse and innovative house building sector. The decline in the number and output of smaller local house builders over the past few decades has led to the industry’s capacity haemorrhaging. To deliver the PM’s vision we will need to reverse this. The Manifesto’s explicit pledge to diversify the delivery of new homes is therefore extremely welcome. Key to doing this will be being able to build on some of the sensible reforms outlined in the recent Housing White Paper, which we hope to see implemented.”

“The Conservative Party’s manifesto sets out an ambition not only to build more, but to build better. There is a welcome emphasis on balancing the pressure for increasing the delivery of new properties with the need to deliver those homes to a high standard. As is widely recognised, smaller scale house builders have a strong focus on quality. By supporting greater diversity in terms of the companies building our new homes, a Conservative Government would be killing two birds with one stone. This is a vision that SMEs can build on.”

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VAT cut would spark building boom

Plaid Cymru’s proposal to cut VAT on home renovations would spark a renaissance in the Welsh construction sector, the Federation of Master Builders (FMB) Cymru has said in response to the Party’s announcement.

Ifan Glyn, Director of FMB Cymru, said “We welcome the announcement that Plaid Cymru would press the UK Government to reduce the amount of VAT currently charged on domestic refurbishment work. The economic benefits of a VAT cut would be significant and timely, given the uncertainty facing the country as it starts the process of departing the EU. Research has demonstrated that cutting VAT on such work would provide an annual £50 million stimulus to the Welsh economy, revitalising a sector that has suffered decidedly mixed fortunes over the last decade. Far from depriving the treasury of revenue, experience from the Isle of Man suggests that the reduction could actually increase net revenues by boosting demand and cutting out the black market.”

“Moreover, it would provide a necessary shot in the arm in the effort to improve the energy efficiency of Welsh homes and help reduce our carbon emissions. Our housing stock is amongst the oldest in Europe, which is a major factor behind the generally poor levels of energy efficiency in our homes. A reduction in VAT would incentivise property owners into investing to improve the energy efficiency of their homes, thereby cutting energy bills. This could play a significant role in tackling fuel poverty, which remains a serious issue for Wales.”

“A tax stimulus could also yield further dividends in the form of empty homes being brought back into the market. There are currently 25,000 properties that are unoccupied in Wales and which could be fully inhabitable again if the incentive to renovate those homes existed. This would be equivalent to nearly two years’ worth of the supply of new homes that it is agreed Wales needs to tackle our housing crisis. Obviously, Plaid Cymru are in no position to win the General Election, but this policy highlights that a VAT reduction on home renovations is both feasible and highly desirable for the Welsh economy.”

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New apprenticeship standards are a welcome boost

Apprenticeship standards in construction are set to increase following the Government’s approval of two new apprenticeships in bricklaying and plastering, says the Federation of Master Builders (FMB).

Brian Berry, Chief Executive of the FMB, said “We feared that the Government’s ambition to deliver three million apprenticeships by 2020 would lead to an emphasis on quantity over quality. Today the Government has demonstrated that it really is committed to working with the industry to increase the quality of apprenticeship training by approving these new standards. Research by the FMB shows that two-thirds of construction SMEs believe that the overall quality of construction apprenticeships has decreased during the past 30 years. Furthermore, over 70% of small construction firms would be more likely to train an apprentice if the quality of construction apprenticeship standards were improved. Given that it’s construction SMEs that train two-thirds of all apprentices, the Government is right to back the FMB’s mission to increase the quality of apprenticeships.”

“The Government’s Trailblazer process is all about putting control back into the hands of the employer to ensure that apprenticeship training actually reflects what’s required in the workplace. It is the employers – large and small – who have given up their time to shape these two new high quality apprenticeship standards and they should be commended. What this means is that the bricklayers and plasters of the future will have a much higher minimum skill level than they do currently. All bricklayers will be able to build arches and chimneys and all plasterers will be able to install drylining, and apply solid and fibrous plaster. These broad skills will future-proof the individuals from forthcoming recessions and ensure that we don’t lose them from the construction industry at the first sign of trouble.”

David Kehoe, Technical Support and Training Representative at British Gypsum, said “This is the best thing to happen to the plastering industry for a number of years. British Gypsum is pleased to welcome this new plastering apprenticeship, which will raise the standards and quality of tradespeople within our industry. The FMB is to be congratulated for bringing together employers to develop the new standards and this will improve the quality of training delivery for apprentices coming into our industry.”

Jenny Herdman, Director of the Home Building Skills Partnership, commented “The Home Building Skills Partnership is pleased to have worked alongside the FMB to develop an apprenticeship standard that promotes the skills of the bricklayers we need to meet the Government’s target for increasing housing supply.”

Sarah Beale, CEO of the Construction Industry Training Board, said “Approval of the bricklaying and plastering Trailblazer apprenticeship standards is fantastic news for learners and industry alike. They will help young people get the skills they need for successful, rewarding construction careers while ensuring the country has the bricklayers and plasterers it needs to build the many projects in the pipeline.”

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Government needs to take note of worsening construction skills shortage now, warn industry experts

The skills shortage in the construction industry has got worse and has now spread beyond bricklayers and carpenters to other key trades, according to recent research by the Federation of Master Builders (FMB).

The FMB’s State of Trade Survey for Q4 2016 shows that:

  • Almost half of construction SMEs are reporting difficulties hiring roofers (46%)
    Shortages of electricians and plasterers are at their highest point in four years
    The SME construction sector has experienced fifteen consecutive quarters of growth.

Brian Berry, Chief Executive of the FMB, said “We’ve been experiencing a severe shortage of bricklayers and carpenters for quite some time – these latest statistics show that skills shortages are now seeping into other key trades such as roofers and plumbers. Indeed, of the 15 key trades and occupations we monitor, 40% show skills shortages at their highest point since we started to feel the effects of the skills crisis in 2013 when the industry bounced back post-downturn. This growing skills deficit is driving up costs for small firms and simultaneously adding to the pressure being felt by soaring material prices linked to the weaker pound.

“The Government needs to be taking note of the worsening construction skills shortage now that we know that the UK will be negotiating a hard Brexit. The Prime Minister must ensure that the immigration system that replaces the free movement of people serves key sectors such as construction and house building. Our sector relies heavily on skilled labour from the EU, with 12% of the British construction workforce being of non-UK origin. As the construction industry represents around 7% of UK GDP, it’s in no one’s interest to pull the rug out from under the sector by introducing an inflexible and unresponsive immigration system.

“On a more positive note, construction SMEs reported steady growth in the final three months of 2016, capping off a generally positive year for the industry. In particular, demand for private refurbishment work was robust throughout 2016 and in terms of private and social house building, builders expect workloads to grow in the first three months of 2017. However, if the Government wants the objectives of its Housing White Paper to be realised, it will need to ensure the construction sector has the skilled workers it needs to build these new homes.”

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70% of builders report material price hikes, report FMB

70% of UK builders have seen an increase in material prices due to the depreciation of the pound, new research from the Federation of Master Builders (FMB) has revealed.

Sarah McMonagle, Director of External Affairs at the FMB, said “thousands of smaller building firms are grappling with the rising cost of materials caused by the depreciation of sterling since the EU referendum. More than 70% of smaller building firms have experienced increased costs as a result of the weakened currency, with additional increases of 10 to 15% expected as the new year unfolds. Anecdotally, construction SMEs are already reporting an increase of 22% in Spanish slate and 20% increase in timber. A quarter of all materials used by the UK construction industry are imported – this is significant and underlines the vulnerability of the industry to sudden fluctuations in the strength of our currency. The combined pressure of higher material prices and the rising cost of skilled labour represents a serious challenge to builders.”

“What this means is that home owners could start to see the cost of their building projects increase. It also means that consumer choice may be reduced as some home owners face having to compromise on aspects of their project due to the fact that certain materials have become too expensive. There is also an added headache for the builder, as material price rises can come at short notice and if they are mid-project, the original costing is no longer accurate. This makes pricing jobs problematic and leads to construction SMEs having to cover themselves against sudden price swings. Some builders are attempting to mitigate this by introducing larger contingency funds when pricing for a job, or by stipulating in the contract that the overall contract price will change in the case of material price hikes, making client budgeting more tricky.”

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Nearly 60% of construction bosses start their careers as an apprentice, reveals FMB

With National Apprenticeship Week kicking off today, FMB have made an interesting announcement. Nearly 60% of SME construction owners started their career as an apprentice, according to new research from the Federation of Master Builders (FMB) ahead of National Apprenticeship Week.

The research also shows that more than half of those bosses were running their own company within just seven years of completing their apprenticeship training, and that 98% of construction SME owners value an apprenticeship over a degree when looking for new staff.

Chief Executive of the FMB, Brian Berry said “The construction industry is ideally suited to a young person with heaps of ambition and an entrepreneurial spirit. Our research demonstrates that a construction apprenticeship is the perfect springboard for a successful and rewarding career, with more than half of construction SMEs being run by people who started out as an apprentice. Of those who went on to start their own businesses, more than one in two reached that goal within a mere seven years of completing their apprenticeship training, showing that you can go from being a brickie to a business owner in no time at all.”

“Even if running your own firm isn’t what you aspire to do, a construction apprenticeship can nevertheless provide the foundation for a highly rewarding career. Almost 80% of our SME construction bosses said that employment in the sector offers high levels of job satisfaction with tangible results and 87% believe an apprenticeship teaches useful and practical skills. What’s more, by the age of 23, a bricklayer with five years’ experience can earn up to £31,000 and rising in some cases to £52,000 in London. Given the high levels of university tuition fees, young people have every reason to properly consider a more vocational education and pursuing a career in construction looks an increasingly shrewd move.”

Tony Passmore, Managing Director of the Passmore Group – an FMB member firm – added “I’ve been working in the construction industry for a long time now and I’ve lost count of the number of young people who I’ve seen start out at the bottom, put in the hard work during their apprenticeship, and then rise up through the ranks to set up their own firm. Many of them wouldn’t have guessed they’d soon be running their own business when they first entered the construction industry and started their apprenticeship. And for those who aren’t keen on running their own firm, most jobs in the construction industry give you the freedom to work anywhere in the country – or better still, anywhere in the world.”

Did you start your career as an apprentice? Tell us about it in the comments below!

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Fall in workloads for small builders

Workloads for small builders across the country took a downward turn towards the end of last year, the Federation of Master Builders’ (FMB) latest State of Trade Survey has revealed, amid worries over wider economic uncertainty.

Brian Berry, Chief Executive of the FMB, said “The building industry remains confident of continued growth but the slowdown we saw in the last quarter is a cause for concern. Undoubtedly, the adverse weather experienced in large parts of the country has played its part, by causing projects to overrun and costs to spiral. However, the fact that both current and expected construction workloads are down in every region is worrying given some of the gloomy predictions being made about the wider economy.”

“Most concerning is that the last three months of 2015 represent the first quarter in nearly three years in which private sector SME housebuilding showed a negative balance. Even if this is a temporary blip, it comes at a time when merely managing to tread water would be inadequate in tackling the housing crisis. We need firms of all sizes firing on all cylinders if we’re going to address the chronic under-supply of housing but, unfortunately, a complex set of problems continue to constrain smaller developers. A concerted effort to tackle ongoing issues around access to finance, availability of suitable small sites and shortages of skilled labour is vital. The survey findings underline the latter point, showing 52% of our members reporting difficulty in finding carpenters and joiners, and 50% continue to have trouble hiring quality bricklayers.”

“We still expect to see growth in our sector continue throughout 2016 and we are optimistic that businesses can bounce back from what appears to have been a disappointing end to the year. However, the coming 12 months still hold in store considerable headwinds, not least the fears over the wider economy slowing down. If 2016 starts in anything less than a positive fashion, we could see growing fears that the hard-earned gains made by the construction industry over the past two or three years are indeed under threat.”

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