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What Corbyn’s leaked draft manifesto says about construction

A few details from a draft version of Labour’s upcoming manifesto have been leaked. What does it say about construction, house building and infrastructure? Buildingspecifier.com investigates:

Energy

The leaked data highlights plans to bring parts of the energy industry into public ownership and introduce a local, socially owned energy firm in every area. Also introduce an “immediate emergency price cap” to make sure dual fuel bills stay below £1,000 a year.

Infrastructure

As well as nationalising the railways, Corbyn proposes to borrow £250bn to invest in infrastructure but stick to the fiscal credibility rule to balance day-to-day spending. He also plans to complete HS2 from London to Birmingham, Leeds, Manchester and Scotland.

Housebuilding

The draft includes a target for tackling the housing shortage, suggesting that we build 100,000 new council houses per year. Additionally, Labour would see the homes of disabled veterans insulated for free.

Skills

In a bid to tackle the skills gap without jeopardising the potential for attracting home-grown talent, the draft manifesto urges us to recognise the benefit that immigrants have brought to our industry but also introduces fair rules and reasonable management. Corbyn promises to work with employers that need to recruit from abroad but emphasises the need to prevent exploitation.

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Skills shortages remain key challenge to infrastructure delivery

Construction and infrastructure workload expectations continue to improve with respondents the most positive since the referendum, according to the latest Royal Institution of Chartered Surveyors (RICS) Construction and Infrastructure Market Survey, Q1 2017. The pace of growth has increased across all sectors pointing to a widespread improvement in the sector.

In Q1 2017 27% more respondents reported an increase in workloads, (up from +18% in Q4 2016). Expectations for the next 12 months also remain firmly positive particularly for activity levels although they have reduced slightly in case of profit margins.

The shortage of skilled labour persists in UK infrastructure and construction and is again widely cited by contributors as a factor potentially impacting the performance of businesses working in the industry.

Looking at the different sectors, 34% more respondents cited an increase in private housing output rather than a decrease, which puts it above the other sectors for the pace of growth once again; this has been the case since Q1 2013.

While the commercial sector saw the largest growth in workload for the quarter (compared with Q4 2016) with 31% more respondents seeing a rise, infrastructure workloads continue to grow steadily with the most significant increases in rail, road and energy categories.

These sectors are also viewed as the most promising sectors in infrastructure for the next 12 months. Breaking this down, 60% of respondents felt that repair and maintenance work of existing structures is the most needed type of investment in their area whilst 40% felt investment in new projects was necessary.

Growing skills shortages

As workloads increase, skill shortages are still sighted as a significant problem to the industry with 53% of respondents stating a shortage of skilled labour to be a key impediment to growth.

This is slightly up from 50% in the last quarter. In recent reports, the proportion of respondents noting skill shortages to be the major barrier to growth had come down slightly but the latest results along with surveyors’ comments suggest labour shortage pressure across the UK construction sector is intensifying once more.

Alongside this, 65% of respondents reported insufficient availability of quantity surveyors, with skill shortages in this area becoming increasingly prominent since 2012. The results also point to the quality of available workers (rather than simply the quantity) being the principle driver in skill shortages, with 67% of respondents taking this view.

Looking at this further, 59% of contributors feel that improved education pathways and training would the most effective policy response to alleviate labour supply pressures, whilst 31% of contributors feel direct government subsidisation of training would be the most effective.

Financial constraints and their impact

Meanwhile, financial constraints are still the most significant obstacle to growth with 70% of respondents citing this as an issue. Planning and regulation remains a significant impediment to growth with 61% of respondents citing this as an obstacle (up from 53% in Q4 2016).

At the same time, tender prices are expected rise in the next 12 months. Specifically, 69% more respondents believe tender prices will go up in the building sector (rather than fall). The expected increase in tender prices may signal rising costs and shrinking profit margins which is also reflected in the 12 month expectation of profit margins easing from +26% in Q4 2016 to +18% in Q1 2017.

Regionally all parts of the UK have observed an increase in pace of output growth in Q1, with the exception of Northern Ireland. The was due to the pace of growth slowing within the infrastructure, private industrials and public non-housing sectors. Output growth gathered the most pace in London and the South East where the net balance rose from +7% to +22%.

Jeff Matsu, RICS Senior Economist said “The mood music in the construction sector has improved in line with the better tone to macro data more generally. However the survey does highlight some key challenges that need to be addressed if government’s ambitious plans for housing and infrastructure, in particular, are to be met. Access to finance, alongside planning and skill shortages, both quality and quantity, remain big obstacles to delivery and though some plans are in place to address these issues, it remains to be seen whether they are sufficient to make a meaningful impact.”

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Skills crisis leaves historic buildings at risk

Britain’s beloved historic buildings are at risk, due to a restoration skills crisis that threatens the future of some of our best-known national treasures, warns a RICS and YouGov survey.

  • 9 in 10 British people identify historic buildings, like those featured in Channel 4’s Great British Buildings – Restoration of the Year* as important symbols of national heritage.
  • 89% of the British public believe it’s important to preserve these national treasures and 42% said the responsibility to invest and maintain these structures lies with the government.
  • However, despite the public’s passion for historic buildings, the majority don’t understand the specialist skills needed to preserve them, at a time when the entire construction industry is facing a skills shortage.

Restoration of the Year

Despite over a million people tuning in to Channel 4’s latest series Great British Buildings – Restoration of the Year, and a new YouGov survey commissioned by RICS finding that 91% of the British public believe historic buildings are symbolic of Britain’s heritage, young people have little awareness of the specialist professions and trades essential to their preservation, suggesting that as people retire, the current skills base could be all but wiped out.

Preserving iconic treasures

According to the survey, 9 in 10 people (91%) agreed that buildings such as Windsor Castle and Kensington Palace are symbols of the country’s heritage. This sentiment is strong across all age groups, including millennials, with 89% of 18-24 year-olds appreciating the importance of historic buildings.

The vast majority of the population (89%) also believe that that these iconic treasures should be preserved for future generations and place the responsibility for maintaining them firmly at the door of the government (42%), followed by industry organisations (16%) and the general public (14%).

Appreciation for historic buildings is particularly strong in West Midlands, with almost two thirds (65%) saying that it’s ‘very important’ such buildings are preserved, while around 2 in 5 respondents (42%) from Scotland say the same.

Skills shortage

However, despite the public’s love for these buildings, the majority don’t understand the specialist skills needed to restore and preserve them. For example, 83% are not knowledgeable about what a historic building surveyor does, and 80% do not know what a roof thatcher’s job entails. Awareness of age-old building professions is fading away amongst the younger generation, with only 1 in 10 18-24 year-olds able to describe the job of a stonemason, and only 16% know what a glass blower does.

This lack of awareness comes at a time when the industry as a whole is facing a skills shortage in the built environment, with the latest figures from the RICS Construction Market Survey showing that the skills gap reported by professionals across the construction sector increased from 2% in 2012 to 43% in 2016.

A pipeline of talent

To ensure that these crucial skills are not lost and cherished historic buildings don’t fall into disrepair, a stronger pipeline of talent is needed. It’s important that craft skills are developed in addition to the continual promotion of professional skills, as the two skillsets are intrinsically linked to create any successful construction project.

RICS is calling on the government and industry bodies to continue to concentrate their efforts on inspiring young people to pursue a career in the sector and educate them on the importance of mastering and maintaining the skills needed to preserve our historic buildings.

Kevin McCloud, British designer and presenter said “Historically listed buildings form part of the fabric of our rich cultural heritage and today’s findings from RICS highlight that so many Brits are genuinely passionate about protecting the physical legacy that these buildings represent. I’m very pleased to be hosting Channel 4’s Restoration of the Year programme, which shines a spotlight on the care and craftsmanship behind preserving these national treasures.”

Matthew Howell, RICS Managing Director for UK & Ireland added “It’s fantastic to see that so many people care about our historic buildings, especially young people. However, without a pipeline of talent developing expertise in these specialist areas, these landmarks could be left in ruin. We need the next generation to understand the role of a historic building surveyor, and the craft of a stonemason or glassblower to preserve this heritage for the future.

“The government and industry bodies must continue to work together and raise awareness of the wide-range of opportunities available in the industry and create more routes into the sector for young people, including investing in quality apprenticeships that lead to roles such as qualified building surveyors who specialise in conservation projects.”

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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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8% of UK construction workforce comes from the EU

New figures from the Royal Institute of Chartered Surveyors (RICS) reveal that the UK construction industry could lose almost 200,000 EU workers post-Brexit should Britain lose access to the single market, putting some of the country’s biggest infrastructure and construction projects under threat.

RICS has cautioned that for Brexit to succeed, it is essential to secure continued access to the EU Single Market or to put alternative plans in place to safeguard the future of the property and construction sectors in the UK.

Latest RICS figures show that 8% of the UK’s construction workers are EU nationals, accounting for some 176,500 people. 30% of construction professionals surveyed revealed that hiring non-UK workers was important to the success of their businesses.

The UK is already in the grip of a construction skills crisis. While some overseas professionals, such as ballet dancers, are regarded as critical by the UK Government, and are therefore prioritised during the visa application process, construction professions have not yet been added to the ‘UK Shortage Occupations List’. RICS is warning that this could already be placing the UK’s predicted £500 billion infrastructure pipeline under threat and must be addressed as a priority.

When asked about the effectiveness of current plans to address the UK’s long-term skills shortages, 20% of respondents felt that apprenticeship schemes were not effective at all.

Jeremy Blackburn, RICS Head of UK Policy said “These figures reveal that the UK construction industry is currently dependent on thousands of EU workers. It is in all our interests that we make a success of Brexit, but a loss of access to the single market, has the potential to slowly bring the UK’s £500 billion infrastructure pipeline to a standstill. That means that unless access to the single market is secured or alternative plans are put in place, we won’t be able to create the infrastructure needed to enable our cities to compete on a global stage. We have said before that this is a potential stumbling block for the Government, which is working to deliver both its Housing White Paper and Industrial Strategy.

“A simple first step would be to ensure that construction professions, such as quantity surveyors, feature on the ‘UK Shortage Occupations List’. Ballet dancers won’t improve our infrastructure or solve the housing crisis, yet their skills are currently viewed as essential, whereas construction professionals are not.

“Of course, we must also address the need to deliver a construction and property industry that is resilient to future change and can withstand the impact of any future political or economic shocks — key to that will be growing the domestic skills base. As the industry’s professional body, we are working with Government and industry to develop that skills base, building vital initiatives, such as degree apprenticeships, in our sector to drive the talent pipeline forward. This survey reveals that more work needs to be done to promote the indisputable benefits of these schemes to industry — RICS intends to take this forward as a priority.”

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Budget delivers more good news for construction industry

The Spring Budget includes plans that will be undoubtedly welcomed by professionals working within the construction industry.

The announcement of new funding to build 110 free schools and the allocation of £103 million to tackle infrastructure issues in the midlands and the north of England indicates that there is money being spent and the government will be calling on us as an industry to support their plans.

Also mentioned in the Budget, was a stronger growth forecast for the UK economy to 2% in 2017 which will likely have a greater positive impact upon the industry’s fortunes over the coming year.

Tackling the skills gap

Labour supply and skill shortages have long been a major concern for construction; an issue that has been thrown into sharper relief following the Brexit vote. The Government’s efforts to raise the status of vocational training, with the introduction of T-Levels, are a welcome step towards tackling this long term issue. The government will increase by more than 50 per cent the number of programme hours of training for 16-19 year olds on technical routes to more than 900 hours a year on average. This includes the completion of a high quality three-month industry work placement.

Responding to this topic, Brian Berry, Chief Executive of the Federation of Master Builders (FMB) said “The Chancellor clearly understands that the UK won’t address the productivity challenge unless we rethink our approach to technical and vocational education. T-Levels could be the answer if they genuinely rival A-Levels in the eyes of parents, teachers and young people. UK society as a whole has been guilty of putting too much emphasis on the academic route – this has made it more difficult for vital sectors like construction and house building to attract the talented people we need. In construction, we are suffering from a severe skills shortage and this is likely to worsen once we leave the EU and no longer have easy access to European labour. This £500 million funding announced today for T-Levels is therefore a welcome and much-needed boost.”

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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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Shrinking construction workforce may be a problem for Heathrow’s third runway

A new runway at Heathrow will put even more pressure on a declining construction workforce, a leading construction advisor has warned.

Mark Farmer, chief executive of Cast, a consultancy and the author of a government review into construction, has said that without radical steps to address its skills shortage, Britain’s construction sector will struggle to redevelop Heathrow alongside the existing pressures of increased housing delivery and other demands likely to be placed on it such as HS2 and Hinkley Point.

Best-case scenarios have put the third runway a decade away – by which time Britain could have lost 20 – 25% of the workforce through retirement and lack of new entrants. All of these factors are likely to be made worse by Brexit. Mark Farmer, who authored the government-backed review, believes serious reforms are needed in order to deliver large infrastructure projects.

The report, titled ‘Modernise or Die: time to decide the industry’s future’, highlights construction’s dysfunctional training model, its lack of innovation and collaboration as well as its non-existent research and development (R&D) culture. Low productivity continues to hamper the sector, while recent high levels of cost inflation, driven by a shortage of workers, has stalled numerous housing and infrastructure schemes as they have become too expensive to build.

With more people leaving the industry each year than joining, the construction workforce is shrinking, placing increasingly severe constraints on its capacity to build housing and infrastructure. Reliance on a fractured supply chain and self-employment also means there is little incentive for contractors to invest in long term training for the labour force.

Crucially, the sector hasn’t raised its productivity in decades so urgently needs to explore ways to make the work less labour intensive, such as through offsite construction. This, in turn, could make a career in the sector more attractive for young people by moving the work from building sites to digitally enabled working in factories.

Mark Farmer, report author and chief executive of Cast, said “Major infrastructure projects like the third runway are crucial for economic growth and this is great news for long term construction demand in what is a very cyclical industry. However, major government infrastructure commitments like this alongside their significant housebuilding ambitions mean more than ever that we need to take affirmative action in addressing the critical issues facing construction’s productivity, resource base and delivery models.”

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Theresa May’s industrial strategy “must address Brexit skills impact”

When Theresa May became Prime Minister, she announced that the UK government would develop an ‘industrial strategy’ to deliver a modern, innovative and competitive economy. Leading international infrastructure group Balfour Beatty are warning the government that projects such as HS2 run the risk of losing valued foreign workers post-Brexit unless tackling the skills shortage is made high priority within the strategy.

In Balfour Beatty’s latest publication entitled “Industrial Strategy: A Vision for Growth,” they highlighted that that around 2.2 million EU nationals working within the UK have helped make up a skilled workforce that the UK would be unable to source alone, should the free movement of labour be compromised.

The paper suggests that the heightened uncertainty surrounding EU labour in a post-referendum Britain risks causing severe recruitment and staffing difficulties. This in turn could lead to increased costs where demand for labour outstrips supply, resulting in long delays – especially on big projects such as HS2 and Hinkley Point.

The report says “An early and integrated policy response to both retain the skills of those who have migrated here and to ensure that the UK remains an attractive place for talented people to reside should be a key element of Government’s industrial strategy.”

Homegrown talent

Balfour Beatty has also stressed the importance of attracting and retaining new talent from inside the UK if we are to successfully thrive in a UK outside of the EU.

“The Government’s industrial strategy should also seek to address the skills shortage in the UK directly, by continuing to support the upskilling of our own workforce. If we want a successful industrial strategy then we must invest in the people who will deliver it, so skills, the investment in human capital, must be a priority in the industrial strategy. In this vein, we welcome Government’s plans to increase the number of apprentices by 3 million and introduce the Apprenticeship Levy.”

“However, we do not believe that the apprenticeship levy alone will be enough to meet the shortfall in skilled workers the infrastructure industry needs. To effectively resolve these skilling issues, we believe it’s necessary that for a collegiate approach to agree a clearly defined programme, designed through close interaction and genuine dialogue between government, industry and representative bodies, such as the Construction Leadership Council. Most importantly, the strategy should be adhered to over the long-term as we see in other countries such as Germany.”

Read the full report here.
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Skills, not Brexit, the main threat to construction industry

Worsening skills shortages, rather than uncertainty over Brexit, are the main threat to the UK construction industry, according to leading recruitment company for the construction industry.

A number of commentators have suggested that the main threat to the industry is the knock on effects of Britain’s decision to leave the European Union. However, an analysis by the construction and rail recruitment specialist found that a lack of skills poses the biggest potential risk to future productivity.

Paul Payne, managing director of One Way, comments “While numerous people have suggested that Brexit presents challenges to the construction industry, the idea is actually a bit of a red herring and we’ve seen little change since the result except for some natural hesitation brought on by the ‘Armageddon scenarios’ being pumped into the market. We’re as busy now as we were before the referendum and the real issue – the crippling lack of skilled professionals in this country – is being overlooked because of all the noise around Brexit.

“Yes, the construction industry has benefited from being part of the EU as it has given the sector access to a lot of workers who have moved over and have filled lower skilled roles, however we’ve never seen any great influx of skilled professionals who can work as design managers or quantity surveyors, for example. These people are needed across the entire industry and in related fields like civil engineering and currently there are far, far too few of them. More robust and well prepared hiring firms like ourselves will always have the resources to be able to pluck individual experts from the EU regardless of changes to freedom of movement laws, but in reality there is no quick fix. The only solution is to focus on ‘growing our own’, for example, through targeting more apprentices and youngsters at school level as well as widening the scope of people who are potentially interested in working in the industry to include more women and professionals from diverse backgrounds. Even at the moment when there are a number of major projects being put on hold there simply aren’t enough people in the market to meet demand. Imagine what the situation will be like when the economy picks up and they’re given the green light. Ultimately, something needs to happen quickly as we’re rapidly approaching a breaking point where productivity will be affected.”

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