A lack of understanding

Construction delivers around 7% of the country’s GDP. So why does this Conservative government seem so intent on running the industry that has underpinned the economic recovery into the ground?

It would have been wildly optimistic to think that our blueprint for construction, Agenda 15, would be adopted in its entirety by the incoming government.

However, equally unlikely was the thought that the construction industry, responsible for around 7% of GDP, would be negatively impacted by the new government. Especially given it’s led by a party that has previously been supported by industry leaders at big firms such as Sir Robert McAlpine, Carillion, Wates and JCB.

How wrong we have been. Some have characterised the contempt for the built environment shown in this new government’s first 100 days to me as “Conservatives Against Construction” - or CAC as I shall now call it.  Here are some exemplars of what many see as a lack of basic understanding of how the built environment works as a sector.

Firstly, the initial attempt to remodel the Construction Leadership Council was CACk-handed at best. In a bid to reduce the size of an unwieldy board, the “representative” body was rendered entirely unrepresentative. Thankfully, pressure from the industry has now at least forced the government to widen the leadership council’s membership.

The removal of the chief construction adviser - more CACk-handed work. This role is surely key as an interface between government and an industry that still has one of the the largest labour forces in the UK. With the position an original creation of the last Labour government, I suspect it has been shelved for political rather than credible motives.

The removal of a zero-carbon homes target for 2016 was met with a furious response from more than 250 business leaders who, it seems, had no chance to voice their concerns before the seemingly snap decision was made. The government and housebuilders together invested over £6.4m in a pilot scheme working towards this aim. There was no mention of its scrapping in the election manifesto. This was CACk-handed and short sighted at the same time.

Meanwhile, the restructuring of planning regulations designed to boost housebuilding in the keynote document ‘Fixing the foundations’ took little or no account of the major inhibitor to growth, which is the industry’s capacity to build being restricted by a shortage of labour and skills rather than a shortage of land or consent. Another simplistic and CACk-handed approach.

The answer to this skills shortage, they argue, is the creation of a skills tax on all firms to fund the creation of 3 million apprentices across all sectors. This could, however, be a double whammy for those in construction, who already pay a levy to the Construction Industry Training Board (CITB). The CITB was not consulted on this change and its role is still not clear. Indeed it may disappear altogether. Both CACk-handed and unclear.

There are other shredded commitments like the paring down of the Network Rail projects, ending of numerous renewable energy policies and the reversal of the commitment on the 10-year settlement for housing association rents, with housing associations now asked to reduce rents by 1% per year. Its predicted impact is to reduce the number of homes being developed by between 14,000-27,000.

Yet despite all these changes, which have not been well explained and are negative and retrogressive, the new administration still claims to (rightly) believe that a key priority is to intervene to get more houses built more quickly and to upskill the nation to assist this.

That at least is a good thing. We are where we are, as they say, and we must learn to live with these changes. However, it is not an overblown claim to say that as an industry we hold the country’s future in our hands. 

As an industry we have an impact on the places where people live, where they work and how easy it is for them to travel between one and the other. Also the tax taken from those employed in the built environment is considerable. According to the Department of Business and Skills’ own economic analysis of the sector in July 2013, construction adds almost £90bn (or 6.7%) in value to the economy, and comprises 280,000 firms covering 2.93 million jobs, equivalent to about 10% of total UK employment.

It therefore, surely, pays to work with, rather than against, those employed in the built environment if you want to affect positive change. Maybe a point worth consideration by Messrs Cameron and Osborne as they travel to the Conservative Party conference in Manchester next month.

Richard Steer is Chairman of Gleeds Worldwide

Opinion piece first published in Building Magazine on the 16th of September 2015

Data:

15.09.15

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Richard Steer Chairman Gleeds

Richard Steer
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