Homes short­fall ‘the size of Leeds’

If con­struc­tion is to de­liver Pro­ject Speed then the Gov­ern­ment needs to im­prove train­ing quickly

The Daily Telegraph - Business - - Front Page - By Melissa Law­ford

MIN­IS­TERS have been urged to fast-track £12.2bn of hous­ing spend­ing as fears grow that coro­n­avirus chaos will tear a hole the size of Leeds in Bri­tain’s home­build­ing pro­gramme.

The pan­demic could mean 125,000 fewer prop­er­ties are built this fi­nan­cial year, a new re­port has found.

This short­fall could surge to 318,000 over the next five years, ac­cord­ing to a worstcase es­ti­mate by Sav­ills es­tate agents for the home­less­ness char­ity Shel­ter – the same size as Leeds.

The Gov­ern­ment is seek­ing to build 300,000 homes a year by the mid-2020s.

Just 4,300 so­cial rent homes will be built this year – a drop of 30pc from ex­pected lev­els and the low­est num­ber in any year since the Sec­ond World War.

More than a mil­lion house­holds are on so­cial wait­ing lists across Eng­land alone. Shel­ter said 4,000 so­cial homes would not be enough to house the fam­i­lies on the wait­ing list in the York­shire city of Wake­field, let alone the whole coun­try.

Boris John­son, the Prime Min­is­ter, will to­day an­nounce plans to spend bil­lions of pounds to “build, build, build”.

In his call for mis­fits and weirdos to come work in Down­ing Street back in Jan­uary, Do­minic Cum­mings, the Prime Min­is­ter’s chief ad­viser, wanted to hear from pro­ject man­agers “who could dual car­riage­way the A1 north of New­cas­tle in record time”. But as the Gov­ern­ment at­tempts a post-coro­n­avirus re­set this week with an­nounce­ments on school build­ing projects and in­fra­struc­ture, Cum­mings’ op­ti­mistic re­quest re­veals he knows more about cam­paign­ing than he does about the UK con­struc­tion in­dus­try.

“Pro­ject Speed” and a new In­fra­struc­ture De­liv­ery Task­force all sounds im­pres­sive at the top of a press re­lease, but turn­ing this into re­al­ity is an al­to­gether more dif­fi­cult task. Just ask Sir John Ar­mitt, the Olympic de­liv­ery chief who’s been wait­ing for two years for a fi­nal re­sponse to the rec­om­men­da­tions of his Na­tional In­fra­struc­ture As­sess­ment.

The harsh truth about the con­struc­tion in­dus­try is that it has been blighted for decades by an ad­ver­sar­ial at­ti­tude, out­dated work­ing prac­tices, a chronic lack of in­vest­ment and an age­ing work­force.

As the Gov­ern­ment’s own In­fra­struc­ture and Projects Au­thor­ity noted in 2017, con­struc­tion “faces is­sues such as low profit mar­gins and lag­ging pro­duc­tiv­ity com­pared to other sec­tors of the econ­omy”. The Of­fice for Na­tional Sta­tis­tics adds that over a 10-year hori­zon, con­struc­tion’s con­tri­bu­tion to pro­duc­tiv­ity has been “rel­a­tively in­signif­i­cant”.

The UK’s build­ing trade is, in re­al­ity, a frag­ile con­struct char­ac­terised by firms bal­anc­ing pre­car­i­ously on the cash of their sup­pli­ers. As the coun­try emerges from lock­down it is an oft-over­looked fact that con­struc­tion was never ac­tu­ally in­tended to shut down at all; in March Alok Sharma, the Busi­ness Sec­re­tary, wrote to pay trib­ute to those still “work­ing tire­lessly” in con­struc­tion.

The dirty se­cret – as one se­nior de­vel­oper told me – was that the cash po­si­tion of the sec­tor was ac­tu­ally so par­lous that of­fi­cials were warned many firms might never re­open af­ter a strictly en­forced shut­down.

The real is­sue for con­struc­tion and the am­bi­tions of Boris John­son will be skills, though. Rather than “build, build, build” the slo­gan should ac­tu­ally be “builders, builders, builders”. Ac­cord­ing to the lat­est fig­ures, there are around 3.2m work­ers in the sec­tor, of which 2.3m are em­ployed and some 919,000 are self-em­ployed.

How­ever, con­struc­tion’s UK work­force is age­ing, mean­ing the sec­tor is dis­pro­por­tion­ately re­liant on younger mi­grant work­ers. In 2018, the ONS said a third of UK-born work­ers were 50 or older, com­pared with less than a quar­ter of those for­eign born. Non-UK-born con­struc­tion work­ers ac­counted for 10pc of the work­force, with the fig­ure at 44pc in Lon­don.

That reliance presents a ma­jor prob­lem for the in­dus­try. As it stands, un­der the Gov­ern­ment’s mi­gra­tion pro­pos­als set out in Fe­bru­ary, there will be no spe­cial dis­pen­sa­tion for “low skilled” con­struc­tion work­ers de­spite con­ces­sions for agri­cul­ture. The high level of self-em­ployed work­ers, as noted above, will also cause headaches as they will have to find em­ploy­ers to spon­sor them.

If th­ese pro­vi­sions threaten the sup­ply of work­ers from Europe and the rest of the world, coro­n­avirus causes more im­me­di­ate is­sues. The con­struc­tion in­dus­try gen­er­ally takes on about 20,000 ap­pren­tices a year, but in­dus­try fig­ures sug­gest this will drop by two-thirds in 2020 due to the out­break.

Un­cer­tainty over cash­flow and prospects means that far fewer com­pa­nies are likely to take on the es­ti­mated £25,000 out­lay of sup­port­ing ap­pren­tices over three years, as well as the cost in time spent mon­i­tor­ing them when the in­dus­try is also get­ting used to work­ing un­der so­cial dis­tanc­ing con­di­tions.

Then there are ap­pren­tices left high and dry by firms col­laps­ing. In 2018 when Car­il­lion im­ploded, about three-quar­ters of its 900 ap­pren­tices were found berths else­where. That task be­comes much harder in a more gen­eral in­dus­try malaise.

Be­sides, sup­ply and de­mand still rules. You can throw bil­lions at all the in­fra­struc­ture fund­ing projects in the world, but if you don’t in­crease the ca­pac­ity of train­ing providers to de­liver the op­er­a­tives re­quired, the risk is sim­ply cre­at­ing a sup­ply bot­tle­neck and in­fla­tion, eat­ing up all the bil­lions ear­marked to spend on na­tional re­newal, as a host of ex­chan­cel­lors warned last year.

Cost over­runs are bad enough al­ready, as un­der­lined by the £100bn­plus HS2 pro­ject. But in­dus­try train­ing ex­perts sug­gest the big short­ages could come in ar­eas such as plant op­er­a­tors and high­ways main­te­nance staff, of which you need a fair few to build a road. Civil en­gi­neers have been on the Gov­ern­ment’s short­age oc­cu­pa­tion list for years.

Cum­mings doubt­less has all this cov­ered off, but if we are go­ing to de­liver on this na­tional pro­gramme of re­newal we will need to do bet­ter than Priti Patel, the Home Sec­re­tary, in Fe­bru­ary. She sug­gested stick­ing shov­els in the hands of the UK’s 8.4m eco­nom­i­cally in­ac­tive work­ers, of which 2.1m are stu­dents, 1.8m are car­ers and 2.1m are long-term sick.

Rishi Su­nak’s pre­de­ces­sor, Sa­jid Javid, was a rare cham­pion of fur­ther ed­u­ca­tion dur­ing his brief spell in 11 Down­ing Street and that is where ef­forts need to be fo­cused, be it in front-load­ing ap­pren­tice train­ing in col­leges while work fil­ters through to sites, and also by sup­port­ing em­ploy­ers in tak­ing on ap­pren­tices.

Even if it costs bil­lions, that looks a bet­ter use of tax­payer cash than ex­tend­ing the fur­lough, for­ward­look­ing rather ex­pen­sively pre­serv­ing in as­pic the busi­nesses which look ill-matched for the post-Covid age.

If the Gov­ern­ment is also re­ally se­ri­ous about sup­port­ing the in­dus­try through a ma­jor in­vest­ment pro­gramme, it also needs to stop shoot­ing it in the foot. Su­nak did pre­cisely that in March’s Bud­get with plans to scrap the red diesel sub­sidy for the sec­tor from 2022, adding an es­ti­mated £500m a year to in­dus­try costs. That is money that won’t be spent on much-needed work­ers as the spree (hope­fully) gets into the swing.

As a bi­og­ra­pher of Win­ston Churchill our PM is a firm be­liever in the “great man” the­ory of his­tory and the power of in­di­vid­u­als to shape events. As he em­barks on his in­fra­struc­ture rev­o­lu­tion, he would do well to re­mem­ber that an­other great Bri­ton – the en­gi­neer Isam­bard King­dom Brunel – had an army of navvies be­hind him.

A brick­layer on a Bew­ley Homes site in Ash, near Farn­bor­ough. A fo­cus on skills will be cru­cial to the Gov­ern­ment’s in­fra­struc­ture plans

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