Homes shortfall ‘the size of Leeds’
If construction is to deliver Project Speed then the Government needs to improve training quickly
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The harsh truth about the construction industry is that it has been blighted for decades by an adversarial attitude, outdated working practices, a chronic lack of investment and an ageing workforce.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