According to central Government, in order to address the imbalance between supply and demand for housing in the UK, all facets of the home building sector need to pull together and build 200,000 new homes a year up to 2020 and presumably beyond. That means, the large house builders, medium sized house builders, SME developers, housing associations, and to a limited extent, local authorities, all working at capacity to deliver a common goal.
The topic of capacity within the home building industry is often referenced, but rarely given great attention. A lot is made of the planning process, and the statutory obstacles to delivering new homes, but if the skills and personnel required to physically deliver these homes are not available, the furnace may be about to run out of coal.
On the 31 October 2016 the Communities and Local Government Committee met to hear oral evidence from leading figures in the development sector, to inform an inquiry into capacity in the homebuilding industry.
During the proceedings Mark Prisk MP, a member of the CLG select committee asked those giving evidence what they thought the obstacles to hitting the aforementioned housing target might be. There was clear consensus that hitting the targets would require a monumental effort. Rather more telling was the response from David Thomas, Group Chief Executive of Barratt Developments, the largest housebuilder in the UK.
“There are a whole series of constraints, which I am sure you are covering through this process, but at present the biggest constraint facing the industry is skills.”
This comment was made in front of a Parliamentary select committee, by a senior representative of the largest housebuilder in the country. But how is the Government proposing to address this constraint?
Well if the contents of the Government policy paper on house building between 2010 – 2015 were anything to go by, not a great deal. The exhaustive contents included; community-led design, empty homes policy, Help to Buy policy, private finance initiatives, policies for locally led large-scale housing sites, Ebbsfleet Garden City, the new homes bonus, and policies around starter homes, the use of surplus public sector land, and custom build housing. Not only does investment in the construction workforce and associated skills not feature on the list, recent political circumstances have, if anything, served to diminish the already stretched skills capacity within the industry. Namely, the result of a certain referendum held in June this year.
The aforementioned comments from Barratt’s David Thomas were not the first warning he issued. In an article published in The Guardian on 12 May 2016, Mr. Thomas warned that a vote to leave the EU would mean, “even more pressure in terms of skills shortages…if you ask any housebuilder what their main challenge is, they say it’s labour availability.” Thomas is not alone, similar concerns have been raised by other major housebuilders including Berkeley Group.
The Chief Executive of the largest housebuilder in the country estimates that 30-40% of the companies workforce in London hails from mainland Europe. According to an article published in the Guardian on 26 July 2016 “nearly 12% of the 2.1 million construction workers in the UK come from abroad, mainly from the EU.” Can an industry already at skills capacity, take a sizable hit to its workforce and still build the homes that supply demands?
In August 2016, following the referendum vote, the Independent reported that according to the Resolution Foundation, employment in the construction sector fell for the first time since May 2013. In September 2016 the Royal Institute of British Architects joined a coalition of construction industry bodies in writing to the Government’s Brexit Minister David Davis to warn that the construction industry is facing a skills deficit. Most recently Mr. Thomas has reiterated his warning in front of the CLG Committee.
So at the last count that’s, Barratt, Berkeley, The RIBA, RICS, the CIOB, the RTPI, the Resolution Foundation, the BPF (well you get the gist), warning of a serious, looming, deficit in skills for the sector.
Thankfully with the Autumn Statement taking place on 23 November, the industry was able to take solace in knowing that the Chancellor could address the issue in his fiscal report. No such luck.
Still, there is another source of hope, but will it simply White Paper over the cracks?