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Let’s not waste the Chancellor’s money this time

Nick Sterling, Managing Director for Osborne Communities shares his views on the  Autumn Statement 2016

“First things first – the Chancellor’s Autumn Statement was great news for the housing sector. There is more money on the table and housing associations, local government and contractors are now trusted to deliver the 300,000 homes the government is now funding with around £13.4 billion over the next five years.

Now we come to the important part – can we deliver?

The obvious answer to this is yes. But I would urge the housing sector – and I include suppliers and contractors in this – to learn the lessons of the flawed decent homes programme.

Decent homes was another big money, very welcome government intervention in the housing sector. It was launched by the then Labour government in 2000 and was intended to ensure that all social homes had a modern kitchen, bathroom and windows. It was a fantastic vision to improve the lives of millions of people, but it was incredibly wasteful and needlessly expensive.

This was down to poor planning, that saw neighbouring councils and housing associations initiating decent homes programmes at the same time. There was all this demand for work, but little consideration of the resources available to deliver it. This meant that the available pool of contractors often had more work than they knew what to do with. So prices shot up. You had many tradesmen earning more than £2,000 a week – it was madness.

If we are not careful we will end up making the same mistakes all over again. Businesses are already being squeezed by higher material costs, as a result of drop in the value of Sterling following the Brexit vote. We are seeing price rises coming through from our subcontractors. Higher labour costs are only a few years further down the road once the UK leaves the EU and its large amount of skilled construction labour.

There are two key steps I suggest to ensure that we as taxpayers get the maximum bang for our buck as a result of the Autumn Statement.

First, the government should ensure housing and infrastructure spending is co-ordinated at a local and regional level. The framework for doing this is already in place. The Homes and Communities Agency can work with the emerging Combined Authorities in local government and the Greater London Authority can ensure spending is phased across London. Mayor Sadiq Khan has launched Homes for Londoners and what better role for it than to get stuck in here?

Second, despite much huffing and puffing over apprenticeships, there remains little real incentive for main contractors to invest meaningfully in apprentices and trainees – they are too busy focusing on finding the resources to do the job now. Social housing clients currently require a trainee or apprentice to be funded for every £500,000 spent in a contract, but there is a much better way of approaching this.

Why not use the new alliancing approach to contracts that is now being rolled out across the construction industry? A training provider could be brought on board through the FAC-1 Alliance Contract as a partner that clients fund directly, as opposed to indirectly through contractors. Contractors would agree to provide work experience and potentially a job as they do at present, but the whole process would be more transparent and more efficient.

Also, none of this needs to be at the expense of time and delivery. In fact, the proper planning I am advocating will ensure that more projects are completed, unnecessary price rises are mitigated, and that the construction industry is better prepared to meet the challenge of training the next generation of construction workers.

Philip Hammond has backed us to deliver – let’s not waste the money. Let’s make sure we do it right this time.”

 

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