Build, build, build – analysis of Boris Johnson’s new deal

Panel

  • Steve Richmond – Head of Marketing & Technical, REHAU
  • Adam Tusk – Chief Operating Officer SIDERISE Group Ltd and Chairman of the
  • Construction Products Association  (CPA) Marketing Integrity Group
  • James Lee – Director of External Affairs, GGF

Prime Minister Boris Johnson recently announced a ‘New Deal’ which puts jobs and infrastructure at the centre of the government’s economic growth strategy.

He set out his commitment to ‘build, build, build’ in order to upgrade Britain’s infrastructure and skills to fuel economic recovery across the UK.

In this announcement he said at the time: “It sounds positively Rooseveltian. It sounds like a New Deal. All I can say is that if so, then that is how it is meant to sound and to be, because that is what the times demand. A government that is powerful and determined and that puts its arms around people at a time of crisis…this is a government that is wholly committed not just to defeating coronavirus but to using this crisis finally to tackle this country’s great unresolved challenges of the last three decades.

“To build the homes, to fix the NHS, to tackle the skills crisis, to mend the indefensible gap in opportunity and productivity and connectivity between the regions of the UK. To unite and level up.  To that end, we will build build build. Build back better, build back greener, build back faster and to do that at the pace that this moment requires.”

But as with anything, the devil is in the detail. So what was outlined in the plan?

£1.5bn this year for hospital maintenance, eradicating mental health dormitories, enabling hospital building, and improving A&E capacity. This will improve patient care, make sure NHS hospitals can deliver world-leading services and reduce the risk of coronavirus infections.

£100m this year for 29 projects in our road network to get Britain moving, from bridge repairs in Sandwell to boosting the quality of the A15 in the Humber region. Plus £10m for development work to unblock the Manchester rail bottleneck, which will begin this year.

Over £1bn to fund the first 50 projects of a new, ten-year school rebuilding programme, starting from 2020-21. These projects will be confirmed in the Autumn, and construction on the first sites will begin from September 2021.

£560m and £200m for repairs and upgrades to schools and FE colleges respectively this year.

£142m for digital upgrades and maintenance to around 100 courts this year, £83m for maintenance of prisons and youth offender facilities, and £60m for temporary prison places, creating thousands of new jobs.

£900m for a range of ‘shovel ready’ local growth projects in England over the course of this year and next, as well as £96m to accelerate investment in town centres and high streets through the Towns Fund this year. This will provide all 101 towns selected for town deals with £500k-£1m to spend on projects such as improvements to parks, high streets, and transport.

The plans are clearly ambitious and, in the Autumn, government will also publish a National Infrastructure Strategy which will set a clear direction on core economic infrastructure, including energy networks, road and rail, flood defences and waste.

But what does it all mean to those in the building products space? To find out more we spoke to a group of industry experts to find out their reaction.

WHAT DOES THIS ANNOUNCEMENT MEAN FOR THE SECTOR YOU REPRESENT?

Steve Richmond:“Any additional money for construction is always a positive, especially after the industry was hit hard by the COVID-19 pandemic. There is the question of how much of the total announcement is actually new money. There is still a huge gap between supply and demand for new housing so hopefully this will improve the number of new homes built per year.

“However I’m concerned that focusing purely on the numbers of new houses and not on the quality, sustainability or the affordability of them can cause us issues for future generations.”

Adam Turk: “It’s all about confidence. Our industry suffers too many peaks and troughs, all of which affect employment and investment, and these are usually driven by confidence. Manufacturers make long term investments, whether that be in machinery, people or product development, and their Boards have to see that there is longevity for these plans, which are often bold and sector-leading.

“It is these investments which drives our growth opportunities overseas and which provides for us the competitive advantages that also make British companies successful in export markets.

“Specifically in our sector, which is focused on passive fire protection for high rise buildings, and with particular emphasis on the external envelope ie protecting the cladding and façades, the continuing strive by Government to remediate unsafe buildings is a big confidence boost. “

WAS IT MISSING ANYTHING IN YOUR OPINION? WHAT FURTHER SUPPORT DO YOU FEEL WOULD BE GOOD TO HAVE FROM GOVERNMENT?

Steve Richmond: “I believe that there is not enough emphasis on sustainability and low carbon technologies in this current proposal. All new houses built from now until 2025 will not need to meet the Future Homes Standard and therefore will likely need additional capital investment in the future to meet the required energy efficiency levels to reach zero carbon.

“In addition, the health and education sectors have received further funding but there is a growing need for brand new schools to be built in many areas due to increasing demand which will need further investment going forwards.”

Adam Turk: “Johnson is focusing on the bigger picture, with regards to infrastructure, making it easier to get construction works started and providing help with access to finance. This is enough to create momentum which is the right approach. The industry across the wider supply chain, from clients to product manufacturers, has to now pick up the gauntlet and create the activity. There is enough in the Government’s message to get us started. It’s up to us now.”

WILL THIS BE THE BOOST THE BUILDING SECTOR AS IT IS PLANNED DO YOU FEEL?

Steve Richmond: “It’s welcome but with the construction industry still adapting to a new way of working after COVID-19, it’s hard to predict if it will have a significant impact on the industry.”

Adam Turk: “It should be enough to help companies to retain staff, and continue with their investment plans. But, it will be carefully watched for signs that it is working, and the confidence it is creating will be short-lived if it doesn’t start happening soon.

“Speed of action is key, and this Government has done well in this regard through the crisis economically, and needs to continue to see initiatives like this through into implementation quickly.”

WHAT DO YOU FEEL WILL BE THE LONG-TERM IMPACT OF COVID-19 ON THE SECTOR?

Adam Turk: “There has to be a recognition that COVID-19 has taught us a different way of living and working, much of which is going to continue regardless of what happens with the virus. I think that will change habits and consideration needs to be given in the built environment and the impact this will have as to where we live and work, the space we require for both, and how buildings need to be designed differently.

“I think offices will become more about meeting spaces and less about work spaces and homes will need to have work space built in. We also need investment in our internet infrastructure.”

Build, Build, Build?

James Lee – Director of External Affairs at the Glass & Glazing Federation analyses government’s plans

The Prime Minister’s announcement of a “New Deal” at the end of June was encouraging and covered many different areas of economic growth, but it must surely have been of particular interest to all in construction when he stated, “Build back better, build back greener, build back faster”.

It almost goes without saying, but for encouraging words to be meaningful they need to be backed by actions. So far the Government has revealed its short term plans to ‘build back greener’ with the announcement of the Green Homes Grant Scheme, scheduled for September. The Scheme is projected to improve the energy efficiency of approximately 600k households in England, with each successful applicant receiving a £5k voucher. It amounts to around a £2bn home improvement fund from the Treasury, to be spent or committed to by 31 March 2021.

It may sound a lot, but when broken down and put into context it is a relatively small boost to a UK construction sector worth approx. £112bn per annum.

The Green Homes Grant Scheme pales into further insignificance when the actual scheme measures are scrutinised. It is divided into primary and secondary measures.

The primary measures are insulation (solid wall, cavity wall, loft and roof) plus low carbon heating, such as air-source or ground-source heat pumps, or solar thermal systems, which provide renewable ways of heating your home.

The secondary measures include glazing, but a homeowner can only replace single glazing with double, triple or secondary.

Here comes the rub. A homeowner has to spend an amount of the voucher on primary measures before a secondary measure can be claimed. The cost of the secondary measure must be equal to or less than the primary measure.

So for glazing there are a few factors that make the Green Homes Grant Scheme not hugely exciting.

Firstly the majority of homes in the UK have double glazing and most have pre-2002 double glazing, which means they will not be particularly energy efficient. These windows under the scheme can’t be replaced because they aren’t single glazed.

The second problem is the secondary measure having to equal or be less than the primary measure. Out of a £5k voucher, this will not leave much scope for modern energy efficient double, triple or secondary glazing.

The third problem is the availability of installers to do the measures. The Government has still to fully reveal the criteria to establish what it will take for installers to become approved suppliers of Green Homes Grant Scheme measures. It is estimated this will involve signing up to a new scheme or system at more cost and inconvenience for the likelihood of very little return.

The obstacles make the ‘build back greener’ promise seem more like a panacea for many, rather than a long term health plan.

The Prime Minister’s boast to ‘build back faster’ looks more inviting and some of the proposals put forward could work well and help rebuild the construction sector.

Since the June announcement, there have been measures in place such as cancelling stamp duty on properties under £500k. This could mean more available cash for home improvements for new buyers. There’s also the plans to accelerate the planning system. This should also mean more works can be carried out quicker.

In addition, the Government has pledged to invest roughly £4bn to upgrade public buildings including schools, hospitals, courts, prisons and town centres. Some will say this is long overdue, but nonetheless it is still encouraging if not overwhelming.

Given the situation, the UK Construction industry should prepare for a continuation of a sobering trading environment ahead. COVID-19 has not gone away. It is now a part of everyday life that we all have to deal with. To compound matters, the Brexit transition period ends on 31st December and there is uncertainty around the final outcome especially on the matters concerning the movement of goods and labour, changing legislation and data protection.

Before then, on 23rd November, the Chancellor will make his Autumn Statement which will outline the budgetary spend for 2021 and beyond. This announcement should give a clearer idea of the Government’s plans to grow the economy in 2021.

The Glass and Glazing Federation (GGF) has been involved in the Government’s work streams on economic growth for the UK housing, repair, maintenance and improvement sectors. The GGF has suggested that Government looks at the following ways to grow the sectors and improve the energy efficiency of existing buildings and the environment.

These include:

  • A three year VAT holiday on all energy efficient measures and products installed in existing UK buildings.
  • An energy efficient scheme that addresses the replacement of pre-2002 windows and doors by offer substantial incentives to homeowners.
  • More funding to upskill and train those entering and operating in construction. In particular, those in the window and door installation sector.
  • More emphasis on competent person schemes such as FENSA to ensure windows and doors are being fitted professionally and legally in England and Wales.

When the Prime Minister boldly announced “Build Build Build!” for many it conveyed rousing rhetoric and real intent. The proof of the pudding though is in the eating. The zero carbon 2030 and 2050 targets are still a long way off, consumer confidence is still low with many facing an uncertain future.

The economy, in the PM’s own words, is needing “turbo-charged” and that means more than passionate speeches and mere soundbites.

Admittedly, the circumstances could be better, but the opportunity now exists to devise and deliver game-changing plans for the short and long term future of the UK construction sector. The time is now, but the question is; can the Government seize the opportunity and put the UK on the road to recovery.