9 March 2020

Budget 2020: NFB calls for meaningful change

Ahead of the budget on 11 March 2020, the National Federation of Builders (NFB) sets out its wishes for the construction and housebuilding industry, with late payment, planning reform and greater support for SMEs at the top of the agenda.

 

Richard Beresford, chief executive of the NFB, said: “The budget has a chance to prepare the UK for leaving the EU, as well as fix some failed approaches. If the Government is serious about levelling up, it needs to understand the barriers our industry is facing and meet them head on with solutions.”

 

Construction

Late payment has been a persistent problem for SMEs, especially in the construction industry. Late payment can lead to cash flow problems and unnecessary costs which puts many businesses in jeopardy. Whilst there have been several attempts to tackle the issue, for example, the introduction of the prompt payment code, no serious penalties have been introduced to curb it.  

The Chancellor must therefore clampdown on late payment and ensure late payers are not eligible for public contracts.

The procurement process remains a burden on the industry as too often, it’s not a level playing field.

Regional Lots have helped but barriers such as project start times, unrealistic turnover expectations, most economically advantageous tender (MEAT) and stringent experience examples preclude small business and compromise quality. Low margins and big business doesn’t always deliver best outcomes and leaving the EU gives us an opportunity for the Government to reform an uneven playing field.

The skills shortage is a prominent problem facing construction. With an aging workforce and too few young people being trained and retained, businesses are struggling to recruit skilled workers in trades such as bricklaying, plumbing and carpentry. Changes to the immigration system have posed further challenges to construction, as experienced workers are in danger of leaving the UK.

The Chancellor must restore confidence by ensuring that SMEs, who train four in five construction apprentices, have a pipeline of work to train and retain. This is most easily achieved by reforming late payment, procurement, and planning while also implementing a construction sector visa, until quality apprentices’ start coming through.

Housing

The planning reform consultation is most welcomed but it must actually deliver change. Too many policies, such as deemed discharge have not worked and builders are regularly meeting planning policy but experiencing delays. For all builders but particularly smaller ones, this delay often makes projects unviable and closes businesses. This is especially true of punitive approaches, such as the negotiated section 106.

Greater access to funding is always welcomed but it cannot be drawn down unless planning is secured. Too many politicians misunderstand this, which is why so many lending schemes are not fully depleted.

Industry does not need a relaxation of planning regulation; it wants regulation that delivers planning certainty.

Increased funding for planning departments is desperately needed but it must target defined strategies. Industry already agreed a 20% increase in planning fees so councils could put money into planning departments but many have not used it to achieve better outcomes.

As well as the need for more staff, we believe local planning authorities (LPA) need funding to introduce a small and medium sites register. Too many five year land supplies are not robust or strategic and a register would enable them to deliver more homes locally, while planning ahead for larger sites.

Social housing must be the Governments legacy, however before we invest in much needed grant increases and give councils a greater share of the money raised through right to buy sales, we must exhaust the opportunities councils have to build many more social homes. With access to low commercial rates, pension funds and the public works loan board, councils could be building many more homes. We believe an investigation into why that is not happening is necessary.

Climate emergency

Over the past decade, the Government has been strong in its climate change responses but recognises the need to go faster. This has been highlighted by recent announcements to unblock barriers to onshore wind, set a future homes standard and support biodiversity net gain. However, we believe more can be done and we would encourage the Government to put retrofitting of old buildings at the heart of its agenda, especially with the upcoming retrofitting consultation.

Increased funding will be needed but by unlocking opportunities such as, offering stamp duty rebates on registered retrofitting works, or streamlining planning/increasing permitted development rights for energy efficiency measures, the Government can encourage greater action without using taxpayer funds. These could be immediately implemented and give industry greater certainty to invest in staff, RnD and manufacturing.