the role for sme builders in increasing housing supply. changing t… · the role for sme builders...
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The Role for SME Builders
in Increasing Housing
Supply
Wednesday 21st March 2018
LGA Housing Conference18 Smith Square
London SW1P 3HZ
Brian Berry
Chief Executive, FMB
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The Federation of Master Builders
• UK’s biggest employers’ body for SME construction firms – over 8,000 members
• FMB Membership offer is unique -independent inspections
• Members’ Code of Practice
• Warranties
• Customer Complaint Service
• 45% involved in building new homes
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UK Construction Industry
A great British industry !
• Nearly 300,000 companies connected to the construction industry
• Employs 3 million people
• Industry worth £124 billion per annum
• Contributes around 7% of UK’s GDP
• Every £1 invested generates £2.84
• 92p of every £1 spent on construction is retained in the UK.
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SME house builders
Shrinking supply…
• Decline in SME housing building
• 1988: 66% - 2016: 23%
• 1988 last time we built 200,000
new homes
• Firms building <100 fell by half
since 2008
• Huge loss of capacity and
reduced competition
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SME House Builders
Vital role…..
• Local growth - SMEs create local jobs
• Employment - SMEs employ 66% of all apprentices in construction
• Competition – without SMEs market remains limited
• Quality – SMEs compete on quality bespoke housing
• Small sites - build on small sites, often brownfield
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SME house builders
Three key barriers ……….
1. Availability of suitable, viable smaller sites
2. Availability of finance
3. Cost, complexity and delay in navigating planning
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1. Access to land
• FMB 2017 Survey – 62% of members cited ‘lack of available land’ as the biggest barrier to increasing output
• Issues involve• Land of right size in the right location
• Expectations of getting planning permission
• Price expectations of landowners
• Local Plans and five year land supplies tend to be focussed on larger strategic sites
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2. Access to finance
• Since the financial crisis of 2007/08 SME housebuilders have faced severe difficulties securing finance
• FMB 2017 Survey – 54% of members cited access to finance as a major constraint
• Banks reluctant to lend for small scale residential developments
• Significant improvement in last 2-3 years, but mainly from alternative lenders
• Lending terms too high
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3.Cost and complexity of planning
• 79% of SME builders view planning process for small sites too heavy handed
• Complexity and bureaucracy within the planning application process
• Large amount of information and detailed pre-application discussions required for outline planning permission
• 43% of FMB members report info requirements increasing
• Under resourcing of planning departments
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SMEs and Housing Supply 29.11.16
Government support …..
1. Housing White Paper
2. 2017 November Budget
£15bn extra funding for capital funding, loans, guarantees to support housing over next 4 year.
• Home Builders Fund an extra £1.5bn
• Small Sites Fund (remediation) £630 million
• Local Authority house building £1bn
• New financial guarantees £8bn
• Develop construction skills £34bn
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SMEs and Housing Supply 29.11.16
Government support …..
Small sites and planning
• ‘Great weight’ given to small sites• ‘Presumption’ in London
• Greater clarity and support for windfall sites
• 20% of housing delivery on smaller sites?
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Local Authorities
FMB/LGiU Research Report
‘Small is Beautiful’
• Lack of land one of the key barriers to build more homes
• Issue is finding the right site in the right location at a reasonable price with reasonable chance of obtaining planning permission
• Local government and builders need to work together
• FMB joined up with LGiU
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FMB/LGiU ‘Small is Beautiful’
Key Findings:
• More than half of councils deliver fewer than 40%
of homes on small sites
• 79% SME builders think the planning application
process for small sites is ‘too heavy handed’
• 64% builders & 45% of LAs see under resourcing
of planning depts. as a barrier to developing
small sites
• 55% of LA respondents said quality of planning
applications for small sites often poor
• 80% SME builders said LAs in their area do not
proactively communicate or engage with them
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Case Studies - Small is Beautiful
• Birmingham City Council• Struggled to find builders to build on small sites
• Set up on-line planning portal
• Leeds Council• Encourages analysis of its Strategic Housing
Land Availability Assessment (SHLAA) to identify sites and broker relationships with builders
• NE Lincolnshire Council• Established a local development forum to allow
all non-site specific issues relating to development to be discussed
• Barnet Council• Set up a specialised pre-application service
which provides a premium fast track planning support for a fee. Dedicated lead officer to manage the process
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Skills Challenge
Record skills shortages - FMB Q4 2017
• 68% difficulties hiring bricklayers
• 63% difficulties hiring carpenters
• 48% difficulties hiring plumbers
Brexit looming
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Skills Challenge
Construction Industry Brexit Manifesto
• Construction industry has united
• 12.6% of construction workers born outside the UK
• Need for settled status
• Longer transition period
• Need should be determined by occupations and not skills levels or income
• Importance of self employment
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Future Skills Outlook
• Annual recruitment requirement is 46,420
• Total recruitment requirement up until 2020 is 232,000
• 400,000 workers expected to retire between before 2025
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Skills Challenge
Going forward:
1. Improve the image of the industry
2. Improve supply chain collaboration
3. Train our workforce to a higher standard and upskill
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Questions?