Growth is coming. That’s the manifesto of today’s spring statement, the first major financial update of the year, delivered by Chancellor Rachel Reeves. Growth is coming, but it takes time. We must be patient.
It’s broadly the sentiment felt here in our offices, for the construction market in the UK. There’s a tangible sense of what Noble Francis terms as ‘cautious optimism’ amongst us. Cautious, patient, optimism. A slew of change has been delivered for construction, in-line with broader aims to cut bureaucracy and slash red tape. In January, we told you that we had faith in market growth for this year, in the unblocking of some of the barriers hindering said growth. Our minds haven’t been changed.
The promises are, well, promising
Let’s start with the positive. In the name of optimism.
An ambitious plan to tackle the skills shortage. The – somewhat contentious – approval of the Lower Thames Crossing. Action to reduce the planning backlog. A two billion investment in social housing. Undoubtedly good things.
The pledge to deliver eighteen thousand new units of social housing is, perhaps, the best example to illustrate our point. Whilst the figures themselves don’t exactly add up to the moon on a stick - those homes are an assured pipeline. A unicorn in this market. Certainty.
Pledged plans in place (try saying that three times quickly) mean that, across the value chain, we can set about making plans of our own. Supply chains are to be secured, equipment sourced, and materials lined up. There is, however, a question of the workforce. Who’s actually going to build the damned things?
There’s a plan for that, too.
A true skill issue
Let’s be real. Five thousand new apprenticeships will not magically resolve our workforce crisis. It is a start though, and a good one at that. The industry has been crying out for skilled labour for years. Now there is some real cash being put to it.
This is more than just keeping the lights on. It’s a step to future-proof our workforce. Those carrying the torch forward need to be armed to solve the problems of tomorrow - once they’re actually trained. But that’s a different conversation entirely.
Nonetheless, we should see this as a classic investment. This funding package is an investment ahead of the curve, and an investment of faith in the recovery of the industry. When the market recovers, which it will, it will be well armed.
And.. hold
The road to growth may not be paved with gold. There are undoubtedly potholes ahead. The growth trajectory may be slower than hoped. Strong economic headwinds and an unpredictable global market are unlikely to give us a free ride.
But slower growth is still growth. It just needs patience.
Even with an optimistic outlook, there are hurdles we’re still facing. The Building Safety Regulator, whilst fulfilling a vital role, needs to scale up – and quickly – to avoid being a constraint on growth. The building boom and much of the investment is primarily in housing, which do not currently fall under the watchful eye of the Building Safety Regulator, but if we are to view this as a catalyst for growth of other construction markets and the sector as a whole – building more houses will also increase a need in surrounding areas for schools, hospitals, office space - then we should keep the potential holdups in mind.
If we are, in the medium-term future, to scale up building, these holdups will become an increasing problem. Like running a marathon in flip-flops: no one gets anywhere with any great speed.
The cost of materials - and labour - is also a sticking point. With inflation creeping and material costs steadily climbing, and developers seeing increased levies, projects may be delayed due to failing ‘financial sense’ rules. Without creative solutions, we might find ourselves in a situation where we can’t start what we’ve promised.
In our view, none of these things are non-starters. Rather, issues that put the caution in cautious optimism. If you’re familiar with our work, you’ll know that there’s absolutely nothing we love more than to shoehorn in a pop culture reference under a dubious link to the subject matter. Consider this the long and winding road of Lennon and McCartney’s criminally underrated 1970 hit – it never disappears. Keep the faith.
Ready for it?
Markets may slow in the short term. But medium-term policies - housing, infrastructure, skills - will lay the groundwork for the second half of the year. When that growth comes, it will not be policymakers getting things. It’ll be us. Contractors. Builders. Specifiers. Suppliers. Our work has already started. We started laying the foundations long ago.
We know demand will rise. We’ll be ready for it when it does. Growth will take as long as it takes. The construction industry will take the responsibility on itself to prepare the workers and the goods for when it does happen. Headwinds are inevitable. Change can come by the day, across the globe. But this industry is resilient. Agile. Reactive. In the good and the bad.
So, when the building boom starts, will you be ready? We will.
Included because the pledged funding works out at £111,000/home. I checked the average cost to put up a new build. This it ain’t.
Latest stats I could find were from September 24, where Housing Today put them at £133k in the ‘easiest possible circumstances’, climbing up to £250k.
Thought this was worth including, but didn’t want to get into it - as we are a provider of said materials! Although the purse of the UK citizen is an avenue we could pursue here - lending policy, increased costs potentially pushing housing up, etc.
