While the UK construction industry has been buoyant of late, the Construction Products Association (CPA) has warned of a dramatic slowing in growth on the horizon.
In its latest quarterly forecast, it has adjusted its forecast for growth in construction output from 4.3% just three months ago to 2.8%. It said the revised forecast reflected the impact of global issues on the UK market.
While demand remains strong, two prevailing issues are labour shortage and product availability issues. The sector is also being affected by the impact of reverse charge VAT and IR35, the UK’s anti-avoidance tax legislation created to tax ‘disguised’ employment. Rising energy costs continue to be an issue, exacerbated by the war in Ukraine – which is also creating commodity shortages.
Noble Francis, CPA Economics Director, said: “Specialist sub-contractors are feeling the effects first, particularly those working to fixed-price contracts. For future projects, contractors will be forced to re-price, add fluctuation clauses and introduce risk sharing arrangement to deal with the uncertainty over potential cost inflation.”
Pressure to reduce emissions
A new report from the House of Commons Environmental Audit Committee (EAC), titled Building to net zero: costing carbon in construction, warns that emissions must be reduced in the construction of buildings if the UK is to meet net zero. It notes that the UK is lagging behind other countries such as The Netherlands and France when addressing this issue.
The EAC has recommended that the government introduces a mandatory requirement for whole-life carbon assessments for buildings. These assessments would consider the emissions from the building’s construction, maintenance and demolition, and the emissions from the energy used in its day-to-day operation.
Environmental Audit Committee Chairman, Rt Hon Philip Dunne MP, said:
“From homes to offices, retail units to hospitality venues, our buildings have a significant amount of locked-in carbon, which is wasted each time they get knocked down to be rebuilt, a process which produces yet more emissions.
“Ministers must address this urgently. Promising steps are being taken: for instance, the Levelling-Up, Housing and Communities Secretary of State recently paused the demolition and retrofit of Marks and Spencer on Oxford Street on environmental grounds.
“But much more needs to be done, and baseline standards for action need to be established. Mandatory whole-life carbon assessments, and targets to crack down on embodied carbon, provide part of the answer. Constructors and developers can then determine which low-carbon materials, such as timber and recycled steel, they can use.
“As in many other areas in the drive to net zero, the UK must have the green skills to make its low carbon future a reality. Before the summer recess in July, I urge the Government to publish a retrofit strategy and upskilling programme that can ensure the UK economy will have the green jobs necessary to deliver a low-carbon built environment.”
In the Queen’s Speech, the Queen said that “the planning system will be reformed to give residents more involvement in local development.”
This relates to the new Levelling-up and Regeneration Bill, which is currently making its way through Parliament. It proposes regulations that permit residents of a street to vote on whether a development should be given planning permission. Also on the bill is a requirement for local authorities to have a design code for their area, whose requirements need to be met before planning permission is granted.
The government has said that “thousands of new homes and jobs will be created in beautiful, green neighbourhoods across England, supported by £15 million government funding for garden communities.”
Housing Minister Stuart Andrew MP announced on Saturday May 22 that the Garden Communities programme will deliver up to 16,000 homes per year from 2025, driving growth across England, breathing life into 43 towns and villages and putting green, wildlife friendly spaces at the heart of new development.
New funding will regenerate three areas: Long Marston in Warwickshire, formerly a disused airfield that is now a vibrant, green neighbourhood will see 3,500 new homes being built, with a requirement for 35% affordable housing.
Halsnead Garden Village in Knowsley will deliver 1,619 new homes in Merseyside along with 22.5 hectares of land for new businesses. A country park will accompany wetlands and restored wildflower meadows to improve biodiversity.
West Carclaze Garden Village will support the delivery of up to 1,500 new homes, in an innovative, sustainable new community that promotes the health and wellbeing of its residents.
Stuart Andrew said:
“Building beautiful new homes in the places they are most needed lies at the heart of the government’s levelling up mission.
Garden villages and towns are perfect examples of the vibrant, green communities we want to see right across the country and today’s funding will allow us to work hand-in-hand with local leaders and industry to deliver the high-quality new homes that we need.
“Today’s investment brings total funding for the Garden Communities programme to more than £69 million, helping level up the country and regenerate communities, with most of the new homes situated in the North, Midlands and South West.
“It will also support nearly 200,000 jobs in the schools, shops and offices developed within each garden community, part of the government’s drive to help people secure good jobs where they live, grow the economy and tackle the cost of living.
“The programme provides support to progress long-term housing projects from their earliest stages. It enables local authorities to recruit specialist staff, undertake the required planning and receive advice and support from the housing delivery body, Homes England.”
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