COMMENT | Tackling housebuilders’ growing pains

David Brigden of Lloyds Bank

David Brigden of Lloyds Bank

While the pace of housebuilding is generally acknowledged to be improving, there remains much discussion about how it can be accelerated to match demand, writes Dave Brigden, senior manager in North West Property SME Banking at Lloyds Bank.

In order to inform that dialogue, it’s important to constantly enhance the industry’s insight, and commissioning research is an important part of that.

This year, we published our first ever report on the UK housebuilding sector, Building for Growth, which analysed the state of the industry today, and the opportunities and challenges it faces in the future.

We spoke to those in the housing supply chain, from SME contractors to major national developers, and a key issue for them was the sector’s skills shortage – not only on individual firms, but also on national housebuilding rates and the UK economy as a whole.

According to the report, there are a number of key issues preventing the effective tackling of the housing shortage, including slow planning decisions, public opposition to development and lack of skilled workers.

Skills pay the bills

Indeed, a quarter said the skills shortage is the biggest challenge currently facing their business. More than a third said there is a lack of suitable candidates to fill existing and new jobs.

Housebuilders told us that the skills shortage is most acute among electricians and site managers, with project managers, quantity surveyors and architects following closely behind – reflecting the supply chain-wide nature of the problem.

They are taking steps to redress the balance, with 31% prioritising investment in recruiting apprentices to increase the pipeline of talent coming into the industry.

We are doing our bit too, with the £100m Government-Lloyds Banking Group Housing Growth Partnership, which is designed to help SME builders fund new projects, allowing them to recruit and train the skilled workers that are vital to the prosperity of the sector.

So let’s not get too bogged down in pessimism.

The bright side

Clearly, though housebuilders are very concerned about the barriers preventing them from playing a role in alleviating the housing shortage, they remain optimistic about their prospects, with respondents giving an average score of seven out of ten when asked to rate their confidence in the future success of the UK housebuilding industry.

In the next year, 87% want to create new jobs, which could mean the creation of more than 100,000 new housebuilding roles.

Expansion in existing regions is seen as the number one way of achieving growth for housebuilders, with more than a third of respondents rating this as an opportunity.

We all want to see a sustained supply of good quality new homes that will meet the needs of the nation.

he government has taken steps to address issues with the planning process, and devolution will also help by putting decisions in local hands.

In the autumn statement the housing budget was doubled to £2bn a year, in an attempt to deliver 400,000 new homes by the end of the decade.

The housebuilding sector now has a more supportive policy environment than it has for some time, coupled with low interest rates, low inflation and lower commodity prices.

It’s time for the industry to start building some momentum.

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Its time the house building industry revised their attitude towards planning and recognised it as a driver of economic growth rather than a barrier

By PNW reader

I also think the industry would not face such big such skills shortages if their business model was less short term and cyclical, dependent on subcontractors and casual labour to see them through the good times.

Of course taking more production in house, smoothing out production cycles, and employing more permanent, skilled staff would make their shares less appealing to investors in whom Lloyds Bank, through the breadth of their activities, will naturally have a large stake; and increasing output would make mortages a less appealing proposition for banks with, again, Lloyds Banking Group being amongst the biggest providers.

All banks and City institutions have a major stake in ensuring housing supply remains constricted and prices continue to rise. So forgive me if I take Lloyds Bank’s ‘research’ and claims to be concerned about housing supply with a pinch of salt!

By PNW reader

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