Home Features FIS Manifesto: what can we hope for in the budget and beyond?

It was a relief to hear our new Construction Minister Nadhim Zahawi recommit to the policy direction outlined in the Construction Sector Deal. The document opens with: “Construction underpins our economy and society. Few sectors have such an impact on communities across the UK or have the same potential to provide large numbers of high-skilled, well-paid jobs.”

The deal looks at productivity across the UK and highlights skills, innovation, a pipeline of work and the business environment. When published, there was good industry buy-in and now we need to get on with it. Here are five priorities to help FIS members drawn out in this work.

1. Lead by example on fair payment
There have been too many league tables, unenforceable and unpoliced or toothless policies (eg the fair payment charter). Almost a third of all construction expenditure is awarded through local or national government. We now need government to lead by example. There should be no retentions (at any level in the supply chain) on public sector projects (or even projects where government is a key stakeholder). Contractors who endemically pay late and starve the supply chain of vital cash must not win work. At the same time we need to review the contractual environment, strike out unfair and overly punitive clauses (often excuses to pay late or at reduced levels) and ensure risk is
managed, not just passed on!

2. Lowest cost over best value procurement must stop
Grenfell shouldn’t have happened. Repeated warnings were ignored, standards and regulations overlooked and processes not adhered to. But it was nearly three years ago now and apart from a few tweaks and advice notes, the regulatory landscape hasn’t moved on. FIS continues to support the working groups and feed into reviews and consultations. Industry can lead, it will but until regulation underpins this, there will always be clients and contractors willing to cut corners at the expense of quality and safety. Change must be accelerated.

3. Review the responsibility that is building ownership
Tightening the building regulations will help to fix construction going forwards, but it does not address a legacy of neglect. This goes beyond construction and points at structural concerns in the way our building stock is managed in the UK. Inadequate upfront investment and a lack of foresight to accrue funds necessary to invest and maintain a building as an asset could not be better exemplified than when we look at the home of our own parliament.

Policies must be developed that ensure these vital assets are effectively managed, that the building functions as intended, while addressing sustainability issues (natural capital is locked up in materials that form part of a building and may or may not be recyclable or re-usable. We need to start recognising and recording this). This approach could be wrapped in a much-needed business rate review that rewards effective asset management and investment and ensures the building itself is effectively valued, not just the land and location.

Serious consideration should also be given to a building safety fund to address many concerns becoming evident through the Grenfell Inquiry. This could be levied through Insurance Premium Tax and kick start a much-needed investment programme that will improve safety, spare the public purse and overcome protracted legal wrangling that will ultimately force many firms without the means to defend themselves out of business.

4. Give us credit
A credit crunch in construction is constraining much-needed investment. Innovation such as offsite and digital solutions that will improve productivity (and sustainability) require capital investment.

The average pre-tax margin of the top 10 UK contractors in 2018/19 was 0.1%. This, coupled with the shockwave that the failure of Carillion sent out, has increased the perceived risk on the supply chain and limited access to credit. Where grants and support are available, they tend to favour huge projects, large enterprises, exports and blue-sky solutions. R&D tax credits are helpful but retrospective and don’t help raise working capital prior to investment. We must look at innovative models such as Carbon Trust loans and the Export Credit Guarantee Scheme to leverage more support for smaller contractors and suppliers through the Sector Deal. We need to be wary too of things that could undermine liquidity in construction further, such as the impact of reverse charge VAT.

5. Don’t starve us of talent
We often hear talk about parity of esteem for vocational education, but the system remains biased towards the academic over the practical. There is still no UCAS equivalent system for apprenticeships (of all levels). We need real support for FE colleges to run courses that lead to jobs and to reward employment rather than training outcomes. This needs to align to improved careers advice in schools and recognition for the importance of
subjects like design technology (it makes no sense that this is not considered a STEM subject). Government and the IfA need to do more to ensure apprentice vouchers accrued through the levy are ringfenced, easily traded and, where businesses paying cannot utilise directly, monies can be directed to investment in the training centres and resources needed to support the delivery of standards. In this way businesses are incentivised to drive profound change, work with providers and develop those vital links between industry and provision.

Finally we must be mindful of the need for a fair, balanced immigration system. Post-Brexit we still need to recruit from outside the UK for roles in shortage so the system must be based on the needs of industry not an arbitrary skill or salary threshold.

Why listen to the FIS?
Our Sector: The average building has more than 30-fit-outs and as a result around 10% of the UK construction sector (around £10 billion). Ultimately we finish buildings of all types, making them beautiful, functional, safe, healthy and sustainable.
Workforce: c 250,000 people

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