With responsibility for risk assessment shifting from government to employers, firms have a lot on their shoulders
We have entered an uneasy stage in the relaxation of covid restrictions and attempts to push on with economic recovery. From today the advice to “work from home if you can” will end, but in a somewhat mixed message the government says it does not want us all rushing back to the office at once. Instead, it wants a more gradual return. Still, 19 July, or “freedom day” as it was once confidently dubbed, shifts responsibility for assessing the risks from government to employers. Not surprisingly, the firms we spoke to are considering their options carefully, weighing up the desire for more productive teams against the prospect of a staff backlash.
Similarly, construction’s recovery appears to move inexorably forward – and yet there are jitters. The ONS’s latest GDP figures show the sector’s output in the three months to May grew 6.3% compared with the previous three-month period, but output just for May dipped 0.8%. While heavy rain was partly to blame, it was also seen as a sign of a stalling recovery in the face of materials and labour shortages.
Firms are saying it is becoming increasingly difficult to price jobs, and companies that are locked into fixed lump-sum contracts have been caught out by rising prices, and feel they are now left carrying all the risk.
You know it is serious when Andy Mitchell wades in with an open letter to the industry appealing for collaborative working, as he did last week. Let’s hope the CLC’s suggestion for “fluctuations provisions” in contracts is taken up, but the pessimists – mostly lawyers – are already warning that an increase in legal disputes looks inevitable.
Construction firms clearly feel life would be much easier right now if the government stepped in and helped with labour market shortages. Hauliers in particular urgently need to ensure materials get to site, and other key trades would also benefit if immigration rules were relaxed, even temporarily.
But the harsh truth is that the industry has to help itself by not dumping risk on those least able to shoulder it. Kier’s Andrew Davies in his interview with Building has some very sound advice on this point: “Don’t take unfair contract terms; run your programmes correctly; don’t accept a bid unless you know you have the capability to … turn it into a building that is contractually and operationally safe.”
Construction firms clearly feel life would be much easier right now if the government stepped in and helped with labour market shortages
While immigration policy is one area the industry may wish government would change tack, planning policy seems to be on the verge of an about-turn. The Chesham and Amersham by‑election defeat to the Lib Dems has changed everything. Whereas last year the prime minister set out a vision of a whole new planning system, now the housing secretary is much more cautious, rejecting the idea of ripping it all up and starting again. So, what reforms can we expect? A fast-changing political backdrop makes it difficult to predict, but the experts we spoke to suggest that controversial “zonal planning”, which would give automatic outline planning permission, will not stay, and there is also doubt over binding housing targets on local areas, plus the idea of a flat-rate developer levy could be subject to change.
All of which suggests that while there has been much tough talk on planning, the action gets diluted when the political stakes are too high.
Another tricky area to tackle is building safety. The government did finally unveil its Building Safety Bill this month, and it was widely welcomed for reversing decades of deregulation and setting out a national regulatory regime for high-risk residential buildings. This is a hugely significant piece of legislation, ushering in a new building safety regulator and three gateways, or checks, that projects must pass to progress further. These, and other measures, it is hoped will prevent a disaster such as the Grenfell fire ever happening again in new buildings that come within the bill’s scope. There will of course be increased costs for the residential development sector in moving to this new regime – the government’s own impact assessment says it will amount to more than £3bn over the next decade.
But the big problem for the government, and the industry, is that the Building Safety Bill as it stands in no way adequately addresses the safety defects in existing buildings. Extending the period of time leaseholders can lodge claims for defective work has been dismissed by many campaign groups as pretty useless unless it comes with more financial support. So far the government has stumped up £5bn in its building safety fund, but this is limited to cladding defects in buildings over 18m, and the total cost of putting right all the problems has been estimated to be more than £15bn. The proposed £2bn developer levy, while helpful, does not cover the shortfall.
This is a messy and expensive problem that needs to be tackled head on, and perhaps backbench MPs’ amendments to the bill will seek to do that. It would be wise for government and industry to listen to their critics on this one – otherwise they face ongoing reputational damage associated with dumping the risk on those least able to pay the price.
Chloë McCulloch is the editor of Building