With an election on the horizon, Daniel Gayne spoke to the leader of the representative body for construction SMEs to get his thoughts about the choices on offer 

Brian Berry FMB

Brian Berry has been chief executive of the FMB since 2012

Brian Berry is not impressed. We are less than a year away from the next general election – hell, it could be just a few months – and what the major parties have to offer to his constituency is less than satisfactory.  

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On the one hand there is the Conservative government, long in the tooth and offering much-wanted engagement far too late in the day. On the other, there is the opposition: a Labour Party that appears to be more interested in courting big business than giving SMEs a hearing.  

So, what is it that the chief executive of the Federation of Master Builders (FMB) wants, and why won’t the politicians give it to him? 

Berry can tell you in a line: “We need to build more homes and we need to improve the ones we have.” Not much to disagree with there as far as either of the parties is concerned, but it is the manner and speed with which these goals are delivered that concerns him.  

On retrofit, Berry says the government’s record has been “very disappointing” and implores the next administration to treat the issue as a national infrastructure project. “I would be saying, We’ve got 28 million homes, how are we going to address that’?” he says.

“What incentives are we going to put in place to encourage that? How are we going to upskill the workforce to make sure we’ve got competent people to do that work? What regulations or penalties will we put in place to shape the market in the medium to long term to make sure we bring properties up to required EPC?” 

The FMB’s own surveys suggest that consumer demand is low because people lack information, and Berry says this requires government intervention. He argues that the current administration’s approach of focusing initial retrofit investment on social housing – an area where it can achieve change at scale – in order to build up a market makes little sense.  

The problem, he explains, is that “those companies doing that retrofit work aren’t the sort of companies that are often doing repairs, maintenance, home improvements in the owner-occupied sector”.

Local authorities typically contract much larger companies to carry out retrofit schemes, whereas in the owner-occupied sector, where properties are typically more unique, smaller companies, which might employ no more than five or 10 people, are usually carrying out the work. 

“Of course, you are going to get some transfer of skills but maybe not on the scale needed within the time that is needed,” he says.

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Source: Shutterstock

According to Berry, Labour was a better friend to small builders under Jeremy Corbyn (right) than under his successor Keir Starmer as party leader

I suggest to him that a national push towards retrofit could benefit big contractors more than SMEs. He agrees that a future government would “need to guard against that” but that smaller firms will be essential to achieve the capacity necessary.

“We need to bring in all the contractors because we’re going to need lots and lots of them to do 28 million homes,” he says. 

On the other side of the political aisle, Berry expresses frustration at the Labour Party’s decision to row back on its “encouraging” commitments to create a low carbon economy. While Ed Miliband had once positioned himself as an energetic would-be energy secretary ready to carry out a green revolution in the UK, his party leadership’s allergy to expensive, attention-grabbing policymaking, has led to a decline in ambition.

A plan to retrofit 19 million homes over the course of 10 years has been reduce to five million, while the party’s pledge to invest £28bn in the green economy has been halved.

On housebuilding, too, Berry is concerned about the opposition’s direction of travel. He notes that, despite their reputation as rabble-rousing anti-capitalists, Jeremy Corbyn’s leadership team engaged positively with small businesses in the construction sector.

Any market that becomes more and more contracted, it’s not good for consumers

“John McDonnell was a good friend of the FMB and stood up and spoke about the value of the building industry and small builders,” he says. “You hear less of that from the current Labour front bench. My impression is that they are engaging with larger businesses, trying to work with big institutions and the City.”

By contrast, Berry says there has been “poor engagement, particularly on housing with SME builders”, and he is concerned that this could feed into Labour’s approach to increase housebuilding. He says a strong role for SMEs in housebuilding will ensure diversity of design, protect against “poor consumer choice” and help to level up deprived parts of the country.

“SMEs are really important because they are generating economic growth in every town and every village, so any government that’s looking to spread regional economic growth, should be focusing on SME housebuilders and also retrofit because that would actually get the money away from London and the South-east to every part of the country.”

He notes that the recent deal between Barratt and Redrow, the biggest and sixth-biggest housebuilders in the country respectively, is proof of how concentrated the sector has become. “Any market that becomes more and more contracted, it’s not good for consumers.

“We know from the Competition Markets Authority report, there have been some unhealthy suggestions about pricing,” he says, noting that he was not surprised by the findings of the regulator’s recent market study.  

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Source: Redrow

The housebuilding sector has become progressively more concentrated over the past few decades, with the big deal between Redrow and Barratt Homes the latest example of M&A activity

“I think it’s good they recognise that the market isn’t working as it should do,” he says, while suggesting that the report should have recognised the difference between SMEs and micro-SMEs.

“A lot of small and very small companies and micros will do home improvements and have extensions. Then they might build one house and then, if the market conditions are right, they will build six,” he says. While policies such as Help to Buy have benefitted larger SME housebuilders, he claims the complexity of the system means micros do not reap the benefits.  

Planning, he says, is the policy area where the difference could be made, suggesting that more small sites be allocated in local plans and funding for planning departments be increased. “For larger companies, [planning delays] are still a problem, but for a small one, it will put you off because it creates cash flow problems if you’ve got to wait months to get the application through,” he says.

“There hasn’t been one SME that has grown to become a major housebuilder in the last 25 years,” Berry adds. “The market is effectively broken”  

In order to build more homes and improve the ones we have, there is another policy area that will require attention: skills and training. “We have got a big challenge in our own industry about standards, which is something the FMB has been a strong champion of over many years.

Berry wants the next government to introduce mandatory licensing for general contractors as a way of pushing up standards in the sector. “The fact that anyone can be a builder is not helpful to the reputation of the industry,” he says.

“Consumers often think of the building industry as associated with cowboy builders and poor standards – it becomes entertainment on TV when things go wrong. We need to redress that.” 

[Licensing] is not going to wipe out the industry, it will knock out those that shouldn’t be in the industry

While more than three-quarters of FMB members support licensing, I put it to Berry that licensing could cause an exodus of other workers from the sector, as it reportedly has within the building control profession. He does not dispute this but argues instead that improving standards will attract a larger and more diverse workforce in the long run and create demand for improved vocational training across the country.  

“I think it will be positive overall,” he says. “Those companies that are not meeting standards will drop out, so you could argue when you’re declining an already shrinking base, but actually I think it will do a lot to attract other people to come into our industry and start their own business”.

He points out that the number of women on the tools has not really increased since he has been involved with the FMB and that the industry continues to have trouble attracting people of colour. “[Licensing] is not going to wipe out the industry, it will knock out those that shouldn’t be in the industry,” he adds. 

For Berry, licensing must go hand in hand with an improvement in support for vocational education. He says the UK is “playing a long game” in catching up on training skilled constructin workers, particularly in the south of the country.

“I think what’s happened in London and the South-east is, going back over the last 20 years or more, there has been a reliance on migrant workers and EU workers to fill the gaps without feeling the need to train people,” he says. “The government has supposedly tightened up on immigration and so we’re struggling to find enough people. Now we’ve got to train people in this country. That’s a good thing.” 

But, so far, he has once again been unimpressed by the record of policymakers. Despite Gilian Keegan’s supportive rhetoric, Berry says having a former apprentice as education secretary has “not particularly” improved things.

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Source: Conservative Party

Despite her experience as a former apprentice, the appointment of Gilian Keegan as education secretary has not changed much on the issue of skills

“What we have seen in recent years is talk about boot camps and shared apprenticeships – these are sticking plasters. We need fundamental reform to ensure we’ve got high standard apprenticeships that are robust and that are available to more people across the country.”

He says he wants to see a wholesale review of the UK’s training landscape, as well as significantly more funding for colleges of further education.  

While the predicted date of the election seems to change daily, it is clear that both parties are getting prepared. Berry says he was recently emailed by the Conservative Party asking him to submit the FMB’s suggested licensing policy to their manifesto team. “You think, gosh, it’s a bit late in the day, you could have actually done a lot of what we’ve been asking for – so that’s a bit rich, but anyway, at least they’re opening up and reaching out,” he says. 

By contrast, engaging with the opposition has been a little more challenging. “My impression of the Labour Party is it has become more closed […] I’m hoping that Labour will engage, but we need to be doing it now.

“A good example is retrofit. What are the standards they’re going to use? Are they going to use the PAS2030 standard? How are they going to get the workforce up to speed in that time? I worry that, if they form the next government, there won’t be the workforce there to deliver because we haven’t spent the time engaging about the next steps.”  

It could be June or October, or even next January, but whenever the next election is, time is running out fast for the big parties to get small builders on their side. 

Election focus 

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As thoughts turn towards the next general election, the UK is facing some serious problems.

Low growth, flatlining productivity, question marks over net zero funding and capability, skills shortages and a worsening housing crisis all amount to a daunting in-tray for the next government.

This year’s general election therefore has very high stakes for the built environment and the economy as a whole. For this reason,

Building is launching its most in-depth election coverage yet, helping the industry to understand the issues in play and helping to amplify construction’s voice so that the government hears it loud and clear.

We kick off this month with a three-parter looking at the state of play across three key topic areas.

Building is investigating the funding gaps facing the next government’s public sector building programmes, looking at the policy options available to the political parties. 

In the coming months our Building Talks podcast will focus on perhaps the hottest political topic: the housing crisis. The podcast will feature interviews with top industry names who side-step soundbites in favour of in-depth discussions.

As the main parties ramp up their policy announcements, we will keep you up to date with their latest pledges on our website through our “policy tracker”.

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