The Building Cost Information Service is calling for the Government to do more to support the construction industry, ahead of the Autumn Statement.
BCIS data forecasts that new work output will not return to growth until the end of 2024.
Here it outlines the measures it would like the government to introduce to help the industry navigate these challenges, while also supporting it to reduce carbon emissions in the built environment.
- Requirement for whole life carbon assessments on all new and refurbishment projects
- Review of planned maintenance programmes for all public sector buildings
- Clarification of a national retrofit policy for housing
- Strategy for increasing public rented housing supply
- Publication of, and commitment to, a transparent infrastructure project pipeline
- More support for contractors at risk of insolvency
- Commitment to a strategy that will plug the skills gap, in support of the green agenda and transition to net zero
The enthusiastic response to the launch of the Built Environment Carbon Database (BECD), from all sectors of the construction industry, confirmed there is an appetite and a strong desire to reduce embodied carbon emissions in the built environment, one of the biggest contributors to the climate emergency.
Poor data quality combined with the lack of standardisation and transparency in reporting practices are acknowledged as major barriers to a wider uptake of carbon assessments in the built environment. The BECD is the first step to addressing this.
James Fiske, CEO, BCIS said: “Although we’re willing to take the lead, we can’t operate in a vacuum. Currently, it is not mandatory to report Scope 3 emissions, which take into account all the embodied carbon emitted throughout the entire lifecycle of a project or development. We need the government to demonstrate that the climate emergency is at the top of its agenda, with policies that prioritise carbon reporting and don’t renege any further on net zero commitments.
“We urge the government to require whole life carbon assessments, as part of the procurement process, on all new publicly funded projects, and to encourage and incentivise funders and developers to do likewise.
“This will help to keep sustainability and decarbonisation at the forefront of everyone’s mind in the industry. They could also foster a more collaborative approach that advocates sharing carbon data for the benefit of everyone in the industry, as well as reducing our impact on the environment.
“We also want to see more investment into creating materials that are more sustainable and emit less carbon throughout their lifecycle. This may result in higher capital costs initially but the long-term savings for both the industry and the planet are worth it, in our opinion.”
Planned Maintenance
Lifecycle costing is integral to reducing costs over the lifespan of a building. The process involves choosing designs and materials that will require less maintenance and are more sustainable – over the long-term this will save costs and ensure less carbon is produced throughout its lifecycle.
The Reinforced Autoclaved Aerated Concrete (RAAC) crisis has exposed what can happen when the lifecycle and maintenance requirements of materials and components – which could have been considered at the outset of a project – are not incorporated into an ongoing schedule of maintenance.
As the Department for Education continues to face an ever-growing repair and maintenance bill, it’s also emerged that RAAC may not even be the top concern – back in 2020, National Audit Office identified Mechanical and Electrical services as ‘elements with the highest condition need’.
Meanwhile, the maintenance backlog continues to grow in other public buildings, including hospitals. The latest release of the Estates Return Information Collection (ERIC) data from NHS Digital shows that the cost of the maintenance backlog in the NHS estate continues to rise, with over half of the total outstanding capital maintenance constituted as 'high' or 'significant risk'.
Dr David Crosthwaite, chief economist at BCIS said: “The safety and upkeep of our public buildings should be of paramount importance to our government, not least because they’re inextricably linked to the health and wellbeing of the people who occupy and live in them.
“While we welcome steps that the government has recently taken to improve building safety in its recent updates to the Building Safety Act, we urge the government to mitigate the risk of buildings falling into a state of disrepair.
“It is essential that the government work with, and support, our sector by investing in lifecycle costing, and appropriately funding ongoing repair and maintenance, for all new work and existing structures across the public sector.”
National retrofit policy for housing
The UK has one of the largest housing stocks that pre-dates 1948 in the world. If the government is as committed to hitting net zero by 2050, as it claims to be, it needs to define and implement a national retrofit strategy.
Energy efficiency retrofit of the existing built stock may well provide a boost to the economy, but a credible medium-term plan for growth is desperately needed.
Public rented housing
Local authorities should be allowed or, better still, incentivised to start building council houses to meet the need for houses from their population.
These could be funded by allowing the authorities to borrow or by building some houses for sale on their developments.
Allowing local authorities to identify the demand, and the location of the supply, may ease planning constraints, argued BCIS.
Government could develop its own land and employ builders to build, rather than selling it to allow developers to develop. Aside from benefiting from the sales, they could use these to produce houses for rent.
Transparent project pipeline
The infrastructure sector, upon which much of the near and mid-term construction forecast growth is reliant, urgently requires clarity and a plan for delivery.
While the government’s own National Infrastructure and Construction Pipeline (NICP) is not legally binding, it does provide a view of forward planning, enabling industry and contractors to plan and invest effectively. The NICP has not been updated since September 2021.
Dr David Crosthwaite, chief economist at BCIS, said: “Unfortunately, ‘illustrative’ plans such as Network North (announced in the wake of the HS2 cancellation last month), serve to obfuscate an already uncertain outlook, as it includes projects already built or funding previously allocated.
“Infrastructure empowers wider macroeconomic growth, which is much needed in the UK. A defined pipeline, with clear timescales, will foster this.
“It will also enable the UK to decarbonise more effectively, to meet its net zero requirements, and begin to deliver on the government’s own levelling up ambitions.”
More support for contractors at risk of insolvency
Soaring inflation, high interest rates, volatile materials and labour costs have all contributed to another tough year for construction, that’s contributed to a disproportionately high number of insolvencies in the industry - construction firms accounted for 17% of all insolvencies in England and Wales in August 2023, warned BCIS.
In the year to August 2023, the total number of construction firms becoming insolvent was 4,263, an increase of 8.3% on the 3,938 insolvencies recorded in the year to August 2022, and a 32.5% increase on the 3,218 in 2019.
Dr David Crosthwaite, chief economist at BCIS, said: “If these annual increases aren’t curbed, the impact on output across all sectors of construction could be dire.
“Although we applaud the government backing of initiatives that the Construction Leadership Council (CLC) continue to lead on – such as the Duty to Report Regulations, which aims to improve payment practices within the industry – we are disappointed by its decision not to back a measure to make Project Bank Accounts (PBAs) mandatory for public projects worth more than £2m.
“Mandating PBAs would help to ensure prompt and full payment from a neutral, client-controlled bank account and protect small construction firms at risk of insolvency. We urge them to reconsider mandating PBAs and extending the practice more widely to the private sector.”
Commitment to a strategy that will plug the skills gap, in support of the green agenda and transition to net zero
Earlier this year, the Construction Industry Training Board (CITB) estimated that an additional 224,900 workers are required to meet UK construction demand between 2023 and 2027 (44,980 per year).
Although the government has attempted to tackle this problem, most notably with the addition of construction labour categories to the Shortage Occupation List (SOL), it’s unlikely to have a long-term impact, until several crucial areas are addressed, BCIS cautioned.
Dr David Crosthwaite, chief economist at BCIS, said: “Aside from the roles outlined in the SOL, the government needs to invest in training and apprenticeship schemes that are focused on more specialist skills, especially mechanical and engineering.
“This will help to attract emerging talent who are motivated to contribute to the green agenda and achieve the country’s wider net zero aims – a move that's essential if the government is serious about investing in decarbonising technologies and retrofits.
“Equally, we need a workforce that has the skills required to carry out calculating and reporting carbon emissions – our recent industry survey found that just 16% of respondents, representing the breadth of the construction industry, feel adequately trained and supported to do this.”
The recent news of the government’s Energy Act is encouraging, BCIS added. Its core aim is to meet Britain’s energy demands through targeting renewable energy projects that will facilitate the country’s transition to a net zero energy system and also help to boost domestic growth.
But BCIS said the government needed to act now to ensure we have an adequately skilled workforce to achieve this.
