A round up of the sector's biggest news

28 September 2021

It’s been a busy few months for the Construction & Built Environment Sector and here is our round up of some of the biggest news to hit the sector in recent months…

UK construction output growth surges to two decade high

In July, it was reported that UK construction output growth reached its highest level for over two decades, according to IHS Markit/CIPS.

Sharp rises in business activity across the three main sectors (housebuilding, commercial and civil engineering) of the construction industry drove the over two-decade high expansion.

This news will be of no surprise to anyone in the sector, the question is how long will the growth continue..?

More employee ownership activity in the sector

 Purcell Architects, with studios in the UK, Hong Kong, and Australian, became the latest AJ100 practice to convert to an EOT.

Mark Goldspink, CEO, commented ‘It’s an exciting time for Purcell as we move to an employee-owned structure. This move now outlines the plans we have for the future strength of the business and our ability to continue delivering excellent design and consultancy to our clients both now and in the future.

Fortus are seeing an increase in activity in this area so please do get in touch if you want to speak to one of our corporate finance team about EOTs, or click here to read more about EOTs in the sector. 

Moral dilemma over furlough payments and dividends

Skanska UK confirmed in July that it wouldn’t return more than £4m in cash claimed for furloughed workers, despite paying its parent company £32m to reward private investors.

A spokesperson for the leading contractor said the ‘business had topped up the salaries of lower paid staff to 100%, supplied office and IT equipment to staff working at home, provided extra paid leave for those caring after dependents and gave all staff an extra day off’.

Other leading contractors, including Morgan Sindall, Balfour Beatty and Galliford Try, have committed to repaying their furlough cash whilst others like NMCN, TClarke and VP have said they will not.

What would you do?

The soap opera continues at RIBA

The damaging rift between outgoing RIBA’s president, Alan Jones, and the institute’s chief executive, Alan Vallance continued.

Jones resigned from the RIBA’s board in July, saying he couldn’t back moves by the board to renegotiate the more than £250,000-a-year chief executive’s contract at the end of his five-year term this September.

Jones is understood to be angry that the ‘serious allegations’ he made about Vallance’s conduct in February last year haven’t been fully and independently investigated. The nature of the allegations, which Vallance is disputing, have yet to come to light.

Revelations about the long-running dispute between the institute’s chiefs has shocked many of its members and prompted calls for the RIBA to open up about the damaging incident and more generally.

Some of the more brutal quotes include:

“RIBA carries the risk of damaging its and architects’ reputation permanently if it cannot manage itself properly”

“The RIBA is becoming an increasingly secretive organisation”

“Senior officers seemed to think that delegated authority comes with some sort of invisibility cloak”

“Confidentiality has been weaponised and woe betide anyone who wants to ask difficult questions”

Tune in for the next episode shortly…

The sector’s being hit by a spiralling costs crisis

The construction industry’s facing a 10% increase in the cost of materials over the next year as it struggles to meet demand for housing and infrastructure projects, a survey’s found.

In the Royal Institution of Chartered Surveyors’ quarterly survey of about 500 construction professionals, 82 % said that a shortage of materials was hampering the market in the second quarter — the highest level since the survey began in 2012.

Nearly two thirds of respondents also identified issues around labour shortages, with respondents citing a worsening scarcity of bricklayers and carpenters. From a complete lack of lorry drivers to transport materials, also exacerbated by the ‘pingdemic’, this has piled on additional pressure to construction projects.

How will this end up? We’re interested to hear your thoughts, so let us know what you think

Time limits

Despite numerous Government reports over the years finding no evidence that developers were deliberately hoarding land (on a widespread scale) the Government revealed plans to place time limits on building on land with planning permission.

Unsurprisingly, the large housebuilders weren’t happy.

Pete Redfern, chief executive of Taylor Wimpey, said it was ‘frustrating’ that proposals were back on the agenda after a series of government-commissioned reviews had warned of the downsides of the policy.

Redfern said: “We have no sites that we aren’t progressing. Every single site we have, we’re trying to build on, yet we’re taking it through the planning system.” He said that Taylor Wimpey could not build on some sites because of additional issues, such as achieving approval to lift a tree protection order or getting through other pre-conditions.

“It would be far better for people to spend the time understanding what the barriers to development are,” he said. “The market’s good, we want to be building and developing our sites. We never sit on sites, even when the market has been very tough. We have an awful lot of capital tied up (in sites) and it would make no rational sense for us to sit on a site.”

There’s definitely two sides to this argument…