A tough year for SME builders

Brian Berry of the Federation of Master Builders (FMB), takes a look at the barriers SME housebuilders have overcome in 2021, and the challenges that face them moving forwards.

The industry closes out another year with enquiries still high and workloads doing well, and it appears that the nation’s local housebuilders have tackled the pandemic head on. I should have expected no less as they’ve always been resilient in the face of adversity. It was 80 years ago that a small group of builders came together to create the Federation of Master Builder (FMB) as a means to give them a strong voice to win the contracts to repair and rebuild London’s homes from the rubble left by the Blitz.

SME builders, despite their long-running resilience, face market barriers. Small, local housebuilders have been producing fewer and fewer homes for some decades. In the 1980s, 40% of new housing stock was delivered by SME housebuilders. Now only 12% of new build homes are delivered by them. This ultimately means the diversity of housing has dropped and that new homes often aren’t reflective of their local area. I completely acknowledge that large scale developers play an important role. But, if the barriers for SME builders are lifted, we will see the delivery of a wider range of better-quality homes.

The major barriers for SME housebuilders

Significant barriers remain for SME builders to start to climb back from the 12% of new housing stock delivery they sit at today. According to the FMB’s latest House Builders’ Survey 2021, lack of available land affected 63% of SME builders. Small housebuilders use small, underutilised sites, but are often left out of local plans. Many builders have reported being aware of sites ripe for organic development, especially on the edge of settlements. What we need to see is the relevant authorities working together with industry, to properly identify these sites and ensure they are included in local plans.

Closely following site availability as a barrier to entry for SME builders is the long-running problem of the planning system, with 62% of FMB members reporting
it as an issue. The FMB have long called for greater investment in local authority planning teams. This would help add the capacity and enable faster turnaround times of applications.

Small builders are often faced with long wait times that delay sites and put a strain on the finances and resources. Beyond resourcing, planning teams need to communicate more effectively – which may be helped by digitising the process. In the same way we can track parcels, so we should be able to track planning applications. Not only would this alleviate uncertainty, but it makes the planning system more transparent.

An industry plagued by delays

Two issues at the top of the list as barriers for builders this year are a lack of materials and skilled labour. 62% were suffering from a lack of materials and 53% were struggling to find skilled labour. From our State of the Trade Survey Q3 2021, we have seen 89% of builders delay work to accommodate for a shortfall in materials and skills. The number of builders facing delays is shocking, and will certainly hamper any effort to ‘build back better’. What is needed is a comprehensive strategy to ensure our hauliers once again have the capabilities to move goods en masse, and transparent allocation of materials policies to help small builders access what they need.

Further exacerbating delays is the long running issue of skills shortages. It would be easy to see the exit of EU workers over the last few years and put two and two together. This does play a relatively significant role for some builders, who were reliant on EU labour. But also to blame is ‘decades of neglect’ to the UK’s training programmes for apprentices. The Government needs to put more resources into training the next generation of builders, to deliver our much-needed homes. The industry also has a vital role to play. We need to make sure that it’s an attractive and worthwhile career for school leavers to take up by breaking down stereotypes and showing the value a career in construction can bring.

Can Gove solve the housing crisis?

To tackle these obstacles, I’m optimistic that we may see pragmatic solutions from the new Secretary of State, Michael Gove, at the newly named Department for Levelling Up, Housing and Communities. Gove has long been seen as a ‘big thinker,’ known to hoover up information to solve the larger problems the Government faces. I hope this level of strategic thinking will be quickly deployed to tackle the long-standing issue of a lack of housing.

We’ve had a constructive relationship with the Department and Ministers; the Housing Minister, Christopher Pincher, has been very accommodating to the FMB over the past year or so, and I hope to see this spirit of co-operation reflected by the new Secretary of State.

Brian Berry is chief executive officer of the Federation of Master Builders (FMB).