A difficult picture for SMEs

Brian Berry, CEO of the Federation of Master Builders (FMB) takes a look at the challenges facing smaller builders this year, and what the Government can do to help.

As the lockdown gradually lifts, and a semblance of normal life returns to our communities, small housebuilding companies must be at the heart of the Government’s plans to help us build back better – and greener – from the coronavirus pandemic.

The pandemic has shone a light on the fundamental role that our homes play in supporting our work, education, health and livelihoods. The housing crisis cannot persist if we are to be more resilient and adaptive to a new situation where more hours are spent at home in the future. This means that the Government must take decisive action now to once and for all address the shortfall in the delivery of new build homes by unlocking the potential of the SME housebuilding community.

Action is all the more urgent as the latest data from the Federation of Master Builders (FMB) State of Trade Survey (the only survey of its kind to track the experience of SME firms in the construction industry), found that small housebuilders are struggling to bounce back after a difficult year.

In Q4 2020, one in three builders reported lower workloads compared to the previous quarter, and two in five reported no change, indicating a sluggish recovery for Britain’s local builders. Indeed, respondents active in the housing sector reported contracting workloads and enquiries in the winter months. At the same time, 82 per cent reported sky-rocketing material prices and costs as global supply chains have limited supplies of key building materials. Furthermore, necessary social distancing requirements on site have led to lower productivity levels and longer build out times for new homes.

The FMB welcomed the Chancellor of the Exchequer’s decision to listen to industry representatives and extend the Stamp Duty holiday by three months at the Spring Budget, to ensure that consumers did not miss out on their dream homes because of factors outside of small builders’ control. We also welcomed the announcement of guarantees on 95 per cent mortgages to keep the aspiration of home ownership alive for more people.

However, what was missing was a cash injection for local authority planning departments, whose recent struggles with resources during the pandemic came on top of more than a decade of budget cuts. My members report that they typically wait a year for a determination on a non-controversial planning application on a small site. This must not continue if we are to build the homes this country needs, and at an organic pace in existing communities.

The State of Trade Survey also found that one in four builders were struggling to hire bricklayers and carpenters, and as activity ramps up again across all the sectors in construction, I fear that the long-standing construction skills shortage will once again rear its ugly head, and constrain the output of SMEs looking to build high quality, beautiful homes.

This concern is further compounded by the decline in construction apprenticeships, with recent figures from the Department for Education showing that there were 3,000 fewer starts in the sector in the first part of the 2020/21 academic year, when compared to the previous year.

SMEs are at the heart of reversing the decline in apprenticeships, as they train 71 per cent of tradespeople in the industry, including the majority of bricklayers. However, builders need more support from the Government to train. Ministers should bring forward plans to give local employers a greater voice in skills plans, and help builders and colleges to work more closely together and identify opportunities for young people coming into the industry.

There has never been a more urgent time to provide opportunities for young people, and I’m calling on my members to do what they can at this difficult time and provide training in whatever form they can.

I paint a difficult picture for the UK’s SMEs, a year on from the start of the pandemic, but true to their characteristic resilience, I know that local builders across the country will be adapting their business, and innovating their methods to provide an even better service to our local communities. I’m now calling on the Government to back builders and help them to what they do best.