Interview with Mark Farmer
Almost a year after he published his highly influential review of the UK construction labour model, ‘Modernise or die’, Mark Farmer will deliver an update on the progress made since then at the Build4Quality conference on 21 September 2017. We spoke to him about some of the key issues around housebuilding – quality, quantity and skills.
Report from – Tom Harvey
It’s been said that there is now a real opportunity for raising the quality of housebuilding in the UK – would you agree with that?
Yes, I would. Housing quality is in the spotlight at the moment, with a strong and growing consumer backlash against poor quality construction in the housing sector. Some recent well publicised examples of poor work by certain residential developers have boosted the push for something better.
We are seeing a new wave of consumerism, with purchasers using social media to launch campaigns that are then propagated in the press, not only about the poor quality of new build housing, but also the ineffectiveness or limited coverage of warranty systems in the UK that are now seen as failing to protect consumers. This increased awareness of poor quality comes at a time when new build housing is more expensive than ever and housebuilder profits have been growing, making the debate hugely emotive.
Along with quality, of course, is the issue of quantity - why aren’t we building enough houses in this country?
It’s a very complex issue with several different facets, but many people have spoken about land availability and the planning process as the key constraints to the number of houses built each year. I don’t agree with that view.
I think that the fundamentals of the economic model used in the housebuilding sector is far more important in determining the number of homes built in the UK. This model is designed to enable housebuilders to sell homes at a pace the market can absorb, while safeguarding their profits. No private housebuilder is going to flood the market with homes if that puts the profitability of their business at risk. And the more dependent on private housebuilders we become for new homes - rather than public sector agencies such local authorities and housing associations - the more this model has affected the pace of overall UK housebuilding.
An added complication, particularly in the last few years, is the growing skills crisis in the construction industry. This means that housebuilders who do want to increase the rate at which they build homes may not be able to because they can’t access enough of the skilled workers they need – and if they do try to build at a faster rate without the appropriate level of skills, we are back to the issues of poor quality construction we discussed earlier.
So, we must have more public funded housebuilding?
Yes, as part of a wider strategy to diversify the market as identified in the Governments’ housing white paper ‘Fixing our broken housing market’. You cannot force the private sector to build homes at a faster rate than they are comfortable with - you can’t intervene in that market.
But there are ways in which house building rates can be influenced. Greater government intervention is one - for example through a programme of directly building affordable homes either in partnership or otherwise. This could involve directly commissioning the construction of homes on central government controlled land. As the ultimate client, government can build these homes at a quicker pace, as it intends to do via the Accelerated Construction Programme for instance. Another government tool available is the affordable housing programme, which can be used to help affordable housing providers and housing associations build more homes. But even that sector is now linked more to the private housebuilding model in that many housing associations are reliant on selling homes to cross-subsidise their core business. So there are limits on how many units you can drive through affordable housing.
Probably the biggest opportunity for increasing housebuilding rates through market diversification is the promotion of the large scale private rented sector or Build to Rent as it better described. There is new capital wanting to come into the UK market to build housing assets and hold them for long-term rental income - the rate at which those units can be rented is much faster than that at which houses can be sold. I think the Government should promote and incentivise the build-to rent sector, which could have a big part to play in getting housing numbers up.
You mentioned the skills issue - how important is digitalisation to the industry, and to attracting new talent?
I think the full digitalisation of construction is vital and can be a massive enabler of change. We are not going to get a modern construction sector unless a digital process forms the backbone of the industry.
When it comes to attracting people - young talent - into the industry, it goes without saying that we must embed digital into the way we all work. This means not just designers using 3D models, but also manufacturers of components and the onsite construction workers – everyone in the industry. These jobs must be technology enabled to make them more attractive to kids who are growing up with digital all around them. There’s a generational shift happening that the construction industry must fully wake up to if we are going to attract the talent we need. The fact is we are facing growing war for this talent against industries better positioned to appeal to the younger demographic.
You are delivering the keynote speech at the Build4Quality Conference – what are you going to talk about?
I’m going to give an update on the progress that has been made since the publication of my review, ‘Modernise or Die’, nearly a year ago. I’ll be covering some of the key related milestones and broader anecdotal evidence of change that is taking place and linking that to the debate around quality. In my review, I focused on innovation and skills, and the attainment of quality is, I believe, inextricably linked to both of these themes.
Looking back to the beginning of this conversation, if we want a modernised construction industry that builds high quality homes in the UK, this will only be enabled by appropriate delivery model innovation and skills development.
Mark Farmer is founding director and chief executive at consultant Cast.
The Build4Quality Conference is on 21 September at the BRE Innovation Park near Watford.