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If we want to build units, we need to stop talking about units…

Why the construction industry shouldn’t be dependent on regulation

We seem to be entering a new phase in our engagement with Government. I believe the Social Housing Green Paper marks a step change, reinforced by Theresa May’s attendance and speech at the NHF Summit in September, and recent announcements covering borrowing caps and £2bn additional funding.  Yes, there is still uncertainty about how the Green Paper will translate into policy, home-ownership still seems to be at the top of the hierarchy and there remains a gap between the vision in the Rethinking Social Housing project at one end of the spectrum and social housing as an ambulance service at the other.  But I have worked in social housing since 2005, and I think it’s fair to say that the political atmosphere has blown hot and cold in that time (sub-zero indeed on occasion) and this feels different.

While we can breathe a very considerable and well-deserved sigh of relief, this is also the time at which it is most important to be careful about the messages we send, as we have the opportunity to establish a different and much more positive narrative.  That narrative should be much more focussed on outcome, quality and place, and far less driven by units. 

The narrative needs to change because, ironically, if we want numbers of units we need to stop talking units.  As a society we have focussed on units for decades, but in reality there have been very few years since the end of the Second World War where the numbers of new homes have met demand.  And although recent figures are good, we are bumping along the top of the capacity that business as usual can deliver. 

So while numbers are creeping up, we are not seeing a consistent and effective closing of the gap between supply and need.  I would argue this is largely due to structural issues in construction that provide a very clear limiting factor in terms of numbers.  The Farmer Review, Modernise or Die (2016), is critical reading for any construction client in this context.  As a society we continue to undershoot the numbers we need, while producing homes of dubious quality, creating places that are less likely to sustain themselves and build coherent, resilient communities.

Volume housebuilders want to expand production, but in terms of numbers this is adding 1000s, when we need tens and tens of thousands.  And very few people would argue that the answer lies in training thousands of new bricklayers. The delivery gap isn’t a challenge of better tinkering, but asks real questions that require genuine, transformative thinking, not business as usual slightly better.

But so what?  As social landlords, why should we be interested?  Why should we make the Farmer Review bedtime reading?  What has this got to do with our core mission?

The answer is that genuine, transformational thinking will be driven by genuine, transformational clients.  And as a sector that consistently commissions between 20-25% of all newbuild housing, year after year, we are a very significant client and potential carrier for change.  As a client group, focussing on units will not open the partnerships, creativity or ambition that underpins fundamental change.

Let’s have a look at what the outcome of this change looks like.  It means we will build good quality, high performing, climate resilient, risk managed, operationally cost-effective homes, in places where people want to live and communities can thrive.  We will deliver skills, employability, thermal comfort at low cost, financial inclusion and homes that support health.

The key to opening up this space is Procuring for Value, ie focussing on outcome over the long term. This enables industry to invest in innovation, quality and performance because they have confidence there is client pull.  The current dominant practice, lowest capital cost tendering to minimum regulatory standards, shuts this space down very effectively.

At the end of the day there are commercial organisations out there that are very skilled at delivering housing units at lowest cost - but this isn’t our strength.  We can’t completely focus on driving down initial construction cost; we are long term asset managers, we need to build properties that deliver value over the long term.  When we focus on cost and units we lose the opportunity to deliver on our values at a stage when it is (ironically) most cost-effective to do so.

Recent headlines highlighted a 173% rise in house prices against a 19% rise in income for 25-34 year olds.  We spend billions every year on new housing, and there is an open door to push against with the right message.  Let’s change the narrative away from units and cost, and start talking about what we can transform and deliver.  The units will come.  But so will the value – good quality housing in sustainable communities, delivering multiple holistic outcomes.  This is the opportunity to build on our strengths and be clear about where we are genuinely a partner in answering the challenge of housing need and quality.

I know we are measured by cost and units, and that this establishes a culture and set of behaviours, and I know that changing this is also dependent on our key influencer, namely Homes England, both measuring us differently and engaging in different behaviour itself.  But we need to take every opportunity to shift our focus to outcomes over the long-term, as that will deliver units, and so much more.

Disclaimer: The sole responsibility for any views expressed lies with the author(s). Any opinions shared do not necessarily represent the views of Saint-Gobain.

Tom Jarman
Tom Jarman Director
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