To view this week’s newsletter with articles regarding Apprenticeship government levy and forthcoming event information please click here.
The Court of Appeal has backed the government’s decision to waive affordable housing requirements for small developments.
The decision, which has of course been welcomed by the Federation of Masters Builders (FMB) and SMEs across the country, means that for developments of 10 homes or fewer, local councils cannot impose affordable housing or Section 106 contributions.
Section 106 of the Town and Country Planning Act 1990 enables local planning authorities to seek contributions from developers to provide affordable housing and mitigate the impact of developments.
The housing minister first announced the news in November 2014, but West Berkshire Council and Reading Borough Council quickly joined forces to challenge the proposal, meaning the case was dragged through the courts, going back and forth for the past two years. The High Court first quashed the plans to exempt developments of less than 10 homes last year, but then the government appealed and the Court of Appeal finally overturned the High Court’s decision last week (11 May) – and about time too!
The government have criticised the decision by the councils to take legal action, calling it a waste of tax payers’ money and I completely agree with housing and planning minister, Brandon Lewis, when he said it just restores common sense to the system. It now means that builders don’t suffer just because they’re developing smaller sites.
The decision will back SME house builders, which I have been fully supportive of for many years. Not only will it make it much easier for small scale developments, but it should put SME house builders at ease. There are many small sites which builders are keen in developing, but they are put off by the Section 106 charges, which is a shame for the housing market.
The councils could have used the time and money it’s taken over the past two years, to support new housebuilding in areas where it is very much needed. The contributions have stopped the potential development of a huge number of small sites, which could have played a massive part in helping us reach the 275,000 affordable homes needed by 2020.
The new threshold will protect small developments from unaffordable, unnecessary requirements, meaning they can finally get back to what they’re good at, building small, sustainable developments.
Prompt payment, or the lack of it, is such a big issue in our industry and it has repercussions that not everybody is aware of. Not only does it cause economic and social damage, but it has really tarnished the reputation of the industry, and it’s about time that changed.
Finance is a huge problem for our industry and a one I don’t think we’ve taken seriously enough in the past. In everyday life you pay for things immediately, whether that be goods or services, and you wouldn’t dream of asking to delay the payment or paying less than what was due, so why should our industry be any different?
Prompt payment, more often referred to as late payments since it’s becoming more of a rarity that they are ever prompt, is everyone paying what they are due as soon as it is due, or earlier.
Earlier this year, Constructing Excellence held a members’ forum discussing the subject of payment. Industry professionals from contractors to suppliers, shared their opinions and shed light from all perspectives, on how late payments affect their work. The outcome of the session was that good practice needs to be carried out throughout the project, whether it be with the client or the contractor, and everyone should pay on time to help the project run smoothly- no surprises there then.
With the rest of the industry digitising, integrating collaborative design and construction processes, and with the new Building Information Model (BIM) mandate going live earlier this month, it surprises me that the way we pay our bills is yet to catch up. For everything else, payment is now automated, we can complete transactions easily via apps, or Paypal, so automatically paying bills online once work is verified and complete could be the answer to all of our problems. It just doesn’t make sense that when it comes to making a payment we are so out-dated, but we have robots capable of building houses.
In a bid to encourage prompt payment, many subcontractors have inflated their tender prices to cover the costs they incur when their customers pay late. Textura found that on average, four per cent is added to costs to cover late payment, but subcontractors did say that they would discount prices by an average of 2.35 per cent if contractors paid promptly – within 30 days.
During the forum, when asked why it was necessary to delay payments, the answers included; project defects, no cash and a simple ‘because I can’, showing that most of the inefficiencies could be resolved by better industry attitudes and behaviours.
Thankfully, the case for prompt payment was particularly strong, with people understanding why prompt payment was so essential. Resolving the current issues could potentially deliver immediate financial benefits to projects and companies, improving the industry as a whole. If more businesses practice prompt payment, the reputation of the industry will sharp change to one that is trusting, capable of collaborative working and most importantly, ethical!
To view this week’s newsletter with forthcoming event information and an article about the CIOB Student Challenge please click here.
Happy New Year to you all – I hope you’ve all had a lovely Christmas break and are raring to get started. I cannot believe 2016 is here already, but I’m looking forward to seeing what the next 12 months have in store for us.
2015 was an amazing year for our industry which has progressed in terms of education, employability, and new technology. We saw massive improvements in encouraging people into the industry and late payments, both of which have been a bug bear of mine for quite some time.
Wherever you looked last year there were campaigns to encourage people to consider a career in construction. We supported The Armed Forces Employability Pathway programme which links Army Reserves, Local Authority, Job Centre Plus and local employers to help people into work, and we need the encouragement and support to continue with this throughout 2016.
The Journal’s Pay Fair campaign managed to reduce the sum of money owed to small businesses in the North East from £41bn in 2014, to £26.8bn last year.
The campaign was launched in response to the growing problem of late payments, which caused the industry many problems last year. Although it was originally set up as a 12 month initiative, aimed mainly at 2015, I believe it is something that needs to continue throughout 2016, the stats are proof in itself that the scheme is actually making a difference.
Another thing we were crying out for is more homes. David Cameron recently announced that more than 10,000 new homes will be built on public land through government direct commissioning. The policy will be backed by an extra £1.2billion to prepare brownfield sites for the building of 30,000 starter homes, which will be available to first time buyers under 40 for at least a 20 per cent discount.
Although most of the good news regarding housing is focused mainly on London, it’s still a positive thing to see that that government are putting the money, time and effort into solving the housing crisis and helping first time buyers, and any improvement is a success to me, regardless of the region. (However, the North East would appreciate similar schemes in the near future, please Mr Cameron).
The year is starting on a high for businesses, with them being urged to dip into the Manufacturing Cash Pot. The pot consists of £24m worth of funding to help regional manufacturers grow, with £14m being kept just for the North East.
Although it is classed as a loan and it does need to be repaid, it’s still the stepping stone a lot of businesses will need to get them off the ground. There’s no shame in asking for help, and when the help is already there to be taken you’d be silly not to take it.
We can achieve a lot in a year, so let’s get our heads down and give the industry exactly what it needs.
I have a feeling this could be our year, bring it on 2016, we’re ready for you!
To view the first newsletter of 2016 and further information about forthcoming events for the beginning of the year please click here.
To view the final newsletter of 2015 full of event information for the new calendar year 2016 please click here.
To view this week’s newsletter containing information about the beginning of the 2016 calendar of events please click here.