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Farmer Review: We are staring at a ticking bomb

Posted: 21st October 2016

Martin Townsend

Director of Sustainability

BRE Global Ltd

The Construction Leadership Council published Mark Farmer’s independent review of the sector’s labour model. The review examines the shortcomings of the construction labour model and shows how it has given rise to under investment in training and development, innovation, and in raising productivity. Whilst this isn’t that new or unexpected, the conclusion is: we are staring at a ticking bomb and something has to change and change urgently. If we don’t take steps now – and big steps – we simply will not be able to meet industry demand.

The report came following the Government approach to the Construction Leadership Council (CLC) at the end of last year to identify actions to reduce the industry’s structural vulnerability to skills shortages, taking account of the Council’s wider work including that on business models and offsite housing.

This review was carried out by Mark Farmer, CEO of Cast Consultancy, and the final document, as quoted by the CLC ‘does not make for comfortable reading’. It is not the first report to set out the shortcomings of the sector’s labour model but its message is much stronger - given workforce attrition exacerbated by an ageing workforce, we simply cannot go on as we are, something has to change.

At the heart of the problem lies the survivalist business model – an absence of alignment between industry and client interests and a lack of incentives and means to invest. The result is underinvestment in training and development, in innovation and in raising productivity.

This largely comes down to the way we do things. We talk about change in the construction industry but when you actually look at how we deliver projects, little has changed over the past decade. Yes our sites are safer, yes there is more focus on sustainability and building performance but we still have a big demand for on-site labour. The bottom line is that in the not too distant future we simply will not have the labour force to deliver what the country needs unless we change how we work.

Farmer highlights the ‘ticking time bomb’ posed by our shrinking workforce, which it has been estimated could decline by as much as 20-25% within a decade. The bottom line is that more people are leaving the industry rather than joining. This is likely to be exacerbated by Brexit with the restriction upon the inflow of foreign workers. Can we change this trend? If we change how we work we can slow it but can we reverse it, unlikely.

One way to slow it is through education and skills and the report calls for an overhaul of training by reforming the Construction Industry Training Board’s grant funding model. BRE, through its Academy, continues to push to ensure that we upskill our workers and provide pathways for lifelong learning to keep people in the industry but more needs to be done. Farmer goes on to recommend a joined-up construction strategy pursued by the Government, construction industry and clients, again something echoed by BRE and demonstrated through standards such as BREEAM where we continue to demonstrate and share best practise.

Responding to the review, both Industry Minister Jesse Norman and Housing Minster Gavin Barwell referred back to Communities Secretary Sajid Javid’s £3bn Home Building Fund, announcement earlier this month at the Conservative Party annual conference in Birmingham. Mr Norman then goes on to say the review ‘makes a strong case for change in the industry, identifies areas where it needs to improve, and sets out areas for action. We will now carefully consider his recommendations’ whilst Mr Barwell added ‘It is vital that the industry has the skilled workers it needs to get the job done. That is why we are investing in apprenticeships with 3 million apprenticeships by 2020.’ Considering recommendations and investing in apprenticeships are steps in the right direction, as are addressing training, but if we are to heed the advice in the Farmer report it is not steps we need to take, it is leaps – and now.

So where is this ‘leap of change’ going to come from? One key area that needs to exploited is that of innovation and in particular innovation relating to offsite prefabrication. Developers such as Urban Splash and Zed Factory are pushing hard to create innovative solutions but we need the industry to really get behind offsite if we are to see a shift in the way we build. Offsite isn’t new but it’s not something the industry has grasped with both hands. The Farmer review highlighted the success of Legal & General’s new factory in Sherburn, Yorkshire. The largest modular housing factory in the world, it is producing homes through automated processes used to make cars and other consumer goods. This is a process being replicated by other parts of the industry, but not by enough and is something that BRE has been championing and demonstrating in its Innovation Park for a number of years.

The report also looks to draw comparison from other sectors by way of highlighting the need for change - ‘if you buy a new car, you expect it to have been built in a factory to exacting standards, to be delivered on time, to an agreed price and to a predetermined quality. Why does this not happen in construction? This is something that BRE through the housing standard review, and more recently with the formation of the Home Quality Mark (HQM) has been calling for and echoes the evidence that BRE submitted to the HSR commons committee earlier in the year.

In a time of uncertainty, it is all too easy to think of the short term and not the long. A ticking time bomb may sound dramatic but if we don’t act now it could be too late, or at least, we will make it more difficult for ourselves. What’s needed are big bold steps by the industry. The groundwork is there – innovation, quality, offsite, these are not new initiatives – but what we need is to be brave and accept that change is needed and take that leap of faith. If not, it could be too little too late.

Contributor: Martin Townsend is the Director of Sustainability for BRE Global Ltd