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Comment: Housebuilding sector needs sturdy base

Gareth Mackie. Picture: Ian Georgeson

Gareth Mackie. Picture: Ian Georgeson

  • by GARETH MACKIE
 

Soaring output in the housebuilding sector is proving to be somewhat of a double-edged sword; the “boom” in job creation reported in the latest construction purchasing managers’ index (PMI) is welcome, but it comes at the cost of a looming skills shortage.

Supported by a range of UK government-backed stimulus measures such as Help to Buy and Funding for Lending – which once propped up mortgage lending but is now focused on boosting the flow of credit to small firms – there have been plenty of shovels in the ground of late but now we hear there aren’t enough people to wield them.

The warning from the Chartered Institute of Purchasing & Supply (Cips) could not be more stark. It says the sector is struggling to find enough skilled trades people to keep pace with new work, which risks driving up costs until the next wave of apprentices enters the job market. Because of the lack of skilled workers, Cips chief executive David Noble decries the quality of sub-contracted work, which has deteriorated at the fastest pace since the organisation’s survey began 17 years ago.

In addition, suppliers are finding it difficult to ramp up production to meet the demand for raw materials, leading to ever-lengthening delivery times.

All of this would appear to be creating a perfect storm that threatens to engulf an industry that was among the worst-hit following the financial crisis of 2008.

Few would argue that more properties are needed for those who have been priced off the housing ladder and for whom finding an affordable home to rent can prove nigh-on impossible.

Recognising this, in 2007 the Scottish Government set a target of 35,000 new homes to be built each year by 2015. Official figures show the number of completions for the year to March 2014 was just 14,737 – marginally higher than the previous year but 43 per cent below the peak of 2007-08.

Ploughing billions of pounds of taxpayers’ money into schemes that help people buy a home with a deposit of just 5 per cent has undoubtedly helped many achieve their dreams of owning their own home – or at least taking on an eye-wateringly large mortgage that would otherwise have been out of reach.

Chancellor George Osborne yesterday lauded the latest statistics that showed more than 48,000 households have been supported by Help to Buy, with 82 per cent of sales going to first-time buyers, arguing that the initiative was a “key part” of the Westminster coalition’s long-term plan to help “hardworking people to secure a better future for their families”.

Housebuilder Redrow also said that the scheme had accounted for more than a third of its sales as it reported a near-doubling in annual profits, adding that the extension of Help to Buy until 2020 had given it the confidence to keep investing to grow its business.

However, Philip Hogg, chief executive of trade body Homes for Scotland, recently said that he feared a decline in sales after funding for the Scottish Government’s version of the initiative ran out in July, expressing “serious concern” for an industry where every new home built supports four jobs.

There will have to come a time when the housebuilding industry and lenders stand on their own feet without the taxpayer-funded prop of interest-free loans and mortgage guarantees, but the more immediate threat posed by a lack of workers needs to be addressed by industry and politicians.

Without the right foundations in place, this fragile house of cards risks collapsing under its own weight.

 

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