The Week That Was – 7 June 2024

Welcome to the week that was, a round-up of key events in the construction sector over the last seven days.

Parties battle over construction sector on apprenticeship funds, employment laws and levelling up cash in latest election pledges

Labour have announced plans for construction firms to be able to use apprenticeship funds to train their existing workforce, shadow education secretary, Bridget Phillipson has announced.  Up to half of a firm's fund could be put towards training staff for an approved list of "high level technical skills", with the remaining available for apprenticeship training. Further Labour plans for the construction sector include proposals to increase the length of ban on hiring foreign workers for firms who breach employment laws. Meanwhile, the Conservatives have earmarked £20m each for 30 towns, primarily in the Midlands and the North. Town Boards consisting of local community members, councils and the local MP would determine how such funds would be used.

You can read more here.
 
Michael Gove to step down as MP and leave housing role

Michael Gove, who has been Secretary of State for the Department for Levelling Up, Housing and Communities (DLUHC) since October 2022, will be stepping down as an MP in the upcoming election, stating that, irrespective of the outcome after the election of July 4, "a new generation should lead" the Conservative Party.  In a review of his tenure, he highlighted that during his time at the DLUHC he believed that he has helped local communities through the levelling up white paper.

Gove worked on reforming leasehold, social housing, and supported housing.  Under his tenure, he claimed that the Government has constructed one million new homes during the current parliament (to be confirmed once the official statistics are published in November), stressing the importance of ensuring existing homes are safe, decent and warm.

Gove also cited the introduction of measures such as the Social Housing (Regulation) Act 2023, also known as Awaab's Law, named after the two two-year old Awaab Ishak, who died in social housing in Rochdale following prolonged exposure to black mould. The Act provides for measures to protect social housing tenants and permit them to hold their landlords accountable if they fail to meet specific standards within certain, strict time limits.

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Chartered Institute of Building (CIOB) launches manifesto for improving construction industry

As parties continue to campaign ahead of the UK's General Election on 4 July, the CIOB has launched its own manifesto on how a future government should support the built environment sector.  The document outlines short, medium and longer-term policy recommendations to address some of the major challenges facing the construction industry.  The proposals come under four key themes: environmental sustainability, quality and safety, the future of construction, and people and skills. Suggested policies include the introduction of a Built Environment GCSE, modifications to current building regulations to include whole life carbon assessments and a reform of the Land Value system.

It is hoped the manifesto will assist candidates from all parties to understand the complexities of the built environment sector as a major economic driver, according to CIOB's CEO, Caroline Gumble.

To read the full report, click here.
 
US media firm behind Universal Studios theme park draws up plans for UK location

Universal Destinations and Experiences (UDE), owned by US media giant Comcast, has confirmed it is working on plans for a proposed location in Bedfordshire following an "overwhelmingly positive" consultation with locals. According to UDE, 92% of the 6,000 people surveyed in the local community supported plans for the park.  It will now press ahead with submitting plans directly to central government in the hope they will be approved by a special development order, which would be granted following consideration by the incoming Secretary of State for Levelling Up, Housing and Communities, to be decided following July's election.

The site would be constructed on 476 acres of brownfield land south of Bedford, designated for development by Bedford Brough Council, which was purchased by UDE last December.

If built, the site north of London will become Europe's largest theme park, overtaking current leader, Disneyland Paris. 

To read more about the plans, click here.
 
Nervous insurers pulling cover in wake of contractor failures

Materials suppliers are struggling to protect themselves against bad debts as the insurance market shows signs of struggling in the wake of high-profile contract failures.

When questioned on the changes to their business, members of the British Merchants Federation (BMF) said they had been forced to reduce sales to customers and reduce credit limits.  Suppliers are also asking to be paid sooner, which is having a negative impact on cash flow.

It appears that the volume of sales being made has been impacted as well.

Over the past two years, the sector has been hit particularly badly by supply chain failures and the impact of high inflation on fixed-price contracts. According to the latest figures, construction was responsible for about one in six business insolvencies – higher than any other sector.

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Questions over mega-projects as Lendlease steps back from UK construction market

Australian construction giant Lendlease is set to withdraw from its UK construction activities, raising concerns about several high-profile projects. The company plans to sell its UK and US contracting operations by the end of next year, along with some global assets, to refocus on its Australian market. This strategic shift follows a 34% drop in profits for Lendlease’s UK arm up to June 2023 and a near 50% fall in its global stock price over four years.

Lendlease’s exit will impact major projects like the £1.9 billion Smithfield development in Birmingham and the £3.5 billion Silvertown scheme in London. The company aims for an ‘orderly capital release’ and may revise land management agreements, selling plots post-planning. CEO Tony Lombardo noted that despite their strong fundamentals these projects' long-term returns are insufficient to justify continued overseas investment.

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Disclaimer: The information in this publication is for guidance purposes only and does not constitute legal advice.  We attempt to ensure that the content is current as at the date of publication, but we do not guarantee that it remains up to date.  You should seek legal or other professional advice before acting or relying on any of the content.

Authors for this week's edition: Tom Butterfield, Catherine Stead, Natalie Chan, Abigail Pipkin and Lucas Johncey