In January 2019, BRE convened Scotland’s policy-makers and senior building experts in Edinburgh for the third in the series of roundtable events to discuss: “How can Britain build a successful, lasting Built Environment Strategy for Scotland?”
The location for the second of BRE’s ‘What Kind of Britain Are We Building?’ roundtable discussions was Edinburgh, where we convened 21 experts under the Chatham House rule from the built environment sector to debate these issues. The timing proved highly appropriate as earlier in the week the Scottish parliament announced an inquiry into the country’s construction sector with specific focus on the procurement model, access to finance, skills, innovation and infrastructure investment.
Frameworks to build a better Britain
The second in our Frameworks to build a better Britain series of articles and podcasts: roundtables and interviews with planners, architects, policy-makers, and construction experts. Read the first roundtable discussion, Beyond Brick Walls.
Frameworks to build a better Britain
Invited by Niall Trafford, CEO of BRE, Nicola Barclay, Chief Executive of Homes for Scotland and Rohan Bush, Head of Public Partnerships & Future Workforce, Construction Scotland Innovation Centre gave opening remarks before the conversation was opened up to the table.
Alan Somerville, BRE’s Building Performance Group Director and David Kelly, BRE’s Scotland and Innovation Parks Director were also on the event panel which included:
Chair: Matthew Gwyther, Partner, Jericho Chambers.
Tony Cain, Policy Manager, ALACHO
Graeme Brown, Director, Shelter Scotland:
Stuart Dorward, Partner & Scottish Head – Cushman and Wakefield:
Ian Drummond, Managing Director, Taylor Wimpey
Susan Grant, Principal Architect, NHS National Services Scotland
Across the UK there is a widespread scepticism – even disillusion – about our built environment sector. We know that we simply are not building enough new homes either in the public or private sector. Middle-income young adults born in the late 1980s are now no more likely than those lower down the pay scale to own their own home. Many buildings are not being built “to purpose” and many more are not performing as designed.
We are also seeing a real lack of power of local government in housing and there’s simply not enough resource and investment in regulation and standards. The way we create our buildings has hardly changed in 40 years. It’s in need of a drastic overhaul if it is to achieve the same increases in productivity as other industries.
The Industrial Strategy Challenge Fund offers the construction sector a chance to address the old and failing models and to explore what is really needed to build a better Britain. But is Scotland’s construction sector and the challenges it faces consistent with those across the UK? It’s worth recalling what HMG in London seeks to achieve with the ISCF:
“We need to transform the sector to build affordable places to live and work that are safer, healthier and more energy efficient. Through this challenge, we will create new processes and techniques, including the standardisation of modular components for manufacture. Doing so will support the industry to construct buildings 50% faster, 33% cheaper and with half of the lifetime carbon emissions”.
These are ambitious targets when one considers the sector has been held back by productivity that is historically an average of 21% below the wider economy since 1997. There’s a lot to do.
We might agree we need to go beyond faster and cheaper construction to delivering greater value across the whole lifecycle together with better health, social and environmental outcomes – but what does this look like in practice? How can Scotland learn, adapt and grow from significant initiatives which are happening across the UK and beyond? Digital construction could provide some of the answers but challenges still lie ahead on talent, dispersed data collection and analysis, and standardisation.
The location for the second of BRE’s ‘What Kind of Britain Are We Building?’ roundtable discussions was Edinburgh, where we convened 21 experts under the Chatham House rule from the built environment sector to debate these issues. The timing proved highly appropriate as earlier in the week the Scottish parliament announced an inquiry into the country’s construction sector with specific focus on the procurement model, access to finance, skills, innovation and infrastructure investment. The session was conducted under The Chatham House Rule and opened by Niall Trafford, the CEO of BRE.
“BRE is soon to be 100 years old. But our purpose and mission – while clear to us – isn’t always clear to the world. Our mission is simply to build a better world together.”
“Our aim with these roundtables is to go out around the country and listen maybe to those we don’t normally interact with. To get out of the London bubble in order to understand and learn more in order to make BRE fit and relevant for the future. We need to place ourselves at the heart of construction to have the proper impact. We need to drive innovation. That’s why we’ve signed up to the Industry Strategy Challenge Fund programme and the Construction Innovation Hub with the Manufacturing Technology Centre (MTC) and the University of Cambridge’s Centre for Digital Built Britain (CDBB). This will combine expertise in digital, manufacturing and construction technology, as well as a track record in supporting policy development and industry change.”
“It is inconsistency that leads us to this debate”
“We need a transformation of construction but it won’t be easy. ISCF brings opportunity for greater quality and consistency around what gets built. That is why BRE has developed the Home Quality Mark. It is inconsistency that leads us to this debate. Our industry is too fragmented. ISCF must focus us on consistency, digital and skills.”
“If you compare us with automotive or aviation they work together on quality because it’s safety critical. It has to be safe to take their product into the air and onto roads. The Industrial Strategy should give us this common purpose – to seek common standards and quality. It’s no silver bullet but it is a necessary vehicle that will be about raising quality and skills. But only yesterday I heard Suzannah Nichol from Build UK speak and she reminded her audience that industry margins are currently level or sub level. How can industry invest in quality and skills? With margins so tight. These are major issues.”
Niall’s podcast interview is here:
The opening provocations were both from women, who are traditionally under-represented in this sector. Nicola Barclay is chief executive of Homes For Scotland and Rohan Bush, head of public partnerships and Future Workforce at the Construction Scotland Innovation centre. Just the day before the roundtable Nicola had been called to defend her industry in the face of a highly critical story picked up by the BBC under the headline Huge Shortfall in Home Construction.
“The home building industry is, for multiple reasons, backed into a corner” said Nicola, “And we find ourselves having to defend ourselves the whole time from commentators in the media who say we’re not delivering what the general population want. Since the recession there are 80,000 fewer houses built than there should have been. It’s all types of need. We should be building 25,000 a year of all tenures but are only building 17, 000 or 18,000 last year. England is on an upward trajectory to where Westminster wants them to be.
“We need to get out of the Edinburgh bubble”
“It’s not just a London bubble. We need to get out of the Edinburgh bubble and appreciate that 50 miles that way or 100 miles the other, there are huge failings in housing. There is market failure everywhere in Scotland with many who cannot get on the housing ladder. But we have to be really careful that there is not a one-size-fits-all approach.
“There’s a different cultural and political response to the housing crisis here. I think the desire is lacking for home building including from residents, councils and planning officers. We don’t have an accepted need for more houses at the local level, even if it exists at the national level. We need political support.
“Who will build these homes? Many of the SMEs that are responsible for building houses have been decimated in the crash. Especially in rural areas. There is a lack in development finance as well as skills. Risk appetite is low. As far as pursuing The Industrial Strategy is concerned and raising productivity – how, for example, can we make off-site work? We need a conversation about the skills we need, what manufacturing model do we want. When we build houses we should be building communities, this includes roads, GP surgeries and schools. However, if we can’t get GPs to occupy the space, then it is a waste of time building it in the first place. The real problem is one of a growing population. You can’t put all the blame at house-builders’ door.”
She wasn’t downhearted, though. “However, in Scotland, there are great benefits. We are small enough to find solutions. Most people in this room know who you need in a room to fix this. A couple of phone calls. We know the people that need to sit in the room to find solutions, but we need the will to do so, and the culture change.”
Nicola’s podcast interview is here:
Rohan Bush, the Head of Public Partnerships and Future Workforce at the Construction Scotland Innovation centre (CSIC) is well placed to look across the piste as she has degrees in architecture, building science and political studies. All merge when it comes to creating a new built environment.
She said: “Thinking about my career in the industry occasionally I wonder about continuing when there are such huge challenges. Do I feel proud to work in this industry? My daughters are also thinking about the sorts of industry they want to work in. In a more positive mood, at the Innovation Centre I work with parties that create the built environment – the homes, the schools – to make the sector better, which in turn makes lives better and more productive. Things aren’t always easy: the built environment has so many layers of complexity, including commercial layers, regulatory layers, policy layers, design layers and finance layers – each of which provides a different level of challenge. But on a more positive note, right now we have a unique opportunity to make change. We are getting a sense of the right pathways. Innovation is what an Industrial Strategy must be about.”
She highlighted four CSIC focus areas:
- Increasing digitisation in the industrial sector – nobody says that should not be a key focus
- Driving industrialised processes
- Building sustainably – it is not going away. It’s broadening to include an ageing society
- Culture change – critical issue
Rohan’s podcast interview is here:
Culture came up consistently as a major issue. Culture and practice within the industry required reform and modernisation. One participant said that, “the problem with construction and the average house building site is the continuing lack of skills and qualifications – far too often people just learn on the job, with all the bad practice that involves.” But there were also cultural issues with the customers – the end users in wider society. The politics of the planning process seemed to exasperate many. “Those who build houses in Scotland are sometimes made to feel like a negative necessity,” remarked one participant. “We need to look inwards to shift perception towards being a valuable, positive player in people’s lives. We’d like to be welcomed.”
“You’d have thought the council would have bitten our hand off”
One slightly bemused contributor noted: “I’m a novice in housing. We are an employer, neighbour and we have a long term view. We have a substantial brownfield site we wish to develop. It will provide affordable housing for own employees and for others. We’ve been through the planning process in multiple cycles of the economy. It should be easier for us to chart a way through but there seems no clear path through the planning process. We can’t seem to get this started. The demand is obvious and we have offered substantial money towards infrastructure so you would have thought the council would have bitten our hand off. But no. Why? There is a lack of political leadership.”
Another panel member cited the example of the Commonwealth Games athletes village in Glasgow which was returned to the local community for housing after the event with up to 1400 units planned: “When we researched and asked people what they thought, they often said: ‘it’s a nice community but it’s not my community.’ One must always try to ensure development is being done with and not to people. This is the case in terms of financial, formal planning and community elements. You need all three to be successful.”
The needs of fragile and isolated rural communities are especially pressing in Scotland. Development units in the Outer Hebrides are being built that only have a value that’s one quarter of their build cost. “But without homes, people don’t want to live there, and without people the communities will die,” said one panel member. “We need to encourage home working for which we need decent homes.
“Can government afford it?”
To add to political leadership, were worries about finance. Austerity measures followed by Brexit have taken their toll. Some on the finance side were concerned about the number of investors in debt capital markets retreating and that funds for the private sector were drying up. Chris Dun, a partner at Brodies LLP, has broad experience in the financing of housing supply and has been at the forefront of many of the most innovative housing finance transactions including the first private placement by a registered social landlord. “There is a shortage year on year in terms of affordable housing,” he said. “But they sell for less than the build cost. As a result, we need intervention through the public sector. We are failing to deliver and need to think of new models of tenure, and the journey to ownership. In the private sector they must turn a profit, so they are caught by market forces. Would some sort of Housing Corporation with backing of public funding be a vote winner? And can government afford it? There’s a fundamental need for people to have a roof over their heads. The housing supply isn’t there in Scotland. It isn’t working.”
Intervention through the public sector and the potential creation of some sort of Housing Corporation was mentioned by several participants. (It’s interesting to speculate whether the central, directional control implied by a Housing Corporation would lead to greater uniformity of quality. This is a subject dealt with by Stephen Hill of C20 FuturePlanners in BRE’s first roundtable from last Summer.) But would it be a vote winner and could the government afford it? There was a broad acceptance that Scotland needs to think of new models of tenure, and the journey to ownership.
One way forward is offsite construction
Off-site construction is closely linked to the Industrial Strategy. There may be arguments in favour of off-site building techniques regarding the speed and cost but other critical factors come into play:
- increasing productivity and with less waste;
- greater predictability;
- less time on site reduces health and safety risks;
- more attractive to potential new entrants to the sector.
Several people pointed out that, with some history of timber frame construction, Scotland wasn’t new to off-site manufacture. There was a sense around the table of real momentum for change but there were cultural factors holding back the advance. One contributor noted: “There’s a feeling of we’ve always done it that way. House builders are small C conservative. But breaking out of that mentality will be inevitably eventually be broken by the necessity of cost. We’ve all seen the legendary bricklaying robot and raised our eyebrows. We are still about five years away from drop-in bathrooms, for example. There are also the negative connotations of the prefab days to overcome. When people move into a new house, they want to bang brick and block walls and feel their solidity. We’re also going to need a proper regulatory framework for off-site to be taken-up at scale.”
“Are we making it overly difficult for ourselves?”
The conversation came back to numbers. Graeme Brown, Director of Shelter, Scotland said “Scottish government is broadly on track but the current housing commitment is short of what we need. A vision towards 2040 feels like a long time. Ten years is a long time in a young person’s life. I worry that capital budgets will disappear in the next Parliament. More generally, complexity is a major issue. Are we making it overly difficult for ourselves? The numbers of players involved in building is enormous. There are too many who are “taking a slice” across the development piece. The system is not designed for efficiency. Post-war we created New Town corporations and they delivered. London Docklands was the same. Are we serious about the needs of people and business? Do we need to look again at process?”
The urgent need to make better use of data came up and the consequent inability of the sector to make better decisions based on hard facts. An absence of feedback loops which would tell builders what they have done wrong and how they might improve next time is a common theme across this roundtable series. This should surely be a focus for The Industrial Strategy. One panel member lamented: “We are poor at using data to work out which are the best ways forward. And we need strong data. It’s a complex system but the methods of evaluating outcomes in construction remain in the Dark Ages. We have not got the tools to tell politicians that it is economic post-occupancy evaluation that is important.”
“To pour your life savings into something that is substandard isn’t acceptable. People need something they can hang onto as guarantee.”
Alan Somerville is the of Head of Building Performance Group at BRE, its largest division. It delivers benchmarking, advisory and data services to those who build, own and occupy both residential and commercial buildings across the world. Data is his thing. “BRE can help here,” he said. “Our Home Quality Mark is the industry benchmark that a local authority and developer and consumer can rely on for robust assessments of what an end product is. To pour your life savings into something that is substandard isn’t acceptable. People need something they can hang onto as guarantee.”
Alan’s podcast interview is here:
Stuart Dorward from Cushman and Wakefield made an important point about generational differences when it comes to housing. We need to know what are the known unknowns…
“The industry tends to plan for what it knows rather than what it doesn’t know”, he said. “Within the sector we study trends and influences, but we should always look a little wider to see how others have successfully overcome similar challenges. Our outlook also appears to be ‘hard-wired’ from that of our parents’ generation – we’ve now had three generations of aspirational ownership, which may no longer be relevant in our society. Our millennials are different; they operate within a more flexible gig economy with lifestyle choices, mobility and attitudes towards disposable income that are different than previous generations. Their material values are different. Whilst everyone requires a home for our basic needs, there is a growing dilemma on whether you need to actually own the property. It is clear that ownership models need to continually adapt and evolve, to remain relevant in the future”.
At the end of two hours there was an impassioned finish from Tony Cain, policy manager at ALACHO (Association of Local Authority Chief Housing Officers): “We have spoken a lot about a broken housing market. But what does fixed look like? What is the purpose of Scottish government policy in housing? What are we trying to achieve? I’m not having a special go at this government. But I haven’t seen a government in thirty years that has a clear, effective vision of a proper housing system. But here the Right to Housing is to be written into legislation. It’s to be a Human Right. Interesting. This has sharp implications for policy. You would struggle to say that more than 75% of people in this country are having that human right met. And in rural areas half the population is fuel poor because of poor insulation.
“The next question is how does a 30-year cycle in homes/roads fit with five-year political cycles? In housing, you cannot ignore full-life costing. 80% of the housing stock we will have in 2050 has already been built. How will this be maintained? In 1999 50% of those in social housing were pensioners and that figure is now down to one third. Over the age of 80, 75% are owner-occupiers. Over the age of 95 they are all owner-occupiers because the poor folk in social housing don’t live that long. Owner occupation will be the real challenge in the next 40 years.
“I am old enough to recall what such institutions are and we now need a National Agency for Housing. It’s a trope to say planners hold things up but try living a life without planners – be careful what you wish for.” Neither did Tony have a lot of time for the Fat Cat building boss intervention. “Even the Persimmon CEO’s £100 million bonus is a bit of a trope. It’s not something you could point at Scottish house building industry. No – the one overriding question is what does good look like?”
Tony’s podcast is here:
The discussion was attended by:
- Nicola Barclay, Chief Executive, Homes for Scotland
- Graeme Brown, Director, Shelter Scotland
- Rohan Bush, Head of Public Partnerships and Future Workforce, Construction Scotland Innovation Centre (CSIC)
- Tony Cain, Policy Manager, ALACHO
- Charlie Dawson, Founding Partner, The Foundation
- Gordon Dewar, Chief Executive, Edinburgh Airport
- Paul Dodd, Associate Director, Scottish Futures Trust
- Stuart Dorward, Head of Scotland, Cushman and Wakefield
- Ian Drummond, Managing Director, Taylor Wimpey East Scotland
- Chris Dun, Partner, Brodies LLP
- Susan Grant, Principal Architect, NHS National Services Scotland
- Matthew Gwyther, Partner at Jericho Chambers & Presenter for Radio 4’s In Business
- David Kelly, Group Director, BRE
- Keith Mackie, Development Manager, Chris Stewart Group
- Dave MacLeod, Head of Property and Infrastructure, Highlands and Islands Enterprise
- Clare Reid, Director of Research & Innovation, Robertsons
- Dave Signorini, Head of Better Homes Division, Scottish Government
- Alan Somerville, Director, Head of Building Performance Group, BRE
- Niall Trafford, CEO, BRE
- Julie Wilson, President, Edinburgh Architectural Association
Further reading and listening:
Research from McKinsey on Seizing opportunity in today’s construction technology ecosystem and Smart cities: Digital solutions for a more livable future.
Discussion Paper from Homes for Scotland.
BBC Radio 4’s In Business on off-site “Home Truths“.
Frameworks to build a better Britain
Frameworks to build a better Britain is a BRE series of roundtables and interviews with planners, architects, policy-makers, and construction experts about the future of the built environment. In collaboration with Jericho Chambers.