One of the recommendations in the Affordable Housing Commission’s report “Making Housing Affordable Again: Rebalancing the Nation’s Housing System”, called on the Government to take more concerted action to address the worsening skills crisis in construction and to consider new incentives to support modern methods of construction, especially for modular social housing.
Unlike at any other point in time over the past generation, recognition that our construction industry needs to change is gathering pace and cogency. Traditional methods of procurement and delivery that have served the sector in the past are now being widely criticised and identified as the root cause of poor quality and unsafe outcomes. But in this post-Covid environment, is it right that landlords are the ones that should be doing all of the heavy lifting in ensuring compliance and safety, or should Government be helping them to set expectations that flow throughout the supply-chain and offering tangible for any resulting cost increases? If so, how could this be achieved?
As Dame Judith Hackitt recognised in her "Building a Safer Future" report and recommendations, procurement sets the tone of the entire construction relationship and, if the focus of that process is not on value or safety, the finished product will never be defined by those outcomes, regardless of later interventions. The move away from bidding models that encourage a 'race to the bottom' will always be difficult in the construction sector, particularly given its highly competitive nature, but Government has tools at its disposal to incentivise behavioural change.
It would be open to Government to explore the scope to drive that change through the medium of its affordable housing funding programmes - whilst compliance with procurement regulations and securing best value is already a feature of the Homes England/GLA funding regimes, a more “interventionist“ approach could make funding allocations contingent on the recipient adopting defined procurement practices and objectives.
For example, funding allocations could be made contingent on recipients adopting a value-led procurement approach that drives value and safety in new-build units. It could also be used to prioritise those developments that adopt a Modern Method of Construction, or a Net Zero Carbon solution, or one that prioritises opportunities for apprenticeships, skills and training. All of these desired outcomes could be embedded in the funding agreement (without tipping it into a public works contract for the purposes of the procurement regulations) and underpinned by a claw-back mechanisms if the promised outcomes are not delivered.
A less draconian approach would be to align or calibrate government funding with particular deliverables, whether a value-led procurement approach, collaborative procurement, incorporation of social value, MMC, standardisation, digitisation, decarbonisation, and so on.
Whilst achieving improved building safety is deservedly the new non-negotiable of housing delivery, it must also be viewed in the context of the projected demand – approximately 145,000 new affordable homes a year for the next decade.
To achieve delivery at those levels, a cohort of many willing partners will be required. Unless grant funding levels are sufficiently attractive, then an overly draconian approach to securing building safety may well discourage participation in the very programmes necessary to deliver the homes in the numbers and to the standards required.
The key point is to start at the beginning – with procurement and public funding. Quality and safety must be embedded in the process at the outset, but unless enhanced public subsidy is to be made available (as the Affordable Housing Commission calls for), then we may find that one policy goal can only be delivered at the expense of another.
Driving up standards requires a firm grip on the steering wheel – but whether the vehicle is a Volvo or a Reliant Robin will depend very much on the depth of the State’s pockets.
