The last few days have seen the government release a number of key announcements for the year to come, what impact do you see these having for the construction industry?
The announcements relating the Housing and Planning Bill were interesting because they highlight the need for SMEs at the heart of housing delivery. When SMEs built around 60% of our housing, output was at its highest. Now that SMEs only account for around 30% and many have left the industry because of costs associated with planning and raising finance, the rate of house building is at its lowest for decades. This is no coincidence.
What impact do you expect the Northern Powerhouse to have on the building sector?
We believe the Northern Powerhouse will help to draw attention to the number of contracts that are awarded to national firms rather than local or regional firms. The National Federation of Builders, together with three other construction bodies, will work under the banner of Construction Alliance Northeast (CAN). CAN aims to demonstrate to local and central government that there are talented regional firms that can also compete for work. Their case is helped by a change in the procurement regulations which now puts the onus on clients to break larger frameworks down into smaller programmes of work so that they are more accessible to SMEs, or justify why they do not.
How important will it be that SMEs are given the support to play a full role in driving the industry forward?
SMEs make up over 90% of the industry. However, the barriers that they face – accessing finance, securing planning permission, connecting utilities at a reasonable cost in a timely way, disproportionately high regulatory costs – hamper them from playing a full part in the recovery. All the government’s aspirations – strong regional economic growth, an increase in apprenticeships, growing exports, more house building that people can afford – cannot be delivered unless the structures in place support delivery by SMEs.
At North England Build you’ll be discussing how SMEs should be financed. Do you think the government should provide more financial support to SMEs?
While finance is often the key to the success or failure of a project, direct financial support is not necessarily the best long-term solution. What we have found is that SMEs are less aware of the range of financial options available to them. Education is, therefore, the key. Portals such as betterbusinessfinance.co.uk have solutions from both high street banks as well as alternative finance providers. There are case studies that show businesses at different stages of their development so you can see what types of finance might be appropriate. At the NFB’s annual conference in November 2015, we showcased peer-to-peer lending and crowdfunding as part of our finance session and this proved to be one of the most popular sessions of the day, so there is definitely an appetite for this type of information. The British Business Bank, set up by the coalition government, has been funding alternative finance lenders and smoothing the way for challenger banks to create a more diverse market. The government is also working on a system that will signpost alternative finance to companies that are refused finance. So, there are more helpful ways of putting SMEs and finance together than direct funding and the NFB has been working over the past two years to promote these.
In just one or two sentences, can you describe the NFB?
The NFB is the most representative voice of professional builders and contractors in England and Wales. Because the NFB’s membership includes specialists, general contractors, large regional contractors and house builders, we represent all parts of the industry to local and central government.