Federation of Master Builders SBE0048
Written evidence submission from the Federation of Master Builders (FMB)
1.1. The FMB is the largest trade association in the construction industry, representing over 7,000 small to medium-sized (SME) building firms across the UK. The majority of these firms operate in the private domestic repair, maintenance and improvement sector. Half build new homes as part of what they do, and 15% are dedicated house builders. One in five operate in public sector or commercial supply chains as specialist subcontractors.
1.2. The FMB welcomes the Committee’s inquiry into the sustainability of the built environment, and its ongoing interest in the best routes to net zero. The recognition of the crucial role that our buildings must play in tackling climate change is to be applauded. Our existing homes contribute 20% of our country’s carbon emissions. So whether it’s a long-term strategy for retrofit, and/or the Future Homes Standard, buildings must be part of the Government’s roadmap to deliver its 2038 and 2050 carbon reduction targets.
1.3. The FMB has a long-standing interest in this field. In 2009, the FMB published its independent research report ‘Building a Greener Britain’ which set out a strategy for how to make low-carbon home refurbishments mainstream. The FMB supported members to achieve Green Deal Installer status; contributed to the design of a Level 5 diploma in Retrofit Co-ordination; and helped micro builders engage with the Green Homes Grant scheme. Working on behalf of the Construction Leadership Council (CLC), the FMB has produced a National Retrofit Strategy, a comprehensive plan to fix market failure in this market. The FMB backs the recommendations of the Committee’s recent report on the Energy Efficiency of existing homes.
2.1. From the outset, new buildings should be designed with energy efficiency in mind. This means thinking about things like the orientation from the sun of the building – where possible – and consideration of the role of natural sources of shade. Implementing a ‘fabric first’ approach when constructing buildings is an important approach as we look to transition to net zero. This means ensuring that high quality insultation is sourced for the building, as well as other core energy efficient measures such as joint electric heating and cooling systems, at the time of construction.
2.2. SME house builders would support efforts by the Government to increase the manufacturing of construction products and materials in the UK as part of efforts to reduce the embodied carbon associated with the shipping of materials. This would also support the Government’s levelling-up agenda by creating jobs and industry across the UK. Increasing the competitiveness of the materials market would also help address issues of cost and availability, helping to reduce the cost of construction.
2.3. When considering which materials to use, greater emphasis should be placed on encouraging the use of natural materials such as timber and hemp. Timber is widely used in the Scottish construction sector, while hemp is used heavily in the American construction industry. Each of these natural building materials has a much lower carbon footprint than heavily manufactured alternatives and should be considered best practice. They can also each be grown and sourced domestically, an advantage economically as well as environmentally.
2.4. Greater consideration needs to be given as to how we re-use waste material when constructing buildings. The materials used to construct many Japanese modular homes, for instance, feature around 80% recycled material. From used plastic to waste timber, more needs to be done to incentivise the recycling of these materials.
2.5. Consumer encouragement for the use of natural and recycled building materials in projects they have commissioned should also be heightened. This can be achieved in part through growing consumer awareness for the environmental benefits of high-quality natural and recycled materials. Additional financial incentives could also be introduced, for instance through mortgage lenders offering better rates for those buildings with lower carbon footprints and higher energy efficiency ratings.
2.6. These aspirations stand in contrast with the current experience of materials availability for UK builders. Material prices are steadily rising, which risks placing downward pressure on both the quality of construction and the deliverability of the Government’s housing, infrastructure and environmental targets. According to the FMB State of Trade Survey for Q1 2021, the only survey of its kind to track the experience of SME UK building firms, 93% of builders said that material prices were rising, and 92% anticipated that they would continue to do so in the second quarter of the year. According to anecdotal responses to the same survey, the cost of materials across the board has risen by on average 10%, with products that could help a shift to sustainable building like timber and insulation, being particularly hit.
2.7. The cost of low carbon heating technology such as ground source heat pumps are currently prohibitively expensive for SME house builders to install. In the FMB’s response to the Future Homes Standard consultation, the FMB reported an instance of an FMB member spending £300,000 on the installation of a ground source heat pump for a 16 unit scheme. Another member reported a quote of £12,000 for a single unit ground source heat pump. SMEs would welcome interventions from the Government that grow consumer demand for ground source heat pumps, and lower the cost. Grants would encourage SMEs to install more of these types of sustainable heating technology.
2.8. Furthermore, the grants available to homeowners to install electric car charging points in their homes should be made available to developers, so that this service is provided to consumers irrespective of their demand. This will better future-proof our homes.
3.1. In its response to the questions in the Future Buildings Standard consultation regarding existing domestic buildings, the FMB welcomed the Government’s proposals to introduce lower U-values for new and existing thermal elements in an incremental way. Incremental change helps builders, their suppliers and their customers adapt to change slowly and sustainably. The FMB also supports these principles when applied to changes to the Building Regulations for new build.
3.2. In parallel to setting out a roadmap for change, incentivising early adopter building firms to deliver building work to more efficient fabric standards than set out in the Building Regulations would help build capacity in the market. To encourage the market to develop in this way, the Government should consider putting in place financial incentives that help consumers better afford more efficient homes. For example, a temporary 5-year VAT cut on the labour element of repair, maintenance and improvement works, and its associated professional services, to 5%. Research by CBI Economics produced for jointly the FMB and Royal Institution of Chartered Surveyors (RICS) found that this measure would help create 345,000 jobs and provide an economic boost worth £51 billion. We welcome the Committee’s support for the use of a VAT incentive.
3.3. Amending the Building Regulations to include guidance on consequential improvements when delivering building work in scope of Part L or Part F on existing domestic buildings would help leverage greater opportunities for the decarbonisation of existing buildings. Builders should also be encouraged to complete an assessment of the scope for renewable energy installation at the same time as more general home improvement works are being carried out.
3.4. It is more difficult for SME house builders to adapt to change than their larger PLC counterparts. This is because they do not have the resources available to invest in research and development, and trial new building techniques or building services. They therefore need extra support from the Government to adapt to forthcoming changes in the Building Regulations and ensure that no SME house builders are pushed out of the sector as a result of new additional requirements . SME house builders would support the application of a two or three year grace period for changes in Building Regulations to apply to sites of fewer than 50 units. This would allow larger companies to identify the most efficient ways of building before SMEs are also asked to adapt. It would also account for the disproportionately longer amount of time it takes to secure planning permission on smaller sites. The facilitation of knowledge sharing across the industry would help make the uplift in Building Regulations a success.
4.1. In its National Retrofit Strategy, the Construction Leadership Council (CLC) advocates for the use of Retrofitting Local Development Orders that would facilitate the implementation of 20 retrofit trial areas, to help create a safe business environment for new business models to be developed and streamlined in anticipation of delivering retrofit at scale. In addition, it advocates for automatic planning permission for specific retrofitting works to remove barriers and uncertainty to homeowners looking to upgrade their homes.
4.2. In its response to the Future Homes Standard consultation, the FMB did not support the proposal that local authorities should have the necessary expertise to be setting their own standards when it came to the Building Regulations for new build properties. The response noted that local authorities would still retain the ability to set separate standards for PV and other environmental standards, so this would not represent a barrier to more ambitious decarbonisation. In the FMB House Builders’ Survey 2020, some members reported that they were already under considerable pressure from local authorities to deliver over and above standards.
5.1. There is scope for the recent extension of Permitted Development Rights (PDR) to unlock additional energy efficiency improvements in existing buildings, but especially on Britain’s high streets. The FMB has previously argued that the objective of the Towns Fund to drive economic regeneration through urban regeneration should explicitly focus on town centre development, and that this should be predicated upon upgrading the energy efficiency performance of the building stock in each allocated town. This will help reduce carbon emissions, but also build capacity in the local retrofit supply chain.
5.2. Any development delivered under PDR needs to be of a high quality. To mitigate the risk of deregulation creating loopholes for unscrupulous developers, the FMB supports the Building Better, Building Beautiful Commission’s recommendation for minimum home or room sizes to be brought into Building Regulations. According to the FMB’s House Builders’ Survey 2020, 57% of respondents said that they would actively seek out opportunities to build under these regulations.
6.1. The FMB welcomes the Biodiversity Net Gain policy, included in the Environment Bill, as a means of protecting wildlife and the environment. However, the policy must account for the challenges that smaller builders face in achieving biodiversity net gain on small sites, especially if they are brownfield sites. Typically, small brownfield sites will be very rich in biodiversity. However, on a small scheme there is little space for green infrastructure such as Sustainable Drainage Systems (SuDS) or wildflower meadows. The FMB is preparing its members for the new policy by providing information on what measures can be included in a development to protect wildlife, including raising fences or installing bat boxes. However, it should be recognised that many SMEs will by default find alternative ways to meet the net gain requirement. The FMB therefore supports the idea that a penalty is introduced so that where SMEs cannot meet the new requirements, they can pay into a climate change fund to off-set the development. This funding should be administered through existing networks and charities that support conservation in the UK.
7.1. We need a long-term strategy to correct market failure and give confidence to industry, to consumers, and to private investors who, alongside Government, will need to invest to make retrofit happen. The FMB has been working within the Construction Leadership Council (CLC) to lead the development of a National Retrofit Strategy that can deliver retrofit at the scale needed to achieve the UK’s transition to net zero. A National Retrofit Strategy could generate 100,000 new, green jobs in the next four years, and 500,000 new jobs over 20 years. In this Parliament, the required investment from Government of £5.3bn would unlock £11.4bn of private capital, and generate additional GDP growth of £12.4bn. 
7.2. As demonstrated by the relatively low numbers of firms that secured accreditation to the Green Homes Grant scheme during its implementation, builders are hesitant to invest in accreditation if they do not anticipate a sufficient return on their investment. For example, anecdotal feedback from FMB members that successfully achieved accreditation reported spending around £9,000 and many unpaid hours on doing so. The key way to overcome this, is the backing by Government of a long-term scheme.
7.3. The CLC’s strategy recommends eight interlocking components for success: leadership and communication; performance standards; finance and grants; training and accreditation; materials and equipment; creation of customer demand; compliance and quality; and innovation and research. We need each of these eight components in place for the strategy to be a success and current market failure to be overcome. It is argued that a Retrofit Delivery Agency is needed to oversee and coordinate regional and local delivery, providing long-term stability and leadership.
7.4. The key deliverables of the strategy include firstly a ‘property passport’ for each home, setting out the measures needed to retrofit and the associated costs, taking a whole house approach. Allowing consumers to include sequential retrofit measures while doing other general home improvement works. Secondly, establishing the right qualifications and training to ensure that all construction professionals have the latest knowledge of retrofit building techniques. And finally, that local delivery programmes are in place to mobilise the development of supply chains, bringing together relevant actors to find local solutions.
7.5. The Government should be encouraged to explore other financial incentives to support retrofit. These could include a targeted and temporary reduction in VAT (as supported by the Committee); and Stamp Duty bands linked to energy efficiency. We know the finance sector has appetite to deliver green mortgages and other products. However, they, like consumers, need the security of long-term Government commitment.
7.6. Central to all construction activity delivering a more sustainable built environment, is the need to tackle systemic skills shortages. The FMB State of Trade Survey for Q1 2021 found that 38% of builders were struggling to hire bricklayers, 34% carpenters, 26% general labourers and 25% plasterers. Given that the number of starts on apprenticeships in Construction, Planning and the Built Environment has been falling year on year, the Government has failed to meet its target set out in the Construction Sector Deal of achieving 25,000 starts a year by 2020. No progress on decarbonising our built environment can be made without the Government taking steps to encourage more new entrants into the industry, and to support more local builders to train. The FMB supports the proposals in the FE White Paper for local employers to play a greater role in developing skills plans for the local area. We know that greater collaboration between local authorities, colleges and employers will be key to identifying opportunities and heightening the number of apprenticeship starts in the coming years. The FMB will follow the passage of the Skills and Post-16 Education Bill with expectation.
7.7. Finally, for some years now, the FMB has advocated for a mandatory licensing scheme in the construction sector, as is in place in other countries such as Australia and Germany. We believe that this is the only way to truly eliminate from our industry incompetent firms which lack the necessary knowledge and professionalism and pose a risk to themselves and their clients. At the same time, a licensing system could serve to promote and drive-up technical competence, customer service, financial good conduct, and health and safety compliance, and provide routes to continual professional development, which we currently lack. Tackling fears of consumer detriment, and raising professionalism within the sector would be important triggers to unlocking greater levels of sustainable construction.