Adrian Aston Comments

Autumn Statement

2011-12-12T02:42:00.000-08:00

The chancellor’s autumn statement certainly had a large element of support for the construction industry with many announcements regarding infrastructure, housing and schools.
However as with previous announcements the figures are impressive but the devil is in the detail. How and when will the investment come on stream and is it any more than what was promised and has already been cut?
There was some good news in that the education sector that will benefit from an additional £1.2bn. It is also pleasing to see that half of this money will be allocated to projects that will create 40,000 new school places in areas with the greatest demographic pressures.
There is no doubt that we are going to see the tough times continue and must be prepared for them to get worse given external factors such as rising oil prices and the Eurozone crisis.
At least the season of goodwill is approaching and we can all take a break from the doom and gloomy forecasts until 2012.

Localism Bill

2011-04-07T09:04:00.000-07:00

Adrian Aston considers if the much anticipated Localism Bill will assist developers and facilitate much needed regeneration in local communities. The much anticipated Localism Bill has implications that will extend far beyond the system of planning. Developers in particular will be dealing with a whole new set of rules, many of which are yet to be defined. The Coalition Government wants to strip Whitehall of its powers and devolve greater freedom to councils and neighbourhoods. The bill will establish powerful new rights for communities and give them much more control over housing decisions in their area. The biggest area of concern for most developers will be that localism becomes ‘Nimbyism’, with local communities using their new powers to delay, deflect and avoid development. Developers will need to take on board the requirement for increased consultation to try and avoid this situation. How well they work with the local community will be critical. Developers who are willing to work closely with community groups and town and parish councils could facilitate the incorporation of their own requirements at the outset, facilitating an easier route to achieving planning permission. In reality there is often much distrust between local people and developers and it is likely to take some time to reverse this perception. Mandatory consultation may also be introduced as a pre-requirement for planning permission. Currently the bill includes no detail about what size of project will have to meet the requirement for mandatory consultation but an impact assessment document suggests that the duty to consult would apply to only large ‘strategic’ developments of 200 or more homes or 10,000 square meters of floor space. Some community groups have expressed alarm at this; they are looking for a much smaller threshold. The coming months will reveal what this threshold will be, but there is no doubt that developers should prepare to invest more time and money in consultation. Before the last election the conservative government promised improvements to the planning system to make it faster and more efficient. The Home Builders Federation published figures that showed that the time taken to get planning permission rose to 15 months under the previous Labour government. Revolutionary changes do not come without a price and it is likely to be the developers who have to pay the price on this occasion and this will not stimulate much needed regeneration.

Uncertainty May Create a Long Road to Recovery for Construction

2010-11-30T08:57:00.000-08:00

Adrian Aston suggests that the government needs to address many of the uncertainties that have been created by proposed reforms to the planning system and regeneration mechanisms to help the industry assess the outlook and determine how long the road to recovery may be.

The CSR has answered a lot of questions but many remain unanswered and not just in terms of where the cuts will fall but how public sector projects will be procured, what will the planning regime look like and how will regeneration be encouraged and managed in the regions.

Many who work within the planning system have voiced their objections over the proposed changes. Bodies such as the Chartered Institute of Housing, National Housing Federation and the Town and Country Planning Association have all expressed concern over the scrapping of the regional planning strategies.

The planning system should offer a framework to deliver the government’s objectives in terms of the economy, the environment, sustainability and social policy. At times these may produce conflicts that need to be resolved and both the local agenda and the national strategy need to be considered.

The government’s reforms aim to allow communities to shape their neighbourhoods and share in the benefits, which nobody can deny is a laudable one. In reality what is needed is that the people making the decision should understand what the development process is about, which is creating business in an area. The decisions they make can hinder the business process unnecessarily because of the application of some indiscriminate rule or the ticking of a standard box.

Time and time again we have been involved in projects that are delayed unnecessarily by an unrealistic planning demand that costs the developer time and money.

Whilst not all planning issues are about commercial development, with the cuts in public spending the government will be looking for the private sector to generate growth.

These developers will need the regional support that used to be provided by the regional development agencies. The West Midlands region now has an approved LEP bid that is set to take over the duties of Advantage West Midlands but how this will be achieved is still very much embryonic.

In the current financial climate, regeneration schemes need all the help they can get. For many there are too many financial hurdles that need to be overcome for the development to make economic sense. One new initiative that was confirmed in the CSR should encourage commercial development, Tax Increment Financing. This is a funding mechanism where councils fund infrastructure by borrowing against future business rates income.

TIF has received much support from the property and construction industry. The BPF has been lobbying the government since 2008 and produced a report that looked at the US experience and the advantages and disadvantages of the approach and how it could be introduced into the UK.

Details have not yet been released about how these will work so at the moment it is just a commitment to introduce the mechanism.

So for the construction and property industry the detail remains an all important key to how quickly they will be able to respond to the changes and deal with the cuts so that the recovery can begin.

More efficiency and fewer cuts

2010-10-26T04:31:00.000-07:00

Following the Comprehensive Spending Review Adrian Aston suggests that the level of spending cuts could be less if the government addressed some of the systems and procedures that waste money and create unnecessary overspend.

There is clearly a need for huge savings to be made but there are also many opportunities to save money that are being ignored in the rush to cancel and postpone major spending.

The procurement process for public sector projects Constructionline is one area in particular that is extremely wastefuland should be radically overhauled or scrapped.

The consultants and contractors that use Constructionline believe that the system is too complicated, too lengthy and could be wasting as much as £250 million each year.

There is merit in having a system that enables firms to tender for public projects in a uniformed manner but a working party that involves professionals from the industry should be tasked with developing a new system rather than the boffins from the Department of Business Innovation and Skills.

A similar situation exists with PFI projects. The cost involved in tendering for these projects is huge and the tendering process takes more than one company too far down the line before a final decision is made.

Framework agreements should also be overhauled. These enable the NHS and education sectors to keep a selected number of contractors and consultants on hand with the necessary experience and knowledge to carry out the work at competitive rates, but the system falls down when the framework agreement itself is too rigid.

The outlook for the construction industry is still very tough and addressing these areas of waste will allow everyone to operate more efficiently and profitably in the future.

Let’s hope that the government realizes the need to view a strategic long term alongside the short term need to reduce the deficit in order to ensure that there is enough capital investment in the areas needed to stimulate the recovery.

Getting down to the community detail

2010-06-09T01:57:00.000-07:00

The media frenzy around the latest news from the new coalition government understandably focuses on the big news items. Will spending on education and the NHS be protected, how will the government nurse the fragile economy back to life when the public purse is empty and how will they encourage the banks to start lending again?
Whilst it is right and proper that these important issues are aired we should not neglect those less newsworthy sectors that are in need of some urgent help.
Community owned facilities for example. There are 9,000 halls in the UK which represents the largest network of community owned facilities in the country with a total asset value of over £3 billion.
These facilities which are often vital lifeblood of any community, especially in rural areas, are run and managed by volunteers without regular funding from local authorities. Capital expenditure to improve or replace these halls has to come from funding which is often difficult to obtain.
Action with Communities in Rural England (ACRE), the national body for the Rural Community Action Network provides a strategic view of rural community issues to government and has previously issued a 10 point plan for improving England’s community buildings.
The new government should address these concerns to ensure that this sector does not suffer a major setback when the final extent of the cuts in spending is known.

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The New Government Should Recognise the Cost of Going Green for Commercial Property

2010-05-05T02:52:00.000-07:00

Green issues have been a hot topic both supporting and encouraging emerging technologies and legislation. The construction industry has had more than its fair share of legislation and it is now clear that meeting the demands of the planners and government legislation is having a detrimental effect on the commercial viability of many schemes.
The major problem is that many green alternatives are much more costly than the traditional option and the resultant savings in energy do not give a commercial payback.
A recent example we encountered involved a PCT funded health scheme. An extra £1m on an £8.5m budget to fund the environmental standards required took the project costs so high that the business case criteria could not be met and this project is now on hold.
A new three year project funded by Corus and the British Constructional Steelwork Association (BCSA), has recently been launched to provide guidance on the design and construction of sustainable, low and zero carbon buildings in the UK.
Initial results have just been published for the school building and this found a 5.8% uplift in capital costs for the school building to reach BREEAM Outstanding. We would judge this to be a conservative result and have experienced schemes where this percentage is much higher.
A small local community project here in the West Midlands has illustrated the problems that the industry faces in wanting to raise standards but not having the budget to do it. In this case additional funding via a Biffaward made it possible to install the alternative systems but the scheme’s sustainable technologies would not have gone ahead without this funding.
The aim was to dispense with oil fired gas boilers with an air source heat pump system and solar panels to provide heat and hot water. The additional cost to do this was £50,000 on a £470,000 build cost.
In the commercial world these extra grants are not available making commercially viability harder, particularly for developers who may not benefit from the reduced running costs in the future.
These additional costs will continue to have a negative effect on commercial property activity until we start to see more demand for environmentally friendly buildings from occupiers and a willingness to pay for them.
In the retail sector the power of the huge supermarkets and their commitment to energy efficient buildings is having an impact on the industry. They are driving developers to supply the buildings that they need for retail, warehousing and distribution with improved carbon footprints and greater efficiencies. The escalating cost of energy is a huge factor in this sector especially in the retail stores that use enormous amounts of energy in lighting and refrigeration for example.
We are experiencing a step change in the environmental requirements of our building projects, which is necessary but the new government should be mindful that the industry faces a long slow road to recovery and regulation should support and help rather than hinder.