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Opinion – Action must be taken to save SME housebuilders and the industry as we know it

Sophie Horgan is the managing director of Horgan Homes and one of the country’s most influential female construction figures. Her award-winning business scooped Best Small Housebuilder gold at the 2023 WhatHouse? Awards, and she is one of the ‘Magnificent Seven’ women who helped the All-Party Parliamentary Group for SME Housebuilders launch a new campaign to attract more women into the industry. Here, she calls for urgent action to save small and regional housebuilders from an existential crisis facing the industry.

How much value do we place on Britain’s independent housebuilders?

You know the type of firm I’m talking about. They are predominantly local, have a strong local supply chain and work hard to develop a reputation for high-quality housing which meets the needs of their communities.

They build houses which become treasured homes, create places rather than spaces and tailor their designs to reflect their settings in a way the big builders simply do not. They are, in many ways, the lifeblood of the UK construction sector.

But if you look at the current crisis in the industry, they are being wiped out in their thousands every year. It’s a crisis which the new government must act to solve as a matter of absolute urgency, otherwise we’re going to be left with just a handful of national housebuilders enjoying a de facto monopoly of the industry.

Recent insolvency figures paint an appalling picture of the damage being done. In the last year, 4,370 construction companies collapsed – a 76% increase on the figure for 2020/21. That means thousands of homes going unbuilt, huge numbers of supply chain companies and sub-contractors facing a bleak future and a huge body blow for the local economies of each affected area.

Of course, there are a myriad of reasons behind this crisis; you wouldn’t expect anything less in a complex economic environment such as the construction industry. But there are two or three huge factors which dominate our sector and which must be top of the new government’s agenda.

Let’s start with planning. The current system – as I’m sure you know – is simply not fit for purpose. It’s bloated, slow, unpredictable and inconsistent.

There are a host of reasons for this. Planning departments have been cut to the bone and are now hugely under-resourced, meaning some applications can take up to four years to progress. The Local Plan framework has effectively fallen to pieces – with recent research showing some 67% are now out of date. There are far too many policies for anyone to make sense of – sometimes even directly contradicting one another, and there is far too much scope for the views of individual planning officers, councillors or objectors to derail perfectly reasonable development.

Add in the time taken to lodge an appeal against any refusal, or the days, weeks and months which can be spent negotiating some of the multitude of conditions which can be attached to a permission, and we find ourselves losing years to paperwork before we can get a single spade in the ground. 

That means when developers buy a site, they struggle to predict build costs and timeframes with any degree of accuracy. Look what has happened over the past two years for example. Energy costs have skyrocketed as a result of the invasion of Ukraine, inflation has been all over the place, interest rates have increased and there have been two or three changes of Prime Minister.

The impact on the industry is alarming. Residential property makes up some 5% of the national GDP, but across the country, we are up to 40% down on housing delivery and 28% down on starting on-site. Against this backdrop, it is no surprise that so many firms cannot make the maths add up.

So, priority number one for the new government must be to sort this mess out once and for all and get Britain building again.

A streamlined, nationally-led planning process which truly reflects the balance needed between brownfield and greenfield development and delivers consent within an agreed timeframe is a necessity.

It should include a focus on ways to make SME constructors more sustainable. We can offer a much-needed alternative to the large housebuilder approach but need a national infrastructure which sweeps away some of the barriers which currently stand in our way.

There is an opportunity for local authorities to embrace a different way of doing things by working with us which will allow them to differentiate themselves in a competitive national landscape and support the heritage, economic health and well-being of their communities.

The new government could do worse than starting with a comprehensive review of the National Planning Policy Framework. The number of planning permissions granted in 2023 was the lowest on record, thanks in part to the removal of housing targets by Michael Gove. More than 60 local authorities have now publicly withdrawn or delayed their local plan consultations, while many more are considering reducing their housing requirements or are sitting on their hands waiting to see how things play out.

A bold, clear and realistic national framework should set clear guidelines for development, simplify the application and appeal system and place the urgent need to build more new homes right at its heart. And once adopted, it should be allowed to remain in place without constant amendment to appease a vocal minority.

This does not mean accepting development willy-nilly but must put an end to the prevailing mindset in many parts of the country that new housing is only acceptable if it is being built somewhere else.

And while the new government is at it, it really must take a long hard look at the education sector and the way in which youngsters are being prepared for the world of work.

We all know that the construction industry offers some fabulous opportunities to ambitious, hard-working and forward-thinking people, but can we honestly say this message is being delivered in schools and colleges?

The time has come for a national programme to raise the profile of the construction industry, to invest in modern skills and training and to shout about the value of a career in the sector.

My own story shows just what can be achieved. I completed an HND and then a degree in construction before starting in a junior role at my father’s building company. I have worked my way up through hard work and dedication to build a regional construction firm which is respected for its quality craftsmanship and innovation.

We need more initiatives such as the All-Party Parliamentary Group for SME Housebuilders’ ‘I am a Housebuilder’ campaign which I helped launch with six other female construction industry figures earlier this year.

Its aim is to attract more women into the industry – there are currently just 2% of SME housebuilding companies with women in charge – and overcome the old stereotype that building is for boys.

Getting rid of these outdated attitudes and building a much more diverse industry should be a top priority for the new government and for our industry as a whole.

Without change, we will simply see more local and regional builders forced out of business. That will leave the industry dominated by a handful of national players and our national housing stock becoming ever more monolithic.

That’s not the future I want for our industry or, indeed, our country.


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