Access Construction recently hosted a webinar on ‘What’s New in Construction?’ – a discussion between a panel of five experts on construction SMEs and The Access Group’s head of construction, Carol Massay
The panel began with a discussion of the UK government’s new infrastructure levy and its effect on construction SMEs – an attempt to simplify the current complex levy system.
Access Construction asked the question, will the new Infrastructure Levy make processes
straightforward or more complicated for UK-based developers?
What is the new Infrastructure Levy?
Currently under consultation and set to conclude in July, the proposed new Infrastructure Levy is set to replace the current Community Infrastructure Levy (CIL), Section 106 and affordable housing contributions.
Described as “a simple, non-negotiable, locally set Infrastructure Levy (that) will ensure that developers pay their fair share to deliver the infrastructure that communities need”, it is part of the Conservative government’s broad Levelling Up & Regeneration Bill. The ultimate aim is to increase affordable housing and improve living standards in impoverished areas in the country.
It is pitched as a simplification of the current levy process and, in theory, ensures new developments contribute to the wider community through funding for both infrastructure improvements and the creation of much-needed affordable housing.
However, there is a big question mark on its impact on the UK construction industry.
Will the new levy be an unfair deal for construction SMEs?
Sandi Rhys-Jones OBE, the current senior vice-president and incoming president of the
Chartered Institute of Building (CIOB), expressed her concerns about the new levy leading to an unfair deal for construction SMEs.
While the aim to simplify and speed up development is great; Sandi had reservations about the new levy really making processes simpler when it is part of a raft of other legislation, such as the 2022 Building Safety Act.
She highlighted the importance of joined-up thinking when it comes to moving forward
for both the industry and the country. The other concern raised by Sandi is how the new levy will impact the broad band of construction SMEs that make up the core of the construction industry.
While major developers at the top of the tree will have the time and resources to adapt to changing legislation quickly, smaller companies may handle a lot of extra work and complexity to account for the growing number of boxes to tick (for example, whole-life carbon assessments).
Sandi linked this back to a looming crisis within the sector – its lack of people. The shortfall of over 220,00 within the industry doesn’t stop with the trades but also within management and back-office staff, especially in construction SMEs, who will have to quickly reskill and transform processes to hit government legislation.
“Personally, I don’t think it’s going to be a level playing field if (the Infrastructure Levy) is a ‘one-size-fits-all’ approach. Principles are fine, but we need a really clear analytical approach to how this will work in practice,” said Sandi Rhys-Jones, senior vice-president, CIOB.
While the principles behind the levy, such as handling geographic imbalances in the UK,
are admirable, Sandi highlighted the need for a mechanism where it can be applied
equitably. Policymakers need to work with those who represent all types of businesses
in the industry to create something practical.
Consolidation to avoid chaos
David Chadwick, editor at Construction Computing, pointed out during the discussion that many major infrastructure projects are seeing delays and cancellations – the latest being a two-year delay of the HS2 rail project announced in March due to escalating costs.
This is leading to uncertainty across the sector, building on the doubt around the new levy. The suggested solution is consolidating the demands on the industry by regulations and levies set by various government and industry bodies, saving the sector time and resources
and relieving it of the current complexity.
“A consolidation of the raft of seemingly conflicting regulations and measures being foisted on the industry wouldn’t go amiss,” said David Chadwick, editor at Construction Computing.
Michaela Wain, managing director of Design & Build UK, agreed with the need to simplify
the industry and consolidate regulations. One of the main criticisms of the new levy is
around the vagueness of the language, particularly the idea that the levy is due once
a project is “completed”, – but the complex truth is this could apply to several parts of the
construction process.
It is also likely to be set at variable rates according to location due to the variety of land values in the UK.
“The industry makes things so complex. Microbusinesses and construction SMEs can’t keep track of daily changes to regulations and struggle to keep track because there will always be something different next week. We need to simplify processes – we are constantly trying to fix problems. If you talk to tradespeople, they just want to do the job,” said Wain.
Michaela also warned about further impacts of the Infrastructure Levy and how that money
will be reinvested. Will the affordable housing generated be high-quality, or will the UK see the return of 1970s-style tower blocks?
While the new Infrastructure Levy may be a step forward in simplifying the industry, the
discussion around the levy concluded that a lot more consultation with the industry is
needed to find a fair deal for the industry.
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*Please note: This is a commercial profile.
Alex Gillham
Digital Content Manager
The Access Group
Tel +44 0845 345 3300
carol.massay@theaccessgroup.com
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