CIOB's analysis of the Government's Levelling Up Missions

So far, 2024 has been a busy year for the built environment with the advent of the latest consultation on the Future Homes Standard to further decarbonise new homes built from 2025. At the same time progress is being made on building safety as the Scottish Government hears evidence from sector experts on a Cladding Remediation Bill, representing a step towards ensuring high-risk buildings in Scotland are remediated to remove unsafe cladding.

However, one policy issue that did not garner as much coverage, was the release of the much discussed ‘Levelling Up Missions’ and the metrics to be used to judge the success of Government in delivering them. Conversations about the missions have rolled on since they were first introduced in the Levelling Up White Paper in early 2022. At the time, it was stated that these would be the overarching objectives used to equal some of the stark social and economic disparities between London, the South and the rest of the UK.
 
For the purpose of this blog, we will highlight some of the missions which we feel are most impacted by the state of the construction industry.

Mission 2: Research and Development – “By 2030, domestic public investment in R&D outside the Greater South East will increase by at least 40%, and over the Spending Review period by at least one third. This additional government funding will seek to leverage at least twice as much private sector investment over the long term to stimulate innovation and productivity growth.”

Construction as an industry is innovative in its nature. It is constantly evolving and looking at new technologies and methods of working.
 
Evidence suggests that the construction sector is investing more resources than ever before into formal R&D. In 2021, the sector invested £471m according to data gathered by the Office for National Statistics (ONS). In 2020, the industry invested £399m in R&D and £350m in 2019 before the Covid pandemic.

If this trend continues, this will present clear evidence to government about the construction sector’s commitment to innovation. Further assurances that construction will be one of the key sectors that benefits from this investment will be crucial and we would be keen to work with the Combined Authorities to showcase new innovations and technologies that are having a transformative impact.

Mission 6: Skills – “By 2030, the number of people successfully completing high-quality skills training will have significantly increased in every area of the UK. In England, this will lead to 200,000 more people successfully completing high-quality skills training annually, driven by 80,000 more people completing courses in the lowest skilled areas.”

It is positive that Government recognises the significant number of new skilled workers needed across all areas of the UK to meet the current skills gap that is affecting various industries, including construction. It is important that crucial industries such as construction, which needs an estimated 224,900 workers by 2027 to meet current and future demand, are not forgotten in this process.

Construction industry careers offer something for everyone, regardless of previous education. As there are many pathways that people can take into the sector, from apprenticeships to T-levels, it is important that these are recognised through the levelling up framework and promoted as viable routes into a highly skilled and important sector. This could be combined with work to improve the perception of construction as a route for low academic achievers, such as teaching construction during early years education through a new built environment GCSE.

It should be noted that, there are negative perceptions about the earning potential in construction compared to other industries. CIOB’s Real Face of Construction report from 2023 showed that this was not the case and that the UK average annual earnings in construction were around £36,000 compared to £33,000 across all other sectors. The report also indicated that there were significant geographical disparities between earning potential, further demonstrating the need for the levelling up agenda. This also demonstrated the need to encourage more learners to enter the construction industry in areas like the North East where average earnings are around £33,000, the lowest in the UK alongside Wales, though still higher than the regional average for all sectors.  

Levelling up offers the opportunity to scale up construction projects across these regions which, could, potentially mean greater opportunities for new entrants in the sector. Ensuring a stable pipeline of work will have a significant impact on staff retention and, ultimately, could lead to further increases in earning potential as competition for work rises.

With more projects and opportunities could ultimately lead to an increase in earning potential.

CIOB is supportive of this mission but holds concerns that construction will fall down the pecking order of industries that are targeted for skills boosts. It must also be acknowledged that, while measuring the number of adults who are successfully completing high-quality skills training will produce definite numbers of new entrants into key industries, we must ensure that the courses they are embarking on are of the highest quality and serve to provide people with the necessary standard of skills needed. A review of existing educational provisions across a variety of industries would be a welcome way of ensuring that courses benefit those taking them as well as meeting the needs of employers.

Mission 9: Pride in Place – “By 2030, pride in place, such as people’s satisfaction with their town centre and engagement in local culture and community, will have risen in every area of the UK, with the gap between top performing and other areas closing.”

While this mission is mainly rooted in the outcomes of the planning system, there is inevitably an important role for the construction industry to play in creating beautiful places that people can be proud of.

One of the metrics listed to judge success against this mission is the percentage of people that agree/disagree that their local area is attractive. Given the current state of the UK’s town centres, with many shops closing and being left vacant, it is likely that significant regeneration work will be required. With the levelling up fund, which allocates finance to many local authorities for regeneration work well under way, it is imperative that these projects are given primacy, and that money is not ‘stuck in the system’ for long periods of time. The certainty of a quick process to move levelling up funding from central to local government will help provide assurance that these projects are going ahead, which will have the joint impact of improving local areas and providing a steady pipeline of work for construction businesses.

Mission 10: Housing – “By 2030, renters will have a secure path to ownership with the number of first-time buyers increasing in all areas; and the government’s ambition is for the number of non-decent rented homes to have fallen by 50%, with the biggest improvements in the lowest performing areas.”

CIOB recognises the impact that the current housing crisis is having on people across the UK, as well as the impacts of the ongoing cost-of-living crisis and inflated household energy bills. While we are supportive of measures to increase the number of new homes built per year, we have always held the view that it is equally as important to focus on quality as it is on quantity.

The number of non-decent homes in the UK is a concern and we are pleased to see that steps are being taken through the levelling up agenda to address this. However, it is widely recognised that the current funding systems for retrofitting the existing housing stock to bring it up to decent standards are failing both consumers and providers.

Consumer confidence is key to the success of retrofitting, which is why built environment professionals expressed frustration when the Prime Minister Rishi Sunak MP scaled back the UK’s net zero ambitions and energy efficiency targets in 2023.

Traditionally, there has been little take-up of retrofitting grants. Take the government’s Boiler Upgrade Scheme (BUS) for example, which provides funding to help homeowners replace outdated, carbon-intensive gas boilers with air or ground source heat pumps.

Almost £90 million of the £150 million initially allocated to BUS went unspent, according to reports from 2023, while 95% of the £1.5 billion funding for the now-defunct Green Homes Grant wasn’t claimed.

If the ambition of reducing the number of non-decent homes by 50% is to be realised the Government must invest in a long-term strategy that is aimed at decarbonising the whole home and looks further than just replacing individual systems, such as boilers.

An example of a strategy for retrofitting the UK’s housing stock can be seen in the Construction Leadership Council’s National Retrofit Strategy which estimates that a project of this scale would unlock 100,000 jobs, generate government revenues of more than £12 billion and provide a GDP boost of £21 billion.

To increase consumer uptake, we recommend that the government introduce an interest-free (or low-interest) “Help to Fix” loan scheme to cover the full costs of retrofitting work. The scheme could be made available to households and landlords for any repairs within the home that result in an improvement in energy efficiency. It also needs to be accompanied by consumer awareness work to undo some of the damage that has been done by previous grant schemes and to increase consumer confidence to drive up interest in these programmes.

At the end of the day, the levelling up agenda represents a positive step forward to easing some of the prominent geographical differences that exist in the UK. However, without an economically healthy and thriving construction sector, many of the stated missions will not be achievable. Therefore, it is paramount that the Government seeks to address some of the long-standing challenges that have resulted in the significant construction skills gap as well as the overarching inefficiency of the UK housing stock.