Housing clients and contractors need to rethink their relationships
Wayne Gales is chairman of JV North and chief executive of Weaver Vale Housing Trust
The position the housebuilding sector faces today is a culmination of austerity, Brexit, COVID-19 and economic turmoil caused by the poorly considered fiscal policy from Liz Truss’s government.
The UK financial market shifted seismically and at pace last autumn, and interest rate rises won’t help construction but it was felt necessary to curb inflationary pressure.
Despite this, the affordable housebuilding sector has a long history of adapting to such challenges and capitalising on opportunities. So how it responds in 2023 will be key.
“Contractors want to work with organisations they feel valued by and who stand shoulder-to-shoulder with them – not just when things are going well, but also during challenging times”
Continued financial support from the government via its Affordable Homes Programme will help us continue building and play an important role in supporting economic growth.
But equally important is the need for a new approach to social housing client-contractor relations.
Simply recognising that times have changed sends a strong message. We need to evolve our offer to reflect the challenges that all stakeholders (the social housing providers, the contractors and the consultants) are facing.
Contractors want to work with organisations they feel valued by and who stand shoulder-to-shoulder with them – not just when things are going well, but also during challenging times.
Clarity is, therefore, more important than ever, so that all parties have clear and reasonable risk and reward boundaries and understanding.
We need to look beyond narrow economics and consider broader long-term value. It starts with a change of culture, with affordable housing providers treating contractors as valued, key partners or ‘part of the team’, instead of the traditional client-supplier relationship that invariably focuses on cost.
Driving prices too hard will only serve to consign contractors to financial breaking point – and there’s no value in that.
We also need the courage to commit to collective, calculated risk-taking at different stages of the construction process.
The days of fixed-price schemes at a time of high inflation will be few and far between, if at all, so flexibility will be of paramount for both parties if we are to keep building much-needed affordable homes for rent, rent-to-buy and shared ownership.
Understandably, there is a collective nervousness due to rate rises; supply-chain and demand-driven prices; and a weak pound.
As the financial squeeze tightens, retaining capacity and talent can be helped by the long-term pipeline that homebuilding-registered providers experience.
JV North – a consortium of 12 housing association and local authority members that has built around 10,000 homes by pooling grant bids, running a framework and sharing best practice – designed a £560m contractors’ and consultants’ Building Back Fairer framework in 2021 to ensure they felt valued and recognised as key, long-term delivery partners.
Late last year we also held a framework engagement day to discuss opportunities, better understand the challenges, explore how to work together more effectively and share market intelligence.
Feedback from contractors was excellent and we are being flexible by separately running tenders for smaller schemes and MMC on our new Dynamic Purchasing System portal.
Put simply, without contractor partnerships we can’t build the quantity and quality of greener, cleaner, more efficient homes we want and need to.
And given the cost of living crisis, this is more important than ever.
Of course there’s no easy answer. But if all stakeholders see the bigger picture, are willing to have open conversations, are prepared to listen – and you also have a long-standing relationship – then that is a better place to be.