Examination of Witnesses (Questions 300-319)
FEDERATION OF
MASTER BUILDERS
4 DECEMBER 2007
Q300 Mr Clapham: Has that view been
put to the HSE and, if so, what has been their response?
Mr Berry: We certainly put it
to the Secretary of State for Work and Pensions when we attended
the Construction Safety Forum as one of our main concerns and
we are talking to the HSE about making this information more widely
available. I think there is also a role there for the construction
sector particularly large contractors which have a lot more information
than the small ones to actually share the information across the
sector. I think it goes right across the construction sector in
addition to the HSE.
Q301 Mr Hoyle: It is interesting
that the Government which is meant to be e-government is failing
when you need information, so I think it is something we must
take that on board. Part of the evidence suggests that the major
construction sites are much safer places to work in, that they
are not the problem any more, and it is the small construction
sites and small builders where you are more likely to have an
accident. Do you think that is fair?
Mr Berry: I think one of the factors
is the size of the private domestic repair, maintenance and improvement
sector which has increased from £12.8 billion in 2002 to
£15.8 billion in 2006, and part of the reason for the number
of accidents is clients undertaking work themselves and not employing
professionals such as those that belong to a trade body like the
FMB. We think that accounts for some of the increase in the number
of accidents.
Q302 Mr Hoyle: The second part is
how do you qualify to become a member of the FMB?
Mr Diment: Anyone can apply. We
then have a vetting procedure that we go through to admit them
which involves them demonstrating to us that they have a successful
trading record, we would look at their credit references, we would
expect to see evidence of their professional indemnity insurance
and, if they employ staff, their employer's liability insurance.
We then ask them to provide a series of references which will
be taken up so that we can talk to the client about quality and
their satisfaction of the work. We have introduced, starting about
six months ago now which we will eventually roll out over a much
wider basis, inspections and actually sending out representatives
of the British Board of Agreement, who we are employing as our
inspectors, to go out and look on site at one of the jobs that
a potential member has done within the last 12 months to see the
quality of it and to talk it through with the clients. We do have
a process which we use if we are not satisfied with how our members
have behaved in talking to them and we have powers which we do
sometimes use to expel members.
Chairman: That is a good answer, thank
you very much. Brian Binley?
Mr Binley: Good morning, gentlemen, it
is nice to see you.
Chairman: He is in a better mood!
Q303 Mr Binley: Can I say how nice
it is to see the craftsmen's body present. There is a concern
about the continuation of that craft within the building profession
and particularly within your organisation. Last year we hear that
50,000 young people applied to be apprentices and only 7,000 were
placed. I know there would be some wastage but that seems to be
quite a lot of wastage to me. Is the record of your members as
bad as the rest of the sector when it comes to taking apprentices
or can you give us evidence that it might be better, and I am
hopeful that you will be able to?
Mr Diment: We certainly share
your concern that there are not enough placements for the number
of people who want to come into the industry. Having said that,
we think that amongst our members there is a fairly good record.
We have just done our annual membership survey and of our 13,000
members just over a fifth (22%) said they are currently employing
apprentices. When you look at the broader figures produced by
Construction Skills something like 70% of apprentices currently
being trained in the construction industry are being trained through
SMEs, so we think the smaller end of the sector is doing a lot,
but there is no degree of complacency and we would like to see
more being done if possible.
Q304 Mr Binley: Can you elaborate
on what more you might do as the Federation of Master Builders?
Mr Diment: We have been working
very closely for a long time now with Construction Skills to make
sure that the support that is available to smaller businesses
is made aware to those businesses. We have just launched a major
initiative, in fact it was launched yesterday by our national
President alongside David Lammy, the Minister for Skills, which
is a cross-industry taskforce which is designed to encourage those
who do not yet train apprentices to take them on and those who
do to consider taking on more. We are certainly aware that we
need to increase two to three-fold the number of apprentices that
are going through the industry as an absolute minimum if we are
going to have the sort of numbers of skilled craftsmen for the
construction industry as we move on beyond the turn of this decade.
Not just because the industry needs them but because I think socially
the country needs them, with all the evidence we have about young
people who are drifting rather aimlessly through life, and to
ensure that they have got some skills which will enable them to
support themselves and their families for the rest of their working
lives.
Q305 Mr Binley: There was a time
when young, would-be professional footballers were told to get
a trade first, but those days have gone! We heard last week from
ConstructionSkills that there is a north-south divide in respect
of provision of training by employers and this is one of the areas
where the north excels, quite frankly. Is this the experience
with your membership? Again, why is that the case? And if you
find the reasons why, can you tell us how we might put it right?
Mr Diment: It certainly is. I
mentioned a few moments ago the survey which we have recently
done which showed that just over 20% of our members currently
have apprentices. Of our members in Scotland it is 60%; in the
north of England, Wales and Northern Ireland it is about one in
three; in Yorkshire, in the North West and the South West it is
one in four; in London and the South East it is somewhere between
one in eight and one in ten.
Q306 Mr Binley: A real problem.
Mr Diment: So there is certainly
a problem as you move further south and further east. Why has
that happened? I think we are still struggling to try to understand
it. I think there are some issues around the impact of the recession
on the construction industry 15 years ago in which the traditions
of training were maintained far more strongly in the north of
the country. There are clearly issues probably felt more strongly
down here in the south of the country about the relative perceptions
of vocational and academic education. All of these I think need
to be overcome.
Q307 Mr Binley: Richard, if you have
got any more information on this could you send it to us because
it is an important subject?
Mr Diment: Certainly.
Q308 Mr Binley: We are talking, oddly
enough, about the area that is going to see some of the largest
construction projects in the country. I know that is not your
bag really as an organisation but you do support those people
and so it is pretty important.
Mr Diment: Very much so, yes.
Q309 Mr Weir: You mention in your
memorandum the Government's climate change agenda and particularly
the fact that it seems to be concentrating on new build rather
than retrofit. You have called for a 5% VAT rate on all retrofits
and refurbishment work to encourage home owners to make their
homes more energy efficient. Do you think this can be implemented
without the risk of such a system being abused by those simply
wishing to avoid VAT?
Mr Berry: Yes we do because we
have looked at the evidence from the European Commission 2003
which looked at the experiment on the Isle of Man and that revealed
where VAT was reduced, 96.4% of the cut in price was actually
passed on to the client. At the same time there was a 96.4% (the
same percentage) increase in business activity. That reflects
that the market is very price sensitive and the construction sector
is very keen to pass on price, particularly in the domestic sector,
to clients.
Q310 Mr Weir: Are you able to estimate
the proportion of work currently undertaken by the sector that
could be classified as retrofit or refurbishment?
Mr Berry: We have looked at the
DTI construction figures for 2006 and in terms of RMI (Repair,
Maintenance and Improvement), the market is worth £49 billion,
which would have meant that the Government collected about £8.6
billion in VAT. If you were to reduce it, as we are recommending,
from 17.5% to 5%, that is a shortfall of about £6.5 billion.
At the same time you have to factor in that a lot of businesses
who operate in the black economy would probably be more inclined
to register. That was certainly the example in Italy where they
reduced the VAT and 35,000 extra firms suddenly reappeared and
were registered, so the tax intake would increase in that way.
Q311 Mr Weir: You said earlier that
most of the work of your members is not building new houses but
retrofitting and refurbishment. Of the overall market is that
the largest share of the market? Irrespective of tax-take, do
you see that as the largest share of the market within the UK
given that there is also a large-scale programme of new build?
How do you see the balance between the two?
Mr Berry: I think it will continue
to be the case that people will want improvements to their homes
either because they want to expand them, they want a bit more
living space, or they feel they have got to repair to continue
to make the place habitable. Clearly there is a massive programme
the Government have announced of new build but our view is that
most of the homes that we have today are still going to be around
in 50, 60 or maybe 100 years' time and there will be a continuing
great requirement to ensure that those are kept to the highest
possible standards. I have no scientific evidence for it, I think
it is just intuitive, but I think with the costs of moving these
days, people are more inclined to make the best of what they have
got rather than go through the agonies and the cost of moving
to a new property, although undoubtedly we do need extra properties
because of the growth in the number of households.
Q312 Mr Weir: Are your members finding
that people who are doing retrofits or refurbishments are looking
to make them more energy efficient or is this being driven by
building standards? Is there a real appetite for it?
Mr Berry: I think it is being
driven by building standards to a great extent, as again your
witnesses were saying earlier on. The customer base is not being
very demanding on this at the moment and again from our survey
that we have just done, our members were telling us this is not
at the top of the list of priorities of the clients they are working
for. Possibly more than in any other part of the industry, this
is an area in which the customer is king; you deliver what the
householder is asking you to do or you do not get the work.
Q313 Mr Weir: So in effect price
is still the guiding principle for your customer rather than energy
efficiency. Do you think that the cut in VAT would have the necessary
boost to encourage more energy efficiency and not only reduce
the price—and I can understand your point that it will hit
the euphemistically called "informal sector" who presumably
do not pay any VAT at all—by taking your prices nearer to
them but will have the effect of people saying, "Okay, I
want to retrofit, I want to make it more energy efficient"?
I am not convinced of that fact.
Mr Berry: One of the problems
is actually the pay-back period, unless you insulate where you
can get your money back fairly quickly. There is growing evidence,
particularly among some of the more affluent clients, of them
wanting to upgrade their homes so they can make them greener and
more energy efficient. It tends to be the top end or in social
housing stock where the Government is upgrading the social housing
stock, so I think there is a growing willingness amongst householders
to upgrade but the tax breaks are not sufficiently attractive.
Linked to that, if the Government is very serious about reducing
carbon emissions by 60% by 2050 it is going to have to tackle
the existing building stock because existing homes contribute
27% of CO2 emissions.
Q314 Mr Weir: I do not think there
is any argument about that. What I am really getting at is what
you are saying to us is that it has to be driven by regulation
to force people to go down this route otherwise price will continue
to be king. Unless the regulations say you must insulate more
and you must do more energy efficient, it is not going to happen
on a large enough scale. Is that a fair comment?
Mr Diment: I think like most things
they need a bit of carrot and a bit of stick.
Q315 Mr Weir: Your memorandum recommended
a cross-departmental review of the regulations surrounding waste
and arrangements for recycling. Why do you think that is necessary?
Mr Diment: This is an area that
our members regard very highly and it was very pleasing to see,
again from our recent survey, that well over 90% of them said
this was a priority, obviously because they think it is environmentally
the right thing but they also see the impact it has on their bottom
line. It is getting more and more complicated to understand exactly
what the regulations are. There are local variations in interpretation.
There are issues about shortage of sites around the country to
which our members can take materials where they can be properly
recycled. I do not know if there is anybody here from Wales but
a particular issue we have from our members in Wales is that there
are hardly any suitable sites for hazardous materials of any sort
in Wales and you end up undertaking extremely long journeys, burning
fuel and creating congestion, to meet the waste regulations, which
when you are trying to look at it from a holistic approach does
not make an awful lot of sense, so there is a range of things
around that need to be more joined up as far as our members are
concerned. I suppose another example would be, because of the
problems of defining one man's waste and somebody else's material
that might be able to be reused in the future, that we have had
examples of members who have taken materials back to their yards
in the hope that they can either sort them out for reuse or move
them on to a proper waste disposal site and then been accused
of trying to run a waste sorting station without the necessary
permits and licences.
Q316 Mr Weir: Do your members find
a difficulty with the regulations to do with disposal of certain
types of waste? I did have an experience of one builder saying
he would not do a job of retrofitting because of the materials
there and it was difficult for them to dispose of and they would
have to bring in specialists to deal with it. Is that a problem?
Mr Diment: That is the sort of
issue that many are facing as the regulations become more complex.
In themselves of course nobody can say these are not right but
it is thinking through the consequences of them, the costs they
are imposing, the difficulties they are imposing, particularly
when for many of these hazardous materials local authorities around
the country do not necessarily have to provide local resources
where they can be dealt with.
Mr Weir: Thank you very much.
Q317 Mr Clapham: It is in the area
of retrofits and refurbishments that you would come into contact
with asbestos. Do you give any advice down the line to your members
regarding the use of approved contractors for its removal? Are
the Asbestos at Work Regulations sufficient to be able to provide
you with the necessary guidance for dealing with asbestos?
Mr Diment: Certainly it is not
an issue of concern that has been raised in the sense that you
are talking about it, Mr Clapham, from our members. We are at
the moment running a series of workshops around the country for
our members to make sure that they are up-to-date on the various
regulations around working with asbestos and of course, more importantly,
disposing of it safely. I think they all recognise the dangers
of these materials and are looking for as much help and guidance
as they can get from an organisation like ours because, as I said,
they are very small organisations in general with not a lot of
people resource and they are expected to know everything in the
same way as if they were a very large company.
Q318 Mark Hunter: I want to move
us on to the regulatory burdens issue. In your submission, you
make the case of the industry being heavily regulated as it is
now. My question to you is: do you think that the Government is
making sufficient progress in simplifying the regulations that
impact on the construction industry or do you think the system
is in danger of becoming even more complex?
Mr Diment: No, I do not think
it is becoming much simpler. The evidence certainly from our members
and I think the wider SME community is that whereas there has
been some simplification it is being overtaken by additional requirements
being added as new regulations come through. I think it is the
sheer complexity, the quantity of them, the cost, the constant
changes which are causing problems. People can rarely argue per
se with a particular regulation but it is the sheer volume of
them coming through. I suppose a classic example for our members
would be the changes in the Building Regulations. There are 14
parts to the Building Regulations, ten of which have virtually
been rewritten within the last five years. There is often not
enough time to get used to it. For Part L of the Building Regs
published last year the documents were published on 15 March and
people were expected to operate them with effect from 6 April.
If you have a big compliance unit in your company that may just
about be possible. If you are a five, six, ten-man company that
is very, very difficult.
Q319 Mark Hunter: So you would agree
with my latter comment then that it is becoming more burdensome?
Mr Diment: It is becoming more
burdensome without any doubt at all.
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