Last reviewed 12 January 2016
In this feature, Paul Clarke gives an overview of what lies in store in 2016 for the construction industry.
In the Summer 2015 Budget, the Government announced the introduction of a levy on large employers (yet to be exactly defined) to help fund three million high-quality apprenticeships during this Parliament. The levy will be calculated on the basis of employee earnings and employers will pay through their PAYE return to HM Revenue and Customs (HMRC). The levy will probably not come into force until April 2017, but there is a complication for the construction industry — it already has statutory levy arrangements in place.
So, during 2016, expect both the CITB and the Engineering Construction Industry Training Board to consult with employers on how to resolve this problem.
As a process, BIM (building information modelling) involves the sharing of three-dimensional data by all those responsible for the design, construction and operation of buildings and infrastructure in the built environment. The Government has recognised that the process of moving the construction industry to "full" collaborative working will be progressive, with distinct and recognisable milestones being defined within that process, in the form of "levels" defined within a range from 0 to 3. Level 2 BIM is distinguished by collaborative working — all parties use their own 3D CAD models, but not necessarily working on a single, shared model.
The Government Construction Strategy (GCS) requires level 2 or, as it states, "fully collaborative 3D BIM (with all project and asset information, documentation and data being electronic)" as a minimum by April 2016. This refers to all centrally procured Government projects as outlined in the GCS including new build and retained estate, vertical and linear.
The EU's Broadband Cost Reduction Directive (2014/61/EU) requires Member States to encourage the sharing of existing physical infrastructure, which may be suitable for deploying broadband networks, and the coordination of civil works across a wide range of infrastructure sectors. Article 8 of the directive lays down that all new buildings and major renovations are to have in-building physical infrastructure that supports connections to superfast broadband.
The Department for Communities and Local Government (DCLG) intends to implement the provision by introducing a new "Requirement R1 – In-Building Physical Infrastructure" to the Building Regulations (see GOV.UK for more details). The UK Government must ensure that proposed regulations implementing the directive are in place in 2016.
The Competition and Markets Authority (CMA) has published a draft order which, once it is finalised early in 2016, will prohibit cement suppliers in Great Britain from sending generic price announcement letters to their customers. Any future price announcement letters will have to be specific and relevant to the customers receiving them, including setting out the last unit price paid, the new unit price, and specific details of other charges that apply to the customer. The draft order and all other information relating to the investigation can be found on the case page at GOV.UK.
Community Infrastructure Levy
Will there be changes in the CIL in 2016? Introduced in April 2010 with the aim of providing a faster, fairer, more certain and transparent means of collecting developer contributions to infrastructure, compared to individually-negotiated Section 106 planning obligations, the CIL is currently under scrutiny by the DCLG.
Since 2011 over 2000 CSCS cards have been issued via this route, with applicants only required to submit evidence of their experience for independent review to qualify for a card. However, as this approach does not support the construction industry's desire for a fully qualified workforce, CSCS has decided to stop accepting new Profiled Route applications from 1 April 2016. For more information, see GOV.UK.
Construction Skills Certification Scheme
The primary objective of CSCS is to provide evidence that individuals working on construction sites have the required training and qualifications for the type of work they carry out. What is known as the Profiled Route was introduced in 2011 and was intended for construction site managers or supervisors who have on site experience but do not hold a nationally recognised qualification in construction.
Since 2011 over 2000 CSCS cards have been issued via this route, with applicants only required to submit evidence of their experience for independent review to qualify for a card. However, as this approach does not support the construction industry's desire for a fully qualified workforce, CSCS has decided to stop accepting new Profiled Route applications from 1 April 2016. For more information, see www.cscs.uk.com.
Reaction to the December floods is still in the clean-up and compensation stage but, given the now regular occurrence of these problems, attention is beginning to turn to making individual buildings more flood-resistant and more easily repairable if inundation occurs. The year ahead should see some of these ideas put into practice if, as seems likely, developers continue to build in areas prone to flooding.
The new year will see a number of Government initiatives designed to alleviate the current shortage of new houses. For example, in a consultation open until 25 January 2016, the DCLG seeks views on changes to national planning policy to support the delivery of new homes. The Department has also announced £8 million of funding for Starter Homes with local authorities in 27 locations across England getting a share of the money. Available at GOV.UKhttp://bit.ly/1J0joH8, the plans should enable a fuller range of low-cost home ownership options to be built more swiftly, and will allow councils to take into account a broader range of housing types when considering local need.
Of particular interest to smaller builders, the Government announced at the beginning of 2016 that it plans to directly commission the building of homes on publicly owned land. The initiative will see work starting on some 13,000 new homes across four sites outside London this year, with up to 40% classed as affordable starter homes. The fact that this will increase the number of small sites suitable for SME house builders was welcomed by the Federation of Master Builders.
The national living wage — to be set at £9 per hour by 2020 for people aged 25 and above — is unlikely to have a major impact on the construction industry when it introduces a rate of £7.20 an hour in April 2016. This is only 50p more per hour than was expected under the national minimum wage and most people in the industry already earn more. Wages, and consequent costs, may well be affected in the supply chain, however, so building firms will need to keep an eye on developments in this area.
Following a ruling in December 2015 by the European Court of Justice, the UK Government will have to change the rate of VAT it charges on the installation of energy saving materials (ESMs). According to a consultation which is open until 3 February 2016 at GOV.UK, changes will be included in the Finance Act 2016, and are anticipated to take effect on 1 August 2016. When ESMs are installed in a residential property and are not part of, or ancillary to, a wider supply of building services, the supply is currently charged at a 5% reduced VAT rate.
The changes proposed by HMRC will mean that there could be a different VAT treatment depending upon the status of the customer. However, different treatment would only arise in cases where the supply includes installed materials and the cost of the materials element of the supply is greater than the labour installation cost. All other supplies would be unaffected. HMRC has made clear that the Government has decided to retain as much of the existing relief as is possible while still complying with EU law.
One long-awaited target set for 2016 year will not be met. In December 2006, Gordon Brown said that all new homes would have to generate enough energy through devices such as wind turbines and solar panels to cancel out their overall emission of greenhouse gases within 10 years.
However, in "Fixing the foundations: Creating a more prosperous nation" (July 2015), which can be found at , the current Government said that it did not intend to proceed with the zero carbon Allowable Solutions carbon offsetting scheme, nor the proposed 2016 increase in on-site energy efficiency standards.