CPA releases UK Economic and Construction Update

CPA releases UK Economic and Construction Update

The latest weekly update from CPA is available to members here.  The updated issues are in Pages 1-3 of the weekly update whilst subsequent pages have existing data and information that remain relevant. This update includes:

  1. Bank of England Mortgage Approvals (June 2022)
  2. RICS UK Commercial Property Market Survey (2022 Q2)

    Market Data

    FIS has access to a wide range of market data from sources including the CPA, Barbour ABI and Builders’ Conference. In addition, FIS produces a state of trade survey specifically for the finishes and interiors sector.

    Interior Systems Installer apprenticeship training courses at Bircham Newton

    Interior Systems Installer apprenticeship training courses at Bircham Newton

    National Construction College in Bircham Newton (NCC East) are delivering training for Dryliner and Ceiling and Partition apprentices and plan to continue this with registration now open for apprentices on courses starting:

    • Monday 12 September 2022
    • Monday 28 November 2022

    For full details please contact Andrew Voase, andrew.voase@citb.co.uk 07798 628902 or Trudie Blackshaw, trudie.blackshaw@citb.co.uk telephone 07770 841816.

    You can view the apprenticeship standard: https://www.instituteforapprenticeships.org/apprenticeship-standards/interior-systems-installer-v1-0 this provides the criteria on which the training programmes are based.

    For organisations that are CITB registered enhanced grants are available for apprentice travel and subsistence covering up to 80% of the costs, please see: Apprenticeship travel and accommodation funding ‘Travel to Train’ – CITB

    On the FIS website there is a downloadable document, Apprentice – Guidance for Employers, that is worth a read at https://www.thefis.org/skills-hub/apprenticeships-and-qualifications/apprenticeships-employers/, the document contains links to all the details you’ll need.  In addition, FIS will be happy to provide further information, advice and guidance for taking on an apprentice, contact georgeswann@thefis.org or telephone 07553 874838 or Marie Flinter marieflinter@thefis.org or telephone 07799 903103.

    Construction product sales growth eases as costs start to bite

    Construction product sales growth eases as costs start to bite

    Construction product manufacturers reported an eighth straight quarter of sales growth in Q2, according to the Construction Products Association’s State of Trade Survey. Combined with another quarter of broad and accelerating cost inflation, expectations have been dampened for the year ahead, however.

    In Q2, 30% of heavy side manufacturers and 17% of light side manufacturers reported that product sales increased compared to 2022 Q1. Alongside this, all heavy side firms and 94% of those on the light side reported an annual rise in costs. For the heavy side, this was the fourth consecutive quarter of universal cost increases that span across inputs such as fuel, energy, raw materials and labour.

    Against a broader economic backdrop of rising inflation, manufacturers cited that demand is likely to be the key constraint on activity going forward, leading to the first negative balance for expected sales since mid-lockdown in 2020. On balance, 30% of heavy side firms, whose products tend to feed into the earlier stages of construction, anticipate a decrease in sales in Q3 and one-third anticipate a fall in 12 months. As a result, 11% also envisage a decrease in their labour force in the year ahead.

    Rebecca Larkin, CPA Senior Economist said:

    “In recent quarters, construction product manufacturers have reported escalating inflationary pressures across fuel, energy, raw materials and wages. Added to this, there are early reports that higher costs further down the supply chain for transport, insurance, reverse charge VAT, and the removal of the red diesel rebate are starting to be reflected in lower confidence and delayed decision-making for new construction projects.”

    She also adds: “Demand currently remains strong, particularly in the housing, RM&I, industrial and infrastructure sectors, but the headwinds related to costs are intensifying. Consumer price inflation is yet to peak too, which poses a downside risk if households and businesses rein in spending as disposable incomes and margins are eroded.”

    Key survey findings include:

    • A balance of 30% of heavy side firms and 17% of light side firms reported that construction products sales rose in Q2 compared with the previous quarter, the eighth consecutive quarter of growth
    • Sales balances weakened from 43% (heavy side) and 50% (light side) in Q1
    • 30% of heavy side manufacturers anticipate a fall in sales in Q3, whilst 17% of light side firms expect an increase, the lowest balance since the first national lockdown in 2020 Q2
    • Costs for fuel, energy, raw materials and wages & salaries rose for all heavy side manufacturers
    • Costs are expected to increase over the next year according to balances of 78% on the heavy side and 94% on the light side
    • Weaker hiring intentions were reported by both heavy side and light side manufacturers

    Overall, the Q2 survey results provide the first indication that the inflationary backdrop is now starting to impact on confidence around the near-term outlook for construction.

    FIS members can download a copy of the full CPA report via the link below.

    CSCS Industry Accreditation: common queries answered

    CSCS Industry Accreditation: common queries answered

    CSCS is aware of concerns raised by many within the construction industry regarding the decision to withdraw cards issued under Industry Accreditation (IA).  They have published an article setting out some of the common areas of concern and information on how they can be resolved: Construction Skills Certification Scheme | Official CSCS Website – Industry Accreditation: Common queries answered

    Here are some extracts that should be useful to FIS members:

    What is Industry Accreditation?
    Industry Accreditation (IA) was a mechanism by which workers could obtain CSCS cards on the strength of an employers’ recommendation rather than the achievement of a recognised qualification.  CSCS stopped issuing new cards under IA back in 2010, but if you previously held a card under IA the scheme rules allowed you to continue to renew.

    Why is Industry Accreditation being withdrawn?
    CSCS, together with their 37 partner card schemes, are bound by the Construction Leadership Council’s (CLC) requirement that all construction industry card schemes must operate with nationally recognised qualifications in place for all occupations.  This requirement is particularly important when addressing the IA issue.  To satisfy the Construction Leadership Council’s requirements CSCS announced plans to withdraw cards issued under IA, which include:

    • IA cards issued from 1 Jan 2020 will expire on 31 Dec 2024 and will not be renewed
    • CSCS will cease renewing IA cards from 30 June 2024.

    What options are there to move off Industry Accreditation?

    1. Vocational qualifications already achieved: cardholders who have achieved the qualifications for their occupation can renew their card for the full five-year term as normal.
    2. Academically Qualified person card: This card is available to people who have completed certain construction related degrees, HNDs, HNCs, CIOB Certificates and NEBOSH diplomas. Further details can be viewed here.
    3. Professionally Qualified person: This card is available to competence assessed members of CSCS approved Professional Bodies of which CIOB is one. Further details can be viewed here.
    4. Not everyone needs a card: There will be IA card holders who no longer require their CSCS cards. For example, you may have moved into a management role, become a director, or rarely visit site.  In these scenarios, you do not require a CSCS card.

    Those unable to fit into these four scenarios will be required to register for the appropriate qualification for their occupation before their cards expire in 2024.

    If you or your workforce need a qualification to show proof of competence contact FIS, we have negotiated offers and discounts in training and qualifications specifically for members.  Call 0121 707 0077 or email info@thefis.org or take a look at the FIS website: Member Benefits Training and Qualifications

    Price inflation: we all need to play our part

    Price inflation: we all need to play our part

    A statement from Build UK Chair Paul Cossell

    As an industry, we are currently facing inflationary pressures not seen in the UK for 40 years. The latest update from the CLC Product Availability Group confirmed that average inflation for products and materials this year has been around 23%, with further increases expected, particularly for energy intensive products.

    We know that cost escalation, closely followed by a lack of skilled labour and material shortages, is now the key issue for businesses across the supply chain. As we did during COVID‐19, Build UK is bringing its members together to coordinate a collective response. With the support of Wedlake Bell LLP, we have published comprehensive guidance on Managing Price Inflation, which includes advice on fluctuations clauses, negotiating new and existing contracts to take inflation into account, and how to mitigate its impact on projects. Most forms of contract have standard provisions for sharing the risks associated with price volatility, which should be used appropriately and fairly and in a spirit of collaboration.

    With businesses across the industry under pressure, we all need to play our part. We often talk about the better industry we want to see, where risk is allocated fairly and projects are delivered more efficiently. How each of us responds to the current challenges will determine how quickly we can realise this vision.

    An enduring commitment to prompt payment must remain a priority, and a number of Build UK Client and Contractor members are reducing their payment terms to support the cash flow of their suppliers. The Welsh Government has provided advice to its public sector bodies on how to manage the unprecedented pressures on materials, and Build UK will be meeting with key Government departments to discuss a collaborative approach to managing inflation to the benefit of all parties.

    We learned the value of collaboration during the pandemic and showed that we perform better as an industry when we work together. Where businesses, programmes or projects are struggling due to materials shortages and price inflation, we need to discuss the issues openly and find creative and innovative ways to mitigate these risks in the interests of our clients and the supply chain.

    I firmly believe that by doing the right thing over the coming weeks and months, we can achieve our shared ambition of being a productive and profitable sector.

    New guidance to explain the impact of Building Safety Gateways on Interior Systems

    New guidance to explain the impact of Building Safety Gateways on Interior Systems

    With the Building Safety Act in force and the Regulator starting to build the infrastructure necessary to manage and monitor and to develop guidance, FIS has developed initial guidance to help members consider what the impact of new Gateways will be on the construction process.

    Commenting on the guidance FIS Technical Director, Joe Cilia said:

    “It is important to remember that the Building Safety Act is designed to change the process and culture of construction.  It is vital that we start to work together to understand the impact and how our processes and working practice will need to evolve.  We have been working with a number of groups and felt it important to share our early thinking and start to explore changes with our members.”

    FIS is setting up a working group to look at Building Safety Act compliance that will start to meet in the Autumn – if you are interested in getting involved, please email joecilia@thefis.org

    Supporting apprentices with free CSCS cards

    Supporting apprentices with free CSCS cards

    Employers and the wider industry are being reminded of the importance of ensuring those on, or about to enter, apprenticeships are using the appropriate Construction Skills Certification Scheme (CSCS) card – specifically the Apprentice card.

    Feedback from the industry confirms many employers are either not aware of the Apprentice card or are put off applying for it by lengthy apprenticeship registration processes. This leads to many opting for the Labourer card instead.

    In recognition of this issue, in advance of the new academic year, CSCS is simplifying the application process and removing the cost of Apprentice cards. From today, all Apprentice cards will be issued free of charge.

    At the same time CSCS will be introducing a new process for anyone experiencing difficulties with their apprenticeship registration. In this scenario, the new entrant can apply for the Provisional Card (at £36), before moving onto the Apprentice card, free of charge.

    This means employers and apprentices will apply for a Provisional card prior to completing the apprenticeship enrolment process.

    George Swann Skills and Training Lead says

    This is great news. Our own FIS BuildBack programme provides individuals who successfully complete the assessment day and two week introductory training with a CSCS provisional card free of charge to the supporting employer.  This allows the employer six months to decide if the individual is capable of completing an apprenticeship.  For details of the apprenticeships available to the sector please see:

    If you would like to find out more please contact FIS on 0121 707 0077 or email info@thefis.org.

    CICV member FIS, backs first Green Home Festival

    CICV member FIS, backs first Green Home Festival

    FIS has thrown its support behind the upcoming Green Home Festival, which will be officially opened on Monday 8 August 2022 by Patrick Harvie as part of the Edinburgh Festival Fringe.

    The Minister for Zero Carbon Buildings, Active Travel and Tenants’ Rights will be keynote speaker at the launch of the week-long renewables jamboree, which will deliver practical assistance and advice to help Scotland become a net zero nation.

    Organised by the Construction Industry Collective Voice (CICV) – of which FIS is a key memberthe five-day event will see 12 in-person and virtual presentations on green topics, targeting homeowners, professionals, housing associations and local authorities.

    Iain McIlwee, FIS Chief Executive said:

    “As a member of the CICV, we are delighted to support this inaugural festival, which will see industry experts share their knowledge and expertise with delegates to help inform about renewable technology.”

    Live Green Home Festival sessions will take place at the Royal Institution of Chartered Surveyors (RICS) at 10 Charlotte Square in central Edinburgh. Each will offer demonstrations and hands-on guidance to help people reduce their carbon footprint and become more energy efficient.

    With contributions from fellow CICV members including SELECT, SNIPEF and the National Federation of Roofing Contractors, the range of topics covered will include:

    • Demystifying heat pumps
    • Improving energy efficiency
    • Building green neighbourhoods
    • Protecting against floods
    • Using sustainable materials
    • Living safely in the future
    • Hitting the road with EVs.

    Online events include a webinar entitled Retrofitting a tenement, in which experts will explain how to reduce heating costs and cut carbon emissions in traditional buildings, including a Q&A and virtual tour of a renovation in Glasgow.

    In another online session, Taking the Swedish View, award-winning Swedish construction company, Botkyrkabyggen, will reveal how they use solar panels, wind turbines, artificial intelligence and district heating to improve energy

    Mr Harvie, who will kick off events at Charlotte Square before the first event, said:

    “This inaugural Green Home Festival is greatly to be welcomed and its organisers, the members of the CICV, warmly congratulated on the initiative.

    “The climate emergency is already upon us, and if we’re to stand a chance of preventing its worst consequences we need both government and industry to support a transformation of our homes and buildings. Many of the actions and new ideas needed are being advocated by the expert speakers and presenters over the week-long Green Home Festival programme.”

    Members of the CICV are now aiming to build the week-long green jamboree into an annual event.

    One of the organisers, Gordon Nelson, Scotland Director of the Federation of Master Builders, said:

    “This event will highlight the important role that construction will play for Scotland to achieve its net zero target in the years ahead, and also help householders understand the new technology and ways of doing things.

    “Delivered via collaboration across the Scottish construction industry through CICV, we are aiming to make this inaugural event an annual occasion that will help to build a long-term legacy and demonstrate our commitment to greener, low-carbon solutions.”

    Full details, including how to book tickets for each event, are available on the Festival’s website at greenhomefestival.co.uk.

    The festival is the latest in a string of practical and constructive initiatives launched by the CICV since its creation at the start of the pandemic in March 2020.

    Made up of 29 trade associations, professional services bodies and companies, including FIS, it has maintained a steady supply of information and practical advice to the sector as well as carrying out surveys, producing animations and posters, hosting webinars and maintaining close dialogue with Scottish Government ministers.

    CPA releases UK Economic and Construction Update

    36% of construction companies anticipate a rise in business activity

    The latest weekly update from CPA is available to members here.   The updated issues are in Pages 1-6 of the weekly update whilst subsequent pages have existing data and information that remain relevant. This update includes:

    1. UK Housing and Construction Ministers (July 2022)
    2. S&P Global/CIPS UK Construction PMI (June 2022)
    3. BEIS UK Building Materials Prices (May 2022)
    4. Bank of England UK Mortgage Approvals (May 2022)
    5. Persimmon Trading Update (July 2022)
    6. Vistry Trading Update (July 2022)

     

      Market Data

      FIS has access to a wide range of market data from sources including the CPA, Barbour ABI and Builders’ Conference. In addition, FIS produces a state of trade survey specifically for the finishes and interiors sector.

      Have your say on plans to transform skills training

      Have your say on plans to transform skills training

      Public consultation launched by the Institute for Apprenticeships and Technical Education (IfATE) on planned new employer-focused approvals system for level 3 technical qualifications.

      IfATE want to hear from employers on their proposals to approve the next generation of technical qualifications.  The consultation runs from 30 June until midnight on 10 August.

      Why employer views matter
      A truly integrated skills system brings employers (or their representatives) into the heart of product design, ensuring that employers’ skill needs, across occupations, can be fully understood and met. IfATE share the Department for Education’s (DfE’s) ambition that, in future, the qualifications landscape should be streamlined, offering clear career progression opportunities and giving confidence that qualifications are high quality.

      A fundamental part of this will be IfATE’s employer-led occupational standards, alignment to which ensures that students are gaining the knowledge, skills and behaviours employers tell us are needed to be competent in an occupation. The occupational standards are presented in the IfATE occupational maps; these underpin their work, setting out the occupations that can be accessed through technical education.  This is an opportunity to share your views and support IfATE to achieve their ambitious plans by helping them shape the approvals process for qualifications submitted as part of the revitalised technical education landscape.

      You can access the consultation via this link: https://www.instituteforapprenticeships.org/reviews-and-consultations/consultations/post-16-consultation/. For any questions in relation to this consultation, please contact Ifate.POST16@education.gov.uk

      Increase fire compliance through better knowledge of fire doors and their supporting construction

      Increase fire compliance through better knowledge of fire doors and their supporting construction

      FIS Technical Director Joe Cilia will be taking part in a seminar focussing on fire door compliance and their surrounding supporting constructions.  This seminar is a collaboration between Selo | Riser doors & Concealed frame doorsets, Knauf and FIS, to help the whole industry progress.

      Understanding the issues and interface between the supporting structure, and the fire doors is key for a compliant installation, yet things can be missed especially in the construction phase when temporary doors are installed.

      The event is being held on 14 July and can be attended in person, or online. For more details and to register visit https://selo.global/seminar-doors-walls-under-review/

       

      Building Safety Act comes into force

      Building Safety Act comes into force

      The Building Safety Act has now taken effect, introducing the most significant changes to building safety regulation in a generation, including:

      • An extension of the limitation period for claims brought under the Defective Premises Act, both retrospectively from six to 30 years for dwellings completed before 28 June 2022, and prospectively from six to 15 years for dwellings completed after this date.
      • The introduction of the Building Safety Regulator and Construction Products Regulator.
      • A new gateway system to ensure building safety requirements are met throughout the planning and construction process, along with the requirement to maintain a ‘golden thread’ of information throughout a building’s lifecycle.
      • An extension of the Building Safety Levy worth an estimated £3 billion.

      The Government has published a series of factsheets to help dutyholders and the wider industry understand the new requirements.

      Mitigating the impact of inflation

      Mitigating the impact of inflation

      The latest statement from the CLC Product Availability Group confirms that average inflation for products and materials so far this year has been around 23% with further increases to come, particularly for energy intensive products. Cost escalation is now the key issue facing Build UK members across the supply chain. To help address this, Build UK has piblished comprehensive guidance on Managing Price Inflation with the support of Wedlake Bell LLP, which covers fluctuations clauses, negotiating new and existing contracts to take inflation into account, and how to mitigate its impact on projects. All members are encouraged to find ways to work together to manage the current pressures in the interests of projects and the supply chain.

      The changes within Government this week have included the resignation of Construction Minister and CLC Co‐Chair Lee Rowley and the sacking of Michael Gove, Secretary of State for Levelling Up, Housing and Communities, who had oversight of building safety and the response to the Grenfell Tower fire. Following the appointment of new Chancellor Nadhim Zahawi, it remains to be seen what actions will now be taken by the Government to tackle rising inflation.

      FIS steps up again to lead qualification reform

      FIS steps up again to lead qualification reform

      FIS has been successful in its application to work with the Institute for Apprenticeships and Technical Education (the Institute), The Office of Qualifications and Examinations Regulation (Ofqual) and The Office for Students (OfS) in the quality assurance of the apprentice End-point Assessments.  As an Employer Directory Organisation FIS represent the employer’s voice working primarily with the Institute.

      The commitment for FIS is to support a network of subject matter experts known as Employer Directory Experts who will work with Ofqual and/or OfS on assuring end-point assessment in order to provide insight, intelligence and expert resource.  Each individual will be approved for this work by FIS.  The work will be commissioned by Ofqual and/or OfS and individuals will be paid for the service they provide.

      This system is about improving the End-point Assessment for the Interior Systems Installer, Dryliner and Ceiling and Partitions Installer and Plasterer, Solid and Fibrous so that it remains relevant and accurately assesses an apprentice’s competence.

      Commenting on the appointment FIS CEO Iain McIlwee commented “It is vital that we get the qualifications to work for us as a sector and this is only possible if we roll up our sleeves and get stuck in to the reform process.  We are crying out for people, we have ever more onerous qualification requirements and fundamentally we want to elevate the perception of the whole sector, so people see what we see – a professional, skilled sector that attracts people and that people are proud to be part of.  To do this we need of practitioners, employers who know what they need from new entrants, to sit on the various working groups to ensure that the qualifications are relevant and have pathways that are deliverable for businesses in the finishes and interiors sector.  It is great to be, through this appointment, part of the process, but this is only the start – the work starts now and we need the industry to get behind us.”

      FIS is also working on apprenticeship reform in Scotland, where the Carpentry and Joinery and Dryliner Apprenticeships are currently starting a review process.  If you are interested in supporting qualification reform in England or Scotland please contact George Swann 07553 874838 or email georgeswann@thefis.org.

      Find out more about qualifications in the finishes and interiors sector here.

      A regional approach to recruitment: together we are stronger

      A regional approach to recruitment: together we are stronger

      As a result of the FIS Regional Events FIS has made an effort to address some of the key points raised by audiences.  This is detailed in our report which is available to download here.

      With labour shortages and recruitment, a key challenge within the sector, presentations and discussions focused on the scale of the problem, local opportunities and provided ideas to support recruitment, retention, social responsibility, competence and funding.  A summary of the key point and potential actions taken from these events has been linked to the FIS Skill and Competency Strategy for 2022 to show what is being done to support the sector.  Thanks go to all who attended, with particular thanks to CITB who sponsored the events and all of the guest speakers.  We know from the feedback received many took away useful information and we look forward to seeing you at the next round of FIS regional events later this year.

      CIJC pay agreement sees 5.0% increase

      CIJC pay agreement sees 5.0% increase

      The Construction Industry Joint Council (CIJC) has completed negotiations with trade unions GMB and Unite the Union and reached agreement on a 5.0% increase in all pay rates, which will take effect from Monday 25 July 2022.   Non‐taxable elements of pay, such as travel and subsistence allowances, will also increase,

      The Construction Industry Joint Council (CIJC) Working Rule Agreement – sometimes referred to as ‘The Pink Book’ – is an agreement between employers and Trade Unions setting out terms and conditions, including national pay rates, that are applied in principle by ‘adherent bodies’ and others across the industry.   The aim of CIJC is to help avoid industrial disputes, and simplify the process of negotiating terms between employers and workers. In addition to standard rates of pay, not taxable expenses such as travel and accommodation costs, are incorporated into the agreement.

      FIS is represented and the Board were consulted and fed vies in via our membership of Build UK.  Other organisations involved in the negotiations include Civil Engineering Contractors Association (CECA), Home Builders Federation (HBF), National Access & Scaffolding Confederation (NASC), National Federation of Builders (NFB),  National Federation of Roofing Contractors (NFRC), Painting & Decorating Association (PDA), Scottish Building Federation (SBF) and Trades Unions Unite the Union and GMB.

      Working together to transform construction

      Working together to transform construction

      Build UK is working on behalf of its members to do what they can to address the inflationary pressures currently facing the industry. In addition, Build UK has been taking forward its work on long‐standing issues as part of Improving Business Performance, Increasing Productivity, and Recruiting, Training and Retaining Talent across the whole supply chain.

      The statutory review of the Duty to Report regulations published in April highlighted the ‘positive impact’ that Build UK’s benchmarking of payment performance has had across the sector, with Build UK contractor members now taking an average of just 32 days to pay invoices. Ahead of the Building Safety Act coming into force this week,the Working Group 2 report was delivered, benchmarking the competence requirements for six occupations identified as priorities for ensuring fire safety in buildings. Along with the CSCS Smart Check app launched in April, this represents a major step towards ensuring that individuals deemed competent have the appropriate knowledge, skills and training to undertake their role.

      FIS Competency Passport

      FIS has partnered with My Professional Pass to provide a platform where an individual’s competence can be stored digitally all in one place, and shared with employers or others that require proof of competence. The FIS Competency Passport is free to individuals and FIS members receive a substantial discount off the cost of the platform.

      BSI seeks comments on proposed new standard

      BSI seeks comments on proposed new standard

      BSI is seeking comments on the proposed new standard: BSI Flex 390 v1.0, Built environment – Value-based decision making – Specification.

      The scope of the standard is to lay out the requirements for the implementation and approach to value based decision making taking into account the project lifecycle.

      The screen grabs below provide some commentary which will help you understand the background and scope in more detail.

      Commenting on Standards before publication provides BSI with instant feedback on the viability and benefits of the standard which we expect to be implemented by the public sector and in turn through procurement routes.

      To get involved please follow this link to register on the portal. You can the access the draft and share your comments using this link: https://standardsdevelopment.bsigroup.com/projects/9022-07261#/section

      The closing date for comments is 20 July.

      NB the draft can not be copied or downloaded.

       

      Product availability is improving and demand is expected to remain positive into the second half of 2022

      Product availability is improving and demand is expected to remain positive into the second half of 2022

      Statement from John Newcomb, CEO of the Builders Merchants Federation and Peter Caplehorn, CEO of the Construction Products Association, co-chairs of the Construction Leadership Council’s Product Availability working group

      In general, product availability is improving. Some products, including bricks, aircrete blocks, some roof tiles and semi-conductors, which are extensively used in building services products and gas boilers, remain on allocation or subject to longer lead times. Otherwise manufacturers are mostly keeping up with demand and, as stated in our last report, the market has become adept at managing supply with planned delivery times.

      Generally, demand is expected to remain positive into the second half of 2022, though some sectors such as private housing RM&I appear to be coming off their highest levels for certain products. Market participants suggest that a slight slowdown in demand may in fact serve to allow stocks to be rebuilt and improve availability.

      Average inflation for products and materials so far this year has been around 23%; with more significant price increases in energy intensive products such as insulation, cement, concrete and many steel products. Further price increases for those products are anticipated in the second half of the year owing to rising energy prices and input costs, and some have already been telegraphed to customers.

      Concerns have arisen that volatile inflation has led to the failure of relevant indices to reflect market reality. Some contractors are engaging in dialogue to use prime cost, provisional sums and target price-based contract mechanisms to mitigate the risks.

      Timber prices, however, have largely stabilised from the highs of last summer. This is largely due to easing demand and strong stocks of structural timber on the ground in the UK making supplies readily available for contractors and merchants. The price of structural timber in Europe and America remains firm to strong and, as a consequence, UK imports of structural timber are reducing. Some panel products have even seen reductions since the first quarter but structural Plywood prices remain firm. Birch Plywood and it potential substitutes have seen little or no availability due to Russian sanctions causing significant upwards price pressure for these products.

      Recruitment, retention and related wage inflation continue to present serious concerns across UK construction and may supplant product availability issues in 2023 among the key risks facing the industry. For example, there is clear evidence from the PAG’s participants that skills shortages are making some SME builders reluctant to take on projects, as they don’t have the trades to complete the work.

      The UK Government made a major announcement regarding the transition to the UK marking ahead of the ending of recognition of CE marking on 31 December 2022. The change will allow manufacturers with existing type tests from EU notified bodies under AVCP System 3, where the product was tested by 31 December 2022, to affix the UK mark to their products, and to continue to supply them to the GB market without needing to be retested. Further government guidance is here.

      The announcement has been welcomed by industry, as it helps alleviate some concerns amongst manufacturers about the ability to place their products on the UK market in 2023. That said, there are many questions and risks still outstanding and industry is awaiting further details from Government. The PAG points out that the Construction Leadership Council is studying the announcement and guidance closely, with the aim of highlighting any outstanding areas of concern and the potential impact on product availability.

      Members may also be interested in this Commodities Flash Report of May 2022