Going public for business opportunities
In these straitened economic times, Ian Bradley shares his thoughts on the significant opportunities for the building-services industry.
Hugh Pym, the BBC’s chief economics correspondent recently wrote an article examining whether the housing market is recovering and houses are starting to be built again. However, I think it would be premature to get out the bunting and celebrate a return to normal.
The evidence for this article was based on the National House Building Council (NHBC) noting an increase in applications to start new homes and the Home Builders’ Federation (HBF) announcing that its members are more optimistic than at any time in recent months.
While there may be hints of recovery, levels of housebuilding are still substantially below their peak. I am not saying that there are reasons for dancing in the streets, or that the light at the end of the tunnel is not an oncoming train, but there are some reasons for hope.
It was only at the end of June that Gordon Brown unveiled his policy document called ‘Building Britain’s future’. He made many pledges in the heavily trailed document, including investment in housing being trebled to £2.1 billion, funding 110 000 new affordable homes to rent or buy over the next two years and creating 45 000 jobs in construction. He said: ‘By building new and additional homes we can also now reform social-housing allocation, enabling local authorities to give more priority to local people whose names have been on waiting lists for far too long.’
There is always controversy about how these things will be paid for. Whichever side of the political argument you fall — spend now, tax bombshell later or spend now and stop the recession becoming a depression — there is definitely work out there that is worth going for.
Take schools for example. The Government has a £45 billion ‘Building schools for the future’ programme, and a number of companies from the beleaguered house-building industry are already trying to muscle in on the action.
New players on the construction side will allow HVAC companies to get a fresh set of contacts and, hopefully by breaking away from the cosy coterie of regulars, a nice piece of the action.
Not that the school building programme has had it easy. Many new schools were set up as PFI deals, and a credit crunch has meant funding has been difficult to get hold of or slowed right down.
However the European Investment Bank has offered to provide 50% of the funding for up to five ‘Building schools for the future’ station schemes. Also, the National Academy Framework is due to double in size in 2009 to around £46 billion of work.
It hasn’t all been plain sailing, though. As the Tories, Labour and Lib-Dems battle it out for cost-cutting measures, there has been some doubt that this public spending will continue. However, the Secretary of State for Children, Schools & Families, Ed Balls, has insisted that spending on schools will continue to rise and can be paid for from savings within the budget of the Department for Children, Schools & Families. He said: ‘I can guarantee — and will announce in the next few weeks – our “Building schools for the future” plans will carry on in future years.’
As we have often seen with public-sector projects, energy efficiency and the green agenda is paramount. The public sector is keen to be seen to lead the way in all things renewable, so there are opportunities for providing innovative solutions, not only to meet mandatory requirements of the Building Regulations and planning stipulations, but also to demonstrate how renewable technology can deliver real results.
Where a private company might see the installation of renewables as ‘nice to have’ but put it on the backburner in these straitened times, a public-sector organisation may well stipulate renewables as a ‘must have’. Companies that can provide both products and expertise in this still relatively new arena are likely to pick up some of the public-spending dividend. At MHS Boilers we have worked on education products combining high-efficiency boilers with solar thermal, biomass or heat pumps as part of their heating systems. Not only have they improved heating performance, they have underlined the energy-efficiency message to teachers, children and parents, sowing seeds of change the future.
The other sector that is going to enjoy additional Government funding is social housing. In a statement last year, the Chancellor announced an investment of £150 million into social housing — which has now been beefed up in the recent ‘Building Britain’s future’ paper.
And the irrepressible Boris Johnson, Mayor of London, has announced plans to create 50 000 affordable homes in London with a £5 billion investment.
There are other opportunities out there — especially with hous- ing associations, arm’s-length management organisations and registered social landlords (housing associations) — and innovation like renewables or district heating will help secure important contracts. Opportunity in the housing sector is not going to be as large, given that the private housing sector is subdued. However, investment in affordable or social housing remains at reasonable levels.
I don’t pretend that the next year or two is going to be easy. Far from it. However, getting the necessary skills, certificates and products in place to serve public-sector projects will stand you in good stead to face uncertain times. We at MHS Boilers are proud of our work with the public sector — whether it is an installation of boilers into a municipal leisure centre, a general hospital or a school. In these somewhat dark times, we are doing all we can to help specifiers choose the right products for the huge variety of public-sector applications.
