PROSPER MAGAZINE: ISSUE 01 | SECTOR FOCUS
BREXIT AND THE CONSTRUCTION INDUSTRY
IN A POST-BREXIT LANDSCAPE, HOW IS THE FUTURE LOOKING AND WHAT WILL HAPPEN TO THE CONSTRUCTION INDUSTRY?
Does it face the same level of uncertainty as other sectors, and how will the industry continue to grow and attract talent? Mike Leonard, CEO at Building Alliance and visiting Professor in Manufacturing and the Built Environment at Birmingham City University believes Brexit will help the sector, especially within the West Midlands.
He said: “The West Midlands has a unique opportunity to build for the future and in doing so, create jobs, inclusive growth, a balanced economy and a greener environment. Now is the time to invest in critical infrastructure, public and commercial buildings and housing to ensure our built environment supports long term economic growth, jobs and social inclusion. Every £1 invested in construction delivers a £2.84 return for the UK economy because we make it here.
“Current Government directly supports through grants, funding criteria and rhetoric to move away from UK manufactured bricks and blocks to offsite and modular homes, where the steel and timber raw materials are almost all imported. This market interference undermines global investment to replace and enhance our manufacturing capacity and will discount from a multiplier that could deliver a £68 billion benefit to the West Midlands economy, based on the 21,500 new homes the Mayor plans to build by 2031.”
Is the construction industry still able to attract talent post-Brexit? Mike thinks new initiatives to attract people into the sector need to start sooner rather than later. He said: “For the industry to deliver what is required, we must act urgently to increase the number of young people starting a career in the construction sector. The diverse construction and building materials sector can offer vast numbers of meaningful jobs, reducing our dependency on migrant labour and opening great career opportunities for the long term unemployed, ex-offenders, those retraining such as individuals leaving the armed services.
The UK Government has a key role to play in creating the economic and regulatory environment that will attract inward investment, remove barriers and create long-term sustainable growth, increasing exports and reducing imports.”
Mike believes that these changes will take place thanks to Boris Johnson’s new cabinet, saying: “With a new team at the helm of government we will need to urgently put in place what is needed to ensure business continuity in the event of a no-deal Brexit.
“Housing must be a key infrastructure priority for the new Government. We must put in place the skills, capacity and infrastructure we need to deliver large numbers of high-quality homes that are built to last, securing the economic and environmental gains that are vital to re-energising our economy. The focus must be on whole-life value rather than the lowest price and on the delivery of quality rather than speed.”
WHG RAISES £25M ON BOND MARKET
Leading Midlands landlord WHG has successfully raised a further £25m on the bond market to help it accelerate its ambitious development programme.
The funding will enable whg to build more affordable and high-quality homes as it works towards its vision of owning or managing 30,000 homes by 2024.
whg had originally secured a £250m bond with a 4.25% coupon in 2014 and retained £75m, £50m of which was sold in 2017. The £25m issue was priced at 145 basis points over gilts, giving a yield of 2.758 per cent. The issue was twice oversubscribed by investors.
Chief Executive Gary Fulford said: “The retained bond attracted strong support from bondholders, showing continuing market confidence in whg and our plans for future growth.
“The money raised puts us in a strong financial position for the years to come and will enable us to reach our target of building around 3,000 new homes over the next five years.”
The housing association received additional funding earlier in the year when it was named a Strategic Partner by Homes England. As part of the partnership, it was allocated a £38.7 million grant to build 1000 affordable homes by 2024.
whg recently published strong financial results, with an operating surplus of £36.7m and an operating margin of 34%, from an income of over £108m.
The housing association also retains a strong A3 stable rating from Moody’s credit rating agency this year and continues to be rated G1 and V1 by the HCA.