Tuesday, 14 July 2015

Please sir, the dog ate my homework. And may I have some more?

From the Evening Standard:

The Government’s announcement about changes to the planning system is a step in the right direction.

Yet policy-makers still fail to address the fundamental issue of development capacity across the industry and the ever-increasing cost of materials. From bricklayers to site managers, the lack of skilled construction workers and professionals in Britain is one of the largest factors that continues to constrain the supply of new homes. Until this is addressed, it is unlikely that we will see a marked difference.

Justin Gaze, Knight Frank’s joint head of residential development.


Pablo said...

Knight Frank's inverse namesake also had something interesting to say:- http://homepage.ntlworld.com/janusg/coe/cofe08.htm

Mark Wadsworth said...

P, yes that name switch gag cheers me up every time.

Bayard said...

It's the other way round: the land-banksters dribble out their plots and the number of brickies etc. remains constant to supply that level of demand. It's always hard to get hold of good building tradesmen as any tradesman worth his salt makes sure that he has plenty of work lined up. I suppose the likes of Mr Gaze expects brickies to sit around on the dole waiting for a huge expansion of housebuilding. Even if construction was ramped up, the extra demand for labour would probably be mopped up by brickies from Poland or Bulgaria.

paulc156 said...

Yes, so if there really was some additional demand for bricklayers and site managers etc you could get them in via the normal route of offering higher wages which would attract the east/southern Europeans.
It sounds like the industry prefers a large reserve army of unemployed tradesmen available on lower wages without any increase in output.

Random said...

"the industry prefers a large reserve army of unemployed tradesmen available on lower wages without any increase in output."
This is the case in general IMO whatever "the industry."

Shiney said...

@R Bollocks.... you need to get out more.

In general 'industry' (whatever that means) invests behind increasing demand by ramping up automation as direct wages rise.

In my company we deliver double (yes double) the number of units we did 10 years ago with roughly the same direct labour hours input. We can do that because we've got four production lines and not two, and auto-packing equipment. The employees get a bit more, the company makes a bit more (and so the government gets a bit more in tax) and the price is roughly 60% of what it was then... so the consumer gets most of the surplus.

Win-Win-Win. That's what economic growth means... doing more with less.

And note the contrast with the construction 'industry'.

Mark Wadsworth said...

B, it is true that it would increase their unit costs if they ramped up construction very quickly. All the tradesmen jn East London in the late 1990s harked back to the golden days of building Canary Wharf when wages doubled or something.

But things then level out again. The point is the land bankers are operating at their profit maximising output level and others adapt to that (as you rightly say).

PC, yes. Although there is still commercial construction, building extensions etc, civil engineering and going abroad as alternatives.

R, to some extent that is true - but is quick increases (or decreases) in output which influence wages, not long term output levels. When we still had social house building, output was twice as high, very few foreign workers were sucked in and prices were still perfectly manageable.

Clearly, businesses like the idea of "reserve army of unemployed" because it means lower wages, but with normal businesses, when wages fall a competitor would snap them up, wages go back up again and overall super profits are competed away (or shared between business and workers and consumers etc).

So in practice, it is the tax system (and to a lesser extent the welfare system) which causes unemployment - it is not wicked employers maliciously laying people off (except the gradual deskilling and automation thing, but that has been going on for centuries and most people re-train or weren't that skilled in the first place).

S, that is true for manufacturing, but not for labour intensive things like housebuilding where a cartel can control output levels.

The Yanks great job at pre-fabricating housing, they can knock up lovely timber framed homes in factories in the dry, where workers can do everything at waist or chest height and install them on site for $30,000 or something.

But who would get the benefit of the lower build costs? The land owners, because the price payable is the same. We see this with these container cities in London - the rents are no lower than for proper flats (adjusted for size and space).

Mark Wadsworth said...

... And what hacked me off most of all is that training people up is somehow somebody else's responsibility I.e. the government.

Shiney said...


And my point was your point about factory built houses... get rid of the construction 'industry' cartel and houses become another manufactured product where the labour is gradually automated out and we get more for less.

Shiney said...


And I also agree about training - why should the government be responsible for education beyond the three 'Rs' beats me.

Mark Wadsworth said...

S, yes, you can build homes more cheaply and efficiently with timber frame and pre-fabrication. But the land prices just go up to soak up the difference.

In Germany, for subtle tax reasons, most new family homes are technically 'self build' which means you buy the home from one supplier (who erects it for you) and the plot of land from another. So everybody knows what the price split is.

A lot of the time the two suppliers are part of the same group of companies or work in tandem and knock up dozens of 'self builds' at a time, so when it is finished it looks like a fairly homogeneous and uniform new estate.

So prices for the houses themselves are competitive and standards are high, but the landowners are laughing all the way to the bank as per usual.