The Week That Was - 14 January 2022

Welcome to The Week That Was, a round-up of key events in the construction sector over the last seven days.

RPC annual insurance review 2022

RPC's Annual Insurance Review 2022 has been recently published, providing a sector based review of the key events that shaped the insurance market in 2021 and a look at key issues that will be relevant in 2022.

A copy of the Construction chapter can be accessed here.

Cladding on intermediate tall buildings

The Housing secretary, Michael Gove, has given residential property developers until "early March" this year to agree a "fully funded plan of action" including the replacement of combustible cladding on buildings between 11m and 18m high.  In a letter to the industry, Mr Gove asked companies to (i) agree to pay into a fund to cover the cost of remediating unsafe cladding on intermediate buildings, estimated at £4bn, (ii) to fund and undertake all necessary remedial works in buildings over 11m that they played a role in developing, and (iii) to provide details of all buildings over 11m with historic fire safety defects which they have helped construct in the last 30 years.

Additionally, the commitments which Mr Gove has asked the industry to provide include that they must "fund and undertake" all works on buildings over 18m which they played a role in developing.

Further information can be found here.

New orders rise

Despite a slip in activity on sites, it has been reported in HIS Markit / CIPS Purchasing Managers' index data that new orders in the construction industry rose in December 2021 at the fastest pace since August, despite the Omicron variant. 

While the Omicron variant has affected activity on site, the survey of 150 construction companies signalled a reduction in supply chain pressure.  While rising construction costs were a theme of 2021, these are understood to have eased as the year ended, with fewer supply problems reported.  While costs have been pushed up by higher energy and raw material prices, the pace of inflation fell to its lowest level for nine months, since March.

While the latest figures show encouraging signs that supply shortages are beginning to ease, the threat of the Omicron variant and its effect on the supply chain remains.

Further information can be found here.

Success for Cala Homes

Legal & General owned housebuilder Cala Homes claim that they are due to turn over £1.8bn a year by 2026. The company aims to build 3,200 homes in 2022 alone.

Cala Homes' profits dropped over 50% in 2020 owing to the COVID-19 pandemic and the company was hit by general supply chain disruption and cost increases in 2021.  However, the increases were offset by house-price inflation rising faster than costs, combined with improved efficiency.  Cala Homes' chief executive has said that their financial performance was enabled by the desire for space which emerged during the pandemic, which has driven demand for homes in suburban locations.

Legal & General first invested in Cala Homes in 2013 and took full control of the company in 2018 when it acquired a 52.1% share.
For further information, please click here.

Greater stability for the timber industry

The Timber Trade Federation ("TTF") has advised that the timber industry will gain some stability in 2022.  The latest statistics show that the volume of timber imported in October 2021 was 16% lower than in October 2020.  October 2021 marked the end of 15 months of continual growth in UK timber imports. 

The TTF attributes this pattern to the more regular demand for new housing and repair and maintenance work which was seen in the fourth quarter of 2021. TTF advise that they are seeing price pressure reduce and import volumes return to more normal parameters after stocks have been replenished throughout the supply chain.

However, TTF acknowledge that Brexit, HGV driver shortages and continuing disruption from COVID-19 will continue to prevent the market from returning to normal just yet.

For further information, please click here.

Vinci completes first pour of ultra low carbon concrete

Vinci and Irish cement producer Ecocem have completed the first major pour in the UK of a jointly developed ultra-low carbon concrete. The project took place at EcoPark South, the first phase in North London Waste Authority's plans to create a £1.2bn sustainable waste management hub and energy recovery facility at the existing Edmonton EcoPark. The mix used on the project reduces the carbon footprint of the construction project by up to 70% when compared to traditional concrete. Developed over four years using waster form steel slag, this type of concrete from Vinci has been tested on several projects in France but is only just starting to be used in the UK.  

For further information, please click here.

Thanks to Sharona Zovich, Oliver Bulleid and Alastair Stewart for contributing to this week's edition.

Disclaimer: The information in this publication is for guidance purposes only and does not constitute legal advice. We attempt to ensure that the content is current as at the date of publication, but we do not guarantee that it remains up to date. You should seek legal or other professional advice before acting or relying on any of the content.