Only by investing significantly in education and training can the government hope to achieve its net zero targets, says James Fiske of the Building Cost Information Service
Labour has wasted little time since its landslide election victory in announcing measures that demonstrate the party’s commitment to make Britain a clean energy superpower by 2030.
In their first week in government, the chancellor Rachel Reeves announced the launch of the national wealth fund – created to power green investment and infrastructure development. A sizeable amount will be given to Great British Energy, a publicly owned clean power company.
More recently, energy, security and net zero secretary Ed Miliband, who wants “to unleash a UK solar rooftop revolution”, granted planning permission for the construction of three major solar farms in the east of England, with further plans to treble solar capacity by the end of this decade. This forms part of a wider strategy to reduce gas-fired generation and install carbon capture at the remaining gas plants.
Labour’s manifesto affirmed the party’s belief that “economic growth, energy security, lower bills and addressing climate change can be complementary”. It also promised to “end chopping and changing on policy, harness clean power to boost our energy security, and invest in home insulation upgrades”.
State funds totalling £7.3bn have been allocated to invest in and grow “new industries of the future”, such as hydrogen projects and the steel industry. However, it remains unclear how the government’s strategy will be delivered, given the shortage of labour currently affecting the construction industry in the UK. This is apparent across the sector but is particularly acute in more specialised areas, such as mechanical and engineering and, perhaps most crucially, green-collar skills.
It is crucial that the government prioritises funds from the national wealth fund for education and training to address fundamental barriers that could curtail their plans
We know labour continues to be the more significant cost driver on projects – we are forecasting annual growth in the BCIS labour cost index to be 7.9% in the second quarter of 2024 before it eases to 5.3% in the final quarter of the year. And it’s particularly prevalent in the skills that Labour desperately needs to fulfil their aims.
As a matter of urgency, it is crucial that the government prioritises funds from the national wealth fund for education and training to address fundamental barriers that could curtail their plans. The UK also needs to update its ailing electricity grid to improve energy efficiency and rapidly electrify heating and transport.
A re-engineered grid could be ripe for investment and have the potential to reap significant returns, if power is collected from smaller sources (PV and wind) rather than very large sources such as power stations.
Labour has promised to upgrade millions of homes through the warm homes programme to raise EPC ratings and lower energy bills for good. But the £6.6bn Labour has promised amounts to just £1,320 when divided among five million homes. This is woefully inadequate when compared with the estimated £26,000 cost (according to the climate change committee).
This figure is hardly surprising considering the rise in building costs and inflationary impacts – not to mention the extra costs in taking out a loan to pay for home improvements, due to the sustained level of interest rates.
There is a dearth of skills in retrofitting too. This has recently been highlighted by The Chartered Institute of Building (CIOB) who, in the run-up to Labour’s victory, called on the government to invest in developing a pipeline of workers with green construction skills that include retrofit, heat pump installation and sustainable modern methods of construction (MMC).
A report from Turner & Townsend in June of this year also raised this issue – highlighting record levels of hourly pay for workers in new green sectors who were picking up £47 an hour due to the shortage of experts in these areas.
Labour’s bid to reach net zero target would be no mean feat, particularly when considering how this will combine with one of the biggest ambitions in their manifesto – the aim to build 1.5 million homes
Labour has recommitted to replacing the current apprenticeship levy with a “growth and skills levy” that could enable construction firms to use up to 50% of their contributions to train existing staff in new skills such as retrofitting. But the King’s Speech was notable for its omission of specifics on this topic and the wider skills shortage issue in general.
Labour’s bid to reach their net zero target would be no mean feat, particularly when considering how this will combine with one of the biggest ambitions in their manifesto – the aim to build 1.5 million homes. If they are to achieve this, they will need to invest in the development of construction materials that are durable, lightweight and less carbon-intensive.
It is also important that the government seeks the support, expertise and insights that the industry can offer to help them address the challenges that these two seemingly divergent aims present.
There was no mention in the manifesto, or subsequently, of mandating the reporting of embodied carbon, which contributes to between 94 and 98% of tier 1 contractors’ emissions (according to Carbon Blind Spots, a report by Akerlof).
>> Also read: Why are contractors neglecting scope 3 emissions? It’s complicated
Yet the construction industry now has the data and the methodology in place to undertake whole-life carbon assessments, which is a vital step towards lowering carbon emissions, specifically those released from embodied carbon.
At BCIS we will continue to advocate for the government mandating the reporting of embodied carbon emissions. Therefore, we call for the inclusion of Part Z in the Future Homes Standard, due to come into force in 2025.
We will also continue to raise awareness of the importance of making better-informed decisions in the design stages of construction. And, as we have previously proposed, it is time to make the most of the cost experts we already have in the business.
Quantity surveyors are the best placed to measure and benchmark carbon, as the underlying principles of cost estimating are very similar.
James Fiske is CEO of the Building Cost Information Service (BCIS)
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