Kevin McCloud: Housebuilder ‘oligopoly’ needs urgent reform
Britain’s housebuilding industry is a cartel-like oligopoly that needs root and branch reform in order for the UK is to build enough high-quality homes to solve its housing crisis, Grand Designs presenter Kevin McCloud has said.
In a withering assessment the track record of major housebuilders, McCloud said the UK construction sector’s supply chain had “been deracinated” by the sector’s biggest players, which have have failed to supply humans with “basic needs”.
“It’s a great model for those at the top,” the presenter told City PM. “If you’re a housebuilder and times are good, you say, ‘Let’s get building.’ You employ a load of people, bang up some houses and then drip-feed them into the market to control the supply. These are standard techniques that seem almost corrupt.”
The UK’s housebuilding market is dominated by a small number of major players, including Barratt Redrow, Taylor Wimpey and Persimmon, which have long faced accusations of anti-competitive behaviour that has constricted supply of new homes hitting the market.
And McCloud, whose own eco housebuilding company went into liquidation last year, said that the major developers’ domination of the housing market gave them enormous leverage over suppliers with which smaller, more entrepreneurial firms have no hope of competing.
“My heart bleeds for small to medium-sized builders” he said. “They have a really tough time of it in this market which is effectively controlled – their supply chains are controlled – by larger parties and organisations.”
Speaking ahead of Grand Designs Live in London, the presenter threw his weight behind growing calls for the housebuilding market to be reformed to foster greater competition between smaller builders, in a move that McCloud argued would improve quality and supply.
He said: “We’re really not in great shape compared to countries like Austria, where there are tens of thousands of small to medium-sized builders , and where 82 per cent of new homes are self-build or custom-built.”
The central European country manages to produce consistent supply of custom-built homes because it was free from the “vagaries of the market in the UK” that have rendered every attempt at a similar model in Britain to “fall by the wayside”, McCloud added.
On entering office, the Labour government set itself an ambitious target to build 1.5m homes over the course of the parliament. Industry figures have voiced scepticism of the number’s feasibility given a slew of hurdles that have continued to plague the housebuilding and construction sectors.
Higher interest rates have eaten into the margins of the often highly leveraged industries. And industry figures have consistently issued clarion calls over the skills shortages that have plagued the sector since the twin blows of Brexit and the pandemic.
“You have a set of skills within construction [in the UK], which have been skeletonised,” he said. “Through both Brexit and through COVID. Yeah, so we’ve seen major skill sets within the domestic market just evaporate. Yeah, we haven’t been training people properly since the 1980s.”
Kevin McCloud was speaking ahead of Grand Designs Live at London ExceL, the UK’s premier home and design exhibition, taking place from 2-5 May.