Building a Better Future

Building a Better Future

The construction industry is one of the largest sectors in the UK economy – contributing over £90 billion a year. Its importance in the Government’s infrastructure plans for the next few years cannot be overstated

UK investment in infrastructure is rapidly developing. The Government is pushing forward with HS2, the largest rail project of its kind in Europe. Alongside this, the £27 billion Crossrail 2 development now has the green light, while the Chancellor’s ‘northern powerhouse’ agenda will channel billions more into rail upgrades connecting key cities in the north. For all of these projects, the construction industry will be key to their successful delivery.

We’re seeing a boom in house building too. The Prime Minister has pledged to build a million new homes over the course of the current parliament – 200,000 per year – and, so far, the Government is very nearly on target. The UK’s ever-increasing population will likely only fuel this boom, particularly in London, where both Labour mayoral hopeful Sadiq Khan MP and Conservative rival Zac Goldsmith MP have placed affordable housing at the very top of their lists of priorities.

It’s the self-employed who make these projects happen. 

Of the 2.3 million people working in the UK construction industry, 800,000 are self-employed. These professionals are the ones providing specialist skills and expertise on a flexible basis, making sure the industry can manage the troughs – such as the disappointing decline in construction output before Christmas – and peaks in demand it experiences.

Any kind of recovery in a sector this big is never going to be in a straight line – and even more so in construction, where third-party factors can have such an influence. It was strong winds in quarter four 2015, for example, that significantly affected output. 

There are so many reasons contract firms take on flexible workers rather than PAYE employees. Any construction project will by nature only last for a finite amount of time – which is often subject to change at short notice. Taking on permanent staff and the burden of ongoing PAYE costs can be much more costly than paying self-employed workers for what they do,
when they do it – particularly as permanent staff can find themselves without a job to do in times of low demand. It ultimately comes down to a mitigation of risk; an engager can take on highly skilled, flexible staff and sleep sound in the knowledge that if something falls through, these staff can be released at short notice and on a basis that suits the project best. 

Freelancers can be found in pretty much every job in the industry, from builders, plumbers and electricians to specialist suppliers and other small business owners. Without them, the industry would be much smaller in size, taking on fewer workers and fewer contracts. It would be less entrepreneurial and more inefficient, while consumers (households, industry and government) would pay higher prices to a more highly concentrated and less competitive industry. 

For freelancers themselves, flexible contracts allow them to move around freely, and choose the work they want to do. But freelancing in the construction industry isn’t without its challenges. Overcoming late payment is, as for most independent professionals, a big issue for freelance construction workers, while finding affordable training opportunities can also be a barrier to progression. On top of that, they have to deal with the Construction Industry Scheme – effectively a business tax whereby contractors deduct money from a subcontractor’s payments and pass it on to HMRC. 

IPSE created the Construction Policy Advisory Committee to address some of these issues. Its aim is to engage with government and develop research-based policy to ensure construction workers are paid on time, able to find development opportunities and aren’t subject to burdensome tax regulations. 

The Committee aims to ensure that the working environment for the self-employed in the construction industry is fair for everyone, and aims also to simplify the process of compliance. It tackles the big issues affecting self-employed construction workers, with a particular focus on tax simplification, productivity and skills shortages, as well as safety, insurance and training opportunities. 

David Jackson is Chief Executive of Hudson Contract, a major employment intermediary, and also Chair of the Committee. He said: “From an individual’s perspective, becoming self-employed in the industry has many benefits. If you’re self-employed, then you’ve got that flexibility to take on as many contracts as you want, and they can be the ones that best suit your work/life balance.”

Much of the UK economy’s future success depends on a buoyant construction industry and, in short, if it weren’t for the availability of highly skilled self-employed workers, many projects simply wouldn’t get off the ground.

IPSE in the construction sector

IPSE strengthened a position working with the construction industry through the creation of the Construction Policy Advisory Committee, established September 2015. The committee is chaired by David Jackson of Hudson Contract and also includes representatives from IPSE, tax experts Deloitte, client companies and renowned academics.

It meets on a quarterly basis and keeps track of developments in the industry such as tax changes, apprenticeship levies and planning laws – and conducts in-depth, robust research to inform IPSE’s position on construction policy.