Pulling in the reins
Whitehall’s chief construction advisor Paul Morrell has his eye firmly fixed on the housing sector. He tells Denise Chevin how he plans to slash the procurement bill by 20 per cent.
Given the shock and awe policies that have been pelting down on it since the coalition came to power, housing must be well used to heavy artillery fire by now. But housing chiefs should know they’ve not seen the end of it yet if Paul Morrell, the government’s chief construction advisor, has his way.
Mr Morrell was appointed to the £120,000-a-year post in the dying days of the last administration following much backbench lobbying on behalf of the construction sector which wanted a representative in lieu of a construction minister. A former senior partner at quantity surveyor Davis Langdon with 40 years’ experience in the industry, his task is to bring coherence to a £10 billion procurement strategy across Whitehall. The main aims are to cut the cost of public projects by 20 per cent and at the same time drive carbon out of the built environment. He’s Mr More for Less, if you will. And he has housing in his sights.
We meet in the Victoria offices of the Department for Business, Innovation and Skills, not so much a ‘more for less’, but rather a ‘less for less’ kind of a building, complete with grotty loos.
‘Would you like a mediocre cup of coffee?’ quips Mr Morrell’s aide. ‘No biscuits though,’ Mr Morrell himself adds wryly. ‘You need to be the prime minister to get those.’ Francis Maude, the paymaster general who has put Mr Morrell at the heart of the current efficiency drive, would be pleased.
The bare bones of a strategy for achieving these cost savings, which Mr Morrell has been working towards for some time, were unveiled by Mr Maude on 31 May. It included the setting up of a powerful new construction board, which Mr Morrell chairs. Around his table will be the key civil servants from each department and their key agencies responsible for buying and commissioning buildings and infrastructure. It’s a reincarnation of the existing Construction Clients Group. The main difference this time is that departments will have no choice but to act on its dictats.
One or two of the 12 to 14 seats at the table will go to the Communities and Local Government department and the Homes and Communities Agency. But that’s up to Richard McCarthy, the department’s director general.
It’s important that local authorities also move with the times, and Mr Morrell is working closely with Andrew Smith, chief executive of Hampshire Council and chair of the National Improvement and Efficiency Partnership for Construction in the Built Environment - the body trying to bring best practice to the way local authorities spend their construction pound. By mid-July, Mr Morrell hopes to be announcing a steering group to accompany the board with representatives from industry - and beneath them a raft of task-specific sub-groups.
On the table for discussion and implementation are ideas such as greater standardisation, integration of the supply chain, better use of IT, and new procurement models. The latter will ensure clients do not pay over the odds to framework contractors - the process by which organisations can avoid procuring contracts and can pre-qualify to become favoured, almost partner-like, suppliers. Simply having more information about how much things cost and asking for different things to be built will, he says, provide early wins - such as less extravagent school designs.
But what, if any, of these tools can be successfully applied to the housing sector? Mr Morrell admits he does not know. In fact, he admits he has a major problem when it comes to tackling housing spend that will make this part of the job rather tricky.
‘Housing is not a huge spending department. That’s kind of the problem. The public funds for housing very quickly break down into projects that lack scale and clients that lack scale so the Homes and Communities Agency doesn’t really have its hands on the levers down at construction delivery level.’
That’s not going to stop him trying to sort things out. ‘It’s certainly noticeable how much less it costs the private sector to build housing than the public sector - about a third less. So it might be possible to draw on the private sector to build it, or use more of its development skills.’
However, he concedes the comparison is not entirely straightforward. ‘You’re not necessarily looking at like for like because you are considering a whole programme where, for the most part, the house builders are building standard house types and also the social sector takes more difficult sites - and operates to different space standards.’
Mr Morrell is fond of posing questions and issuing challenges, which can create the impression of a man still searching hard for answers. But his views have certainly hardened around certain issues. Having always been a quality-over-quantity man, he can now see the attraction of quantity - and is standing firmly with education minister Michael Gove, who claims cash is being squandered on the over-elaborate design of schools. He has come to the conclusion that good enough is exactly that.
For housing, ‘good enough’ influences his take on the issue of space standards. Typically, a home for a housing association would be bigger than a comparable one for the private sector. This is something which he thinks needs re-examining.
‘Space standards are one of the things I’ve really changed my mind about since taking up this role. I’ve always said that they should be the same in the public sector and the private sector and in the past that meant I wanted space standards in the private sector increased.
‘Now I feel that when there’s thousands of people living on the streets [1,768 according to latest CLG figures] and 4.5 million on a waiting list, you have to look at it differently. If I were in that position, would I be willing to stay in the queue potentially for years while the bigger houses are built for other people?
‘I think we should say no. And so I understand now why for a politician there is a value in quantity over quanlity. And if you’re one of the have-nots, I think you’ll see a value in quantity too.’
What about design quality - often the Achilles heel for housing?
‘I haven’t changed my personal view there. I think it would be tragic if we lived through a century and built everything in the vernacular of the last century. But I realise many people think differently. So you have to allow house builders to decide what will sell. And what I’d hope follows is that contemporary architects will find ways of producing a product that appeals to the public.’
He’s also convinced that the government is on the right lines when it comes to localism. ‘Buying locally is bound to secure a better long-term position for the client as long as you keep operational levers such as the new homes bonus. I think the balance of this new approach is actually quite sophisticated - much more so than the regional targets which the government simply had no ability to deliver on the ground.
‘I accept that at the moment we’re only seeing the problems of it all. But eventually if your local authority is not producing enough housing for your people, you’ll vote them out, won’t you? And if people won’t vote out a local authority that won’t provide them with housing - then why would you want Westminster to fix that problem?’
Mr Morrell is also with the government on increasing rents in the sector, which he says may encourage new entrants into the market - something that he says ‘has to be a good thing’.
Returning to how cost savings can be made in delivering housing, he’s relying on processes from the private sector to provide efficiencies. But he’s very well aware that the differing economies of scale is an issue. And that off-site manufacture isn’t the holy grail either. The private sector hasn’t been able to make it work with the scale of delivery it has.
‘The system is too inflexible to cope with big swings in demand,’ he says. ‘So how are commercial house builders so efficient? Again, it comes down to producing standard house types with a whole series of variations around it. Between 60 per cent and 80 per cent is standard product. Social landlords don’t tend to do that.’
One more thing he’s also convinced of: there’s no point trying to change things from the centre unless it can have an impact down the line. ‘You may as well bring about a change by simply restricting the flow of funds and making people look more carefully at the way they spend money,’ he reasons.
Social landlords would no doubt say that’s the way things have already gone. And given that the housing budget has been halved, from £8.4 billion to £4.5 billion, with associations being expected to increase rents to plug the gaping hole left by grant reduction, they would have a point.
‘We’re certainly practising Mr Micawber finances at the moment,’ says Bill Payne, chief executive of Metropolitan, one of the biggest housing associations.
‘There’s a huge pressure on all of us already. Maintenance and building costs are under enormous pressure, and the cultural differences that might have been there between the public and private sectors are very much a thing of the past.’
He adds ominously: ‘I think the potential savings will probably be far less than they might hope for. But my message to Paul would be this - he should take for granted our own willingness to be held accountable. We welcome Paul’s review, particularly as it’s by someone experienced, and rational. The last thing we need is someone ramming off-site at us, and another £60,000-home debacle,’ he says, referring to the much-derided stunt Labour pulled to show housing could be built more affordably.
Mr Morrell would take the point. He is the first to admit that he’s no social housing expert. ‘But I wasn’t hired to give the government advice on housing policy. My job is to advise them how to build.’
And for that he is eminently qualified. He joined blue-chip quantity surveyor firm Davis Langdon when he left university in 1971, becoming a partner within five years. He then rose to senior partner, before retiring from Davis Langdon in 2007. Among other things, he sits on the board of the Royal Shakespeare Company, the project board for Tate Modern 2, and the property committee of the Rambert Dance Company.
His passion for the arts and modern architecture meant he was always the quantity surveyor of choice for the likes of Norman Foster and high-end developers such as Stuart Lipton. He was a natural choice, too, as a Commission for Architecture and the Built Environment commissioner and, at the end of his eight-year stint, its deputy chair.
One job that isn’t highlighted on his CV is his role as quantity surveyor for the construction of the new Scottish Parliament - one of the industry’s black spots owing to its massive cost overruns. The Holyrood building went a spectacular £400 million over its £40 million budget and was delivered 20 months late. Mr Morrell says it was ‘predictable and predicted’. He says he warned civil servants, who didn’t heed his advice. ‘I did learn a lot from it. It made me appreciate that you’ve got to stand up when you think’s it’s wrong - you can’t be a passenger on a ship heading for the rocks. What’s the point?’
He got the call to fill the newly created post of construction advisor in 2009, on a two-year contract which ends in November. There’s been a great deal of speculation about whether he’ll still be in the job come December, after ministers refused to confirm his reappointment.
On this, Mr Morrell is untypically coy: ‘I’d very much like to do one more year,’ he says, and is at the moment waiting for the nod from the Treasury - though he’s optimistic it will come through. Mr Morrell is clearly a man on mission. ‘I want to put something in place that’s really sustainable. But if the strategy is not working next year, it never will.’
Low carbon construction
The second big strand of Morrell’s job is driving out carbon from the built environment, which has seen him working on the definition of zero carbon and what its impact is on the code for sustainable homes. There was an outcry among the green lobby when the government recently changed the definition of a zero carbon home to a more pragmatic and less costly one.
His first task was to chair the department’s Innovation and Growth Team Low Carbon Construction report, which came up with a host of recommendations in December. The government’s response is expected any day now - alongside a carbon plan from the Department of Energy and Climate Change which will set out a timeline towards meeting its commitment of reducing energy consumption by 80 per cent by 2050.
One key recommendation in the IGT report was for the government’s green deal to be enforced by regulation to accelerate take-up when it’s introduced next year. He still maintains that view. But on the green agenda generally he says one of the key messages has to be you can’t go from doing nothing to solving th eproblem overnight - ‘we are talking about a 40-year timescale’.