The importance of building local skills
Pension Insurance Corporation’s £200m investment in the One Eastside development in Birmingham gives an insight into how to address critical skills shortages in the housing sector. Hayley Rees, managing director of PIC Capital, explains more
Pension Insurance Corporation’s £200m investment in the One Eastside development in Birmingham gives an insight into how to address critical skills shortages in the housing sector #UKhousingIn association with:
The Spending Review gave the housing sector greater certainty and stability on funding. Translating that 10-year settlement into programmes that address critical skills shortages is now the key challenge. Pension Insurance Corporation’s (PIC) £200m investment in One Eastside, a build-to-rent development in the heart of Birmingham, gives an insight into how this can be achieved in practice.
The skills crisis in the housing sector is acute. Around one in five builders are over 50 and many will retire in the next decade. According to the latest figures from the Office for National Statistics, there are over 35,000 job vacancies in construction and employers report that over half of vacancies can’t be filled due to a lack of required skills – the highest rate of any sector.
Without a step change, the government’s target to build 1.5 million homes by 2029 will not be achieved.
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Working with Birmingham City University
PIC was delighted to support the Housing 2025 survey of key organisations involved in the sector to look at how to accelerate housebuilding in England.
Respondents said partnership-led solutions were the best way to address the skills gap, and 44% said their organisation was forging stronger connections with local educational bodies to encourage young people into the industry.
PIC’s One Eastside development involved a close relationship with Birmingham City University (BCU). The redevelopment of a brownfield site into two residential towers, one of which is now Birmingham’s tallest building, provides 667 one and two-bedroom flats within easy reach of the future HS2 terminus. There was significant investment in local skills, with over 60% of workers hired from Birmingham, and £33m injected into the local economy.
Hayley Rees, managing director of PIC Capital, leads the PIC Capital team, which sources and manages assets through debt and equity, enabling purposeful investment with the primary objective of paying PIC policyholders.
Ms Rees was recently appointed chair of the Investment and Banking subcommittee at Cardiff University. Previously, she was head of direct investments at L&G. She started her career at Barclays, working with infrastructure assets.
One Eastside gave BCU students practical experience which increased their employability. BCU offers chartered surveyor and construction site management apprenticeships, and we have been delighted to welcome 11 apprentices on site.
A student academy was also established. Many students visited the site, taking part in work placements, on-site courses and training opportunities.
BCU established a student mentorship programme linked to One Eastside. This pioneered a new approach to manage indoor conditions and facilitate preventative maintenance that can be used as a blueprint for safe, healthy and environmentally friendly high rises.
A recent student described how creating a dynamic, AI-integrated digital twin of the development expanded their expertise in the Internet of Things and predictive analytics, and contributed to advancing environmental standards.
Pipeline of projects needed
PIC invests in assets like One Eastside because the long-term cash flows provided by investment-grade, illiquid investments, in particular UK infrastructure and housing, are a very important part of our ability to pay our policyholders’ pensions over the coming decades. Rental income from One Eastside will support the pensions of our policyholders, including 15,000 in the West Midlands.
PIC wants to invest in more projects of this scale and type, but are not seeing enough opportunities coming through. Councils should look at where they can package land into a pipeline of projects of sufficient size and duration that give investors the confidence to invest in local skills.
A lack of local planning capacity could frustrate this, so a privately funded, independently administered pipeline fund should be set up to provide specialist planning capacity to help local authorities clear backlogs.
The fund was recently recommended by the Purposeful Finance Commission, a forum focused on overcoming barriers to regeneration chaired by Tracy Blackwell, chief executive of PIC.
PIC is excited to work with local authorities and partners to develop what is needed, using the experience we gained in developments such as One Eastside.
Hayley Rees, managing director, PIC Capital
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