Report of Meeting 8th October 2021
Michaela Lancaster, Sales and Marketing Director, and John McNulty, Construction Director.
We met for the second time since lockdown face to face – a goodly crowd, starting to feel more confident about this. And for good measure, we got two fabulous speakers: Michaela Lancaster, Barratts’ immensely experienced Sales and Marketing Director, and John McNulty, Construction Director.
It’s been a rollercoaster year for housebuilders but Barratt has come through with flying colours. A few days before our meeting they published stellar annual results and upped the dividend. When so many other firms were struggling, we were keen to know “Why?” and “How?”
Michaela, a graduate in psychology, has been a Director for many years and chairs the North West Marketing Forum. John did his HND qualifications over 40 years ago. They made a great team.
Barratt Homes, she told us, sold 18,000 houses nationwide last year and is aiming at increasing that to 25,000 over the next five years. 1,100 new apprentices have been taken on – as big an intake as many colleges – with in addition a graduate programme, taking new graduates through a two-year training, experiencing every side of the business from site management to IT. As Diversity Ambassador she is keen to get more women into the industry, at every level. The days of girls in the office and blokes on site are over.
During the first lockdown, sites and sales offices were shut down. Soon, however, they were seen as key workers, reopening in June 2020. Since then inquiries have been up 400% and demand continues to run “very high”. Thinking about why that is, Michaela said that Work From Home is a key factor. People want something bigger if they need an office away from the kitchen and the children, but they also want to live somewhere nicer. What could be nicer than the Peak District? The upswing is also due to record levels of household savings, so more purchasers have the deposit; and record cheap lending, with mortgages more affordable than for some time. Fundamentals rather than temporary government policy on Help to Buy is driving this.
One outcome is that Barratt are releasing properties for sale much quicker – n normal marketing conditions they sell six months after build; due to demand right now, they’re selling 9 months ahead. That of course is helping their bottom line and helps explain why they’re sitting on a huge cash pile right now. Indeed the problem is that they don’t have enough to sell – 80% of next June’s release, she told us, is already spoken for. We asked about demand for our current local developments in Whaley and Buxton; currently 65% of those inquiries are coming from people within 6 miles. Food for thought for campaigners against such new developments – it could be their own families and neighbours who are interested in moving in.
Barratt is the UK’s biggest housebuilder by volume, and Barratt Manchester is the largest division in the company, covering the area from Carlisle to the Potteries. The future, she said, is one where renewable energy, PV solar panels and heat pumps play a much bigger part. A flagship zero carbon concept house has just been unveiled at the University of Salford to test out practicalities and costs. Two postgrad researchers will be living in it for a year to monitor results. Some of the ideas – such as running the heating systems through skirting boards rather than radiators, leaving more space – looked great to me, and could be quickly adopted.
They’re also getting into timber frame pre-packs – it will save a fortune in time and money if these become standard, as they are in many countries (Barratt recently bought Oregon Timber Frame Engineering, the Scottish specialists). We’ll definitely hear more in future about “Modern Methods of Construction” (MMC) such as closed panel timber frames with highly insulated cladding, factory-fitted windows and ground floor wall panels, reducing the need for bricklayers and cutting the time it takes to build by half. In normal times we might worry about the effect on jobs, but tradespeople are scarce right now, especially as many older workers retired during the pandemic and aren’t coming back.
John commented that Sir Laurie Barratt, the firm’s founder wanted people to join for life. There were no national trainee schemes then, so on the job training was the norm; but an employee could go from foreman to site manager at various levels then to contracts manager, and eventually to Director. Many of their staff and regular contractors have been with them for decades. Continuity brings consistency; and in turn, good communication brings innovation, and helps in staying ahead of the game.
Apprenticeship, John said, is the true bloodline of the industry. It can take 18 months or 2½ years depending on the level of qualification. But the outcome can be spectacular – a bricklayer can earn £70-80,000 pa today. Retention for Barratt is “not a problem” – why? “Because we work hard at it!” And they strive to improve, with most recently 65 young women joiners. They also work with the Armed Forces Transition Scheme, taking ex-servicemen and women, placing them for example as assistant site managers with excellent promotion prospects.
The Peak District offers some special hazards for builders. “The climate!” said John. The typical 9 month building programme takes longer here and is more unpredictable. But, “If it’s 3 deg and rising, we can lay a brick.” That makes new building methods much more valuable here: if you can get to roof level in seven days, you may be able to beat the weather.
I had asked, “What’s in it for us..?” Current Barratt plans in the High Peak will produce a total of 275 houses, of which 83 will be affordable. Construction spend over 3 years exceeds £21 million; 96 jobs are directly created with another 1,100 indirect. Some 657 residents will arrive including children (most are already local) with a spending power of around £3 million a year, and the councils will get an estimated £3.83 million more council tax. It’s not negligible.
Lastly.. input does not end with the last house on a site sold. Their Legacy Project works with local communities after completion; in one Buxton primary school which received a grant to spend as they saw fit, the children have been burying time capsules. My favourite example is the school which asked for a child-sized mini-house in the playground and got it, to their delight. Other projects link with colleges and older people, depending on where it’ll make a difference. Good PR, of course, but given the number of complaints about legacy issues on other sites in our area, all very welcome.
In all, a fascinating look at a remarkable British business in a challenging and rapidly changing industry.