Government’s Construction Sector Deal Set to Boost Sector

The Government announced its flagship Construction Sector Deal which sets out an ambitious partnership between the industry and the government that aims to transform the sector’s productivity through innovative technologies and a more highly skilled workforce.

The construction sector is one of the nation’s major employers, with around 3.1 million people working in the sector, most of whom are outside London and the South East. It is one of our truly nationwide industries – encompassing individual homes in remote areas and some of the greatest infrastructure projects of our generation, in every corner of the United Kingdom.

The government recognises that the sector has an important role to play in achieving the vision set out in its Industrial Strategy: strengthening the foundations of the economy and achieving the Grand Challenges by:

  • putting the UK at the forefront of the AI and data revolution
  • maximising the advantages from the global shift to clean growth
  • becoming a world leader in the future of mobility; and
  • meeting the needs of an ageing society

The construction sector, encompassing contracting, product manufacturing and professional services, had a turnover of around £370 billion in 2016, adding £138 billion in value to the UK economy – 9% of the total – and exported over £8 billion of products and services.

However, the potential of the sector has been held back by productivity that is historically below than the wider economy – an average of 21% lower since 1997.

The Farmer Review, published in 2016, highlighted a combination of factors behind this problem, including the cyclical nature of the sector, the unpredictability of future work and a lack of collaboration across the sector. It concluded that transforming the industry would require shared leadership by the industry, its clients and the government.

This Sector Deal brings together a coalition of businesses from across the sector, its clients, the government and research institutions to set out a strategy to improve the industry’s performance and help it fulfil its potential to deliver wide-reaching social benefits.

The government is setting out an ambition for the construction sector to deliver:

  • better-performing buildings that are built more quickly and at lower cost;
  • lower energy use and cheaper bills from homes and workplaces;
  • better jobs, including an increase to 25,000 apprenticeships a year by 2020;
  • better value for taxpayers and investors from the £600 billion infrastructure and construction pipeline
  • a globally-competitive sector that exports more, targeting the $2.5 trillion global infrastructure market

The Sector Deal builds on Construction 2025, published by the government and the Construction Leadership Council (CLC) in 2013, and provides the framework for a sector that delivers:

  • a 33% reduction in the cost of construction and the whole life cost of assets
  • a 50% reduction in the time taken from inception to completion of new build
  • a 50% reduction in greenhouse gas emissions in the built environment –supporting the Industrial Strategy’s Clean Growth Grand Challenge
  • a 50% reduction in the trade gap between total exports and total imports of construction products and materials

These goals will be met by focusing on 3 strategic areas:

  • Digital techniques deployed at all phases of design will deliver better, more certain results during the construction and operation of buildings.
  • Offsite manufacturing technologies will help to minimise the wastage, inefficiencies and delays that affect onsite construction, and enable production to happen in parallel with site preparation – speeding up construction and reducing disruption.
  • Whole life asset performance will shift focus from the costs of construction to the costs of a building across its life cycle, particularly its use of energy.

As part of the Clean Growth Grand Challenge, the Prime Minister has announced a mission to at least halve the energy use of new buildings by 2030. This commitment to innovation and improvement will help the industry respond to the recommendations of the Independent Review of Building Regulations and Fire Safety, published in May 2018.

Industry leaders expressed their views on the new deal: Andrew Wolstenholme, Co-Chair of the Construction Leadership Council said: “We are an industry that must be at the forefront of the UK’s drive for future growth and prosperity – and I’m confident that this deal will help to achieve that.”

Build UK chief executive Suzannah Nichol said: “Today’s announcement sets out a bright vision for the future of UK construction along with a plan that the industry can, and should, all get behind.”

The Civil Engineering Contractors Association warned that “words must be met with action”.

The CBI welcomed the deal with George McFarlane, CBI Sector Development Director, saying “Businesses will welcome the Construction Sector Deal, which firmly recognises construction’s indispensable role in driving growth across the UK as part of the Industrial Strategy.

“With the industry needing to fill 158,000 roles over the next three years, the announcement of new training programmes to help develop the sector’s skills pipeline is particularly encouraging.”