Boosting the UK’s faltering productivity was the key focus of last November’s Budget, and that drive has been further emphasised in the Industrial Strategy, which was published soon after it.
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This puts construction very much centre stage through a £420M pot to drive reforms in the way the industry procures and delivers projects.
The strategy, published in November in the form of a White Paper, sets out how the government will imorove the nation’s productivity by investing in skills, infrastructure and future technologies. It builds on ideas set out in a Green Paper in January 2017.
The Industrial Strategy was published came alongside gloomy news from the Office for Budget Responsibility, which has downgraded Britain’s growth forecasts for each year until 2022.
The strategy aims to tackle that and four major challenges are identified. The UK must confront these to stay ahead in the coming years. They are:
- the need to make the UK a leader in artificial intelligence development
- the need to make the UK a leader in clean growth
- the need to meet challenges associated with future mobility through the development of new transport modes such as electric and autonomous vehicles
- the UK’s ageing population.
A watchdog called the Independent Industrial Strategy Council will be set up in 2018 to monitor the government’s progress on tackling these four challenges.
Support for the strategy comes in the form of a £725M investment boost to the Industrial Strategy Challenge Fund over three years. The Department for Business, Energy, and Industrial Strategy (BEIS) hopes this will help the UK become “the world’s most innovative nation by 2030”. It is in addition to the £1bn investment announced earlier this year.
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“The way we earn and live our lives as workers, citizens and consumers is being transformed by new technologies,” said business secretary Greg Clark, at the stratgy launch. The UK is well placed to benefit from this new industrial revolution and we start from a position of significant strength.”
“The Industrial Strategy is an unashamedly ambitious vision for the future of our country, laying out how we tackle our productivity challenge, earn our way in the future, and improve living standards across the country.”
One of the first recipients of the Challenge Fund will be the construction industry. It will receive £170M after the industry, through the Construction Leadership Council agreed to add £250M of its own money to the government cash in a Sector Deal (see box). Despite the announcement, there is still some uncertainty about the industry’s £250M contribution. A CLC spokesman confirmed that exact details of how the industry’s contribution will be put together have still to be worked out.
Nevertheless, ministers were keen to extoll the new agreement’s ambition.
“The agreement embodies our vision for a modern Industrial Strategy, with government and industry working together in a strategic partnership towards the common goal of higher productivity, and a more skilled construction workforce with more earning power,” said Clark.
Deals reached with other sectors
Sector deals, which combine government and private sector investment, have also been reached with the artificial intelligence, automotive and life sciences industries.
Plans for the construction sector deal were revealed in the summer and have been driven through by Crossrail chief executive and CLC chairman Andrew Wolstenholme, who says he is “delighted” that construction is included within the first wave of sector deals.
It will focus on modernising construction practices through new digital and manufacturing techniques, and a boost to the number of skilled workers through a £64M investment for construction skills training.
Clark said the deal’s four main objectives build on goals previously set out in the government’s Construction 2025 industrial strategy for construction policy paper.
The four main objectives now are:
achieve a 33% reduction in the costs of construction and whole-life costs of assets.
- to halve the time it takes for refurbishments and new build projects to be completed.
- to reach a 50% reduction in greenhouse gas emissions in the built environment.
- to secure a 50% drop in the trade gap between total exports and imports of construction products and materials.
Wolstenholme insists the industry will unite to rise to the challenge.
“Securing this deal is a reflection of how well the sector has come together over the last year – and spoken with one voice about where it wants to go, and what it needs to do to get there,” he says. “This deal is also a reflection of the vital role we have to play in delivering the UK’s infrastructure and housing ambitions – and of government’s commitment to working with us to deliver on them.
A separate paper setting out the full details of the deal will be published in the coming weeks, an initial statement sets out three key areas of focus: procuring best on whole life value, driving innovation and building skills for the future (see box).
Most industry experts have welcomed the deal. ICE director general Nick Baveystock says the ICE has been “supportive of a construction sector deal for some time”.
Unlocking productivity problems
“This Industrial Strategy provides the will and the direction for our industry to attempt to unlock the productivity problems that face the country,” he explains. “Now that the Industrial Strategy has been published we can work towards improving productivity with employment better distributed across the UK, kick start growth across the country through better infrastructure, enable transport links and improve provision of public services.”
Civil Engineering Contractors Association (Ceca) director of external affairs Marie-Claude Hemming was encouraged that the government has highlighted the construction sector as one “primed to drive economic growth” and also welcomed the steps towards improving innovation and skills.
“We believe the UK economy will grow if we take steps to boost productivity and drive innovation,” she says. “We must also work to ensure that the current workforce in the infrastructure sector is upskilled, and sufficient new entrants are attracted to the industry, to deliver the government’s planned pipeline of investment.”
Recognising construction contribution
Turner & Townsend head of infrastructure south and UK commercial services David Whysall said the sector deal was a major milestone. He says that being part of the first tranche of sector deals shows the government recognises the huge contribution the construction industry makes to the economy, and the major challenges it faces.
Whysall says the industry has struggled to reinvent itself and improve performance because of its “fragmented supply chains, coupled with its highly cyclical nature and low margins”. He sees the new deal as a call to action for the whole industry, setting a clear agenda for change.
The idea for the new Industrial Strategy was announced five months after the referendum on whether Britain should stay in the European Union (EU).
At the time, prime minister Theresa May said the result of the referendum gave a “once-in-a-generation chance to shape a new future for our nation: the chance to build a stronger, fairer country”. Many now see this new approach as a way to try and smooth the transition as Britain leaves the EU.
“Government must work with industry to ensure the challenges facing our sector are addressed,” stresses Hemming. “Get it right and we could see our roads, rail, and utilities acting as a springboard for a resurgent economy, which will secure the economic health of UK plc after we leave the European Union.”
The civil engineering has broadly welcomed the strategy since its launch, but many experts are saying that the government now has to follow through on its promises and make sure actions do not contradict each other.
Sector Deal: Two initiatives
Centre for Digital Built Britain Programme
The government has announced the launch of the Centre for Digital Built Britain at the University of Cambridge. The new centre, which forms part of the Industrial Strategy Challenge Fund investment, will develop Building Information Modelling (BIM), sensors, data analytics and smart systems technologies that can be embedded in new building projects.
The Centre for Digital Built Britain Programme, first announced in the 2016 budget, is intended to deliver reduced whole-life costs and carbon emissions from buildings, and improve construction productivity and capacity by using intelligent building information models, sensing technology and secure data and information infrastructure.
Building for 2050
The government is also investing £1.4M in a research project called “Building for 2050”. Led by Aecom, this project is gathering evidence from three housing developments located in Swansea, Bristol and Manchester with the aim of uncovering the barriers to developing low cost, low carbon housing.
The project will test innovative methods of construction and will involve working closely with householders to track their views, and to report on the progress of efforts to reduce the environmental impact of UK homes by 2050.
What is the sector deal plan?
The deal contains commitments to work collaboratively in three key areas.
Procuring for Value
In the months ahead, the construction sector and the government will work to ensure construction projects across the public and private sectors are procured and built, with consideration given to their whole life value, rather than just initial capital cost. The sector will aim to develop a procurement standard and work with the Infrastructure & Projects Authority to develop cost and performance benchmarks for assets and contractors. They will also monitor outcomes including increased housing capacity, productivity and pre-manufactured value.
There is a joint government/industry commitment to invest in a programme to bring together the construction, digital technology, manufacturing, materials and energy sectors to develop and commercialise digital and offsite manufacturing technologies.
This will accelerate change in the infrastructure and construction sector, ensuring new technologies that can help deliver the government’s planned investments in infrastructure and the government’s 2015 commitment to deliver 1M homes by the end of 2020 and 500,000 more by the end of 2022.
Skills for the Future
The construction sector, with support from the government, will work closely to drive increased investment in skills development, while adopting a more strategic and coordinated approach to recruitment, while equipping workers with the skills that they will need for the future. This will be achieved through a joint commitment to reform to the Construction Industry Training Board to make it more strategic and industry-led.