The UK supply chain faces more barriers to delivery in transport than in any other sector, with major constraints in innovation, policy risk and procurement, the department for Business, Innovation and Skills (BIS) has said in a report published this week.
As a result businesses seeking work in the sector struggle with winning tenders, developing and retaining skills and seeing a long-term pipeline of work.
BIS found that barriers in energy and waste infrastructure were also of significant concern. The water sector was said to face some concerns over innovation and skills, but was not classed as having any “major” constraints.
The report said three particular concerns over the supply chain’s ability to deliver infrastructure were:
- A lack of production capacity for high-voltage subsea cables
- Timing issues relating to nuclear power station construction and commissioning
- Immature technology where marine energy is concerned
However, the report said new “institutional arrangements” beyond what the government had already planned — including the introduction of the Major Infrastructure Planning Unit — were not needed. It also noted that the government’s publication of a long term forward view of infrastructure projects and programmes in the National Infrastructure Plan 2011 — expected in October — will help to reduce barriers relating to forward visibility and policy risk.
The Civil Engineering Contractors Association (CECA) said more needed to be done to address the problems. “It is now vital that we see a coordinated response from government and industry to overcome these barriers,” said CECA director of external affairs Alasdair Reisner. “The alternative, letting the UK slip further down global league tables for infrastructure, is clearly unacceptable.”
Transport infrastructure barriers
On road projects, the report said planning, procurement and project management should be made more efficient by increasing “in-built flexibility to allow for the inevitable challenges of the unexpected arising”. Pipeline uncertainty and complex procurement approaches increase transaction costs and deter industry from a more strategic approach to investment in skills, technology and innovation, the report said. “There is in fact over-supply in the UK — but this is not reflected in lower costs.”
Policy risk, procurement, communications, skills and training, standardisation, innovation and standards were cited as key challenges in the rail sector. Uncertainty on policy inhibits investment decisions, innovation and recruitment. On procurement, the report identified “unnecessary secrecy aimed at enhancing competition”, and “significant barriers for many SMEs in understanding how to participate in major procurement programmes”. Major buyers are not sufficiently aware of the range of SMEs in the lower tiers of the supply chain due to poor communication, the report said. There is also a significant skills challenge, because uncertainty makes it difficult to plan for and fund the required workforce.
The report said that increasing overseas demand, for example from China, has led to “talent flight”, and a lack of skills planning or good apprenticeship schemes is “decreasing UK capability to actually construct infrastructure”, endangering the UK’s capability to take advantage of domestic and overseas opportunities. In addition, SMEs seeking airport work were found to be “shut out” of military contracts, and overlooked by major clients.
Significant overseas demand for expertise — China was again given as an example — encourages “talent flight” abroad. The long-term decline in the skills base was said to pose a “significant risk of irreversible damage” to UK capability to take advantage of domestic and overseas opportunities. However, the report said there was no clear reason to intervene in the supply chain for UK capability to fit-out port infrastructure. “The supply chain has adapted to respond to decreased UK capability and is able to source appropriate skills, materials and equipment to meet existing requirements,” it said.