What you need to know about the Construction Sector Deal

The announcement of a Sector Deal for construction has the potential to be an important step in moving the industry forward. The construction industry is a huge part of the UK economy and employs 3.1 million people - almost 1 in 10 workers. However, its productivity has been on average 21% lower than that of the wider economy and construction demolition and excavation accounts for 60% of all UK waste. The partnership between government and industry aims to change the way we construct buildings, improve productivity, foster innovation and ensure we have the required skills for the future. In this blog, we pick out a few key highlights from the deal:

Technology:

The Construction Sector Deal has been described as a ‘bytes and mortar’ strategy and as such technology and digital construction feature heavily in the plans. The fact is that construction still underutilises technology when compared to other sectors. One of the reasons for this identified in the Sector Deal text is a lack of investment in research and development (R&D). In 2016 the construction sector invested £211m in R&D compared with £1.9bn in aerospace and £3.3bn in the automotive industry. The Construction Sector Deal promises £420m of joint investment from the industry and the government to develop new technology and techniques.

Lessons learned:

Since the Construction Sector Deal was first announced in November 2017 the industry has had to deal with the collapse and liquidation of Carillion. The first half of 2018 also saw the publication of the final report from the Independent Review of Building Regulations led by Dame Judith Hackitt. Both are reflected in the final strategy, with the government promising to ‘develop a new, fairer and more sustainable approach to contractual and payment practices’ and extolling the virtues of digital techniques to construct safer buildings.

Skills, training and apprentices:

The skills shortage in construction is an issue we are all familiar with. From the potential impact of our exit from the European Union to the retirement of the baby boomer generation there are a number of challenges of meeting the future needs of the industry. According to government figures 32% of the current construction workforce is over the age of 50 so training the next generation is crucial. The Sector Deal sets out several initiatives to help achieve this.

Perhaps the most fundamental of these is the reform the Construction Industry Training Board (CITB). The government has pledged to fully implement the recommendations of the CITB Review to ensure it is focussed on delivering the skills required for the future. Figures quoted in the Sector Deal document suggest that currently between 30% and 40% of those who complete construction courses have not entered the industry within 6 months of course completion. One reason is the lack of access to high quality work experience. To address this, from 2020 those undertaking the T Level in construction will undertake a minimum of 45 working days of industry placement. The Sector Deal also promises a £34m investment to identify and scale up successful and innovative training models from across the industry with the specific aim of supporting the delivery of 1.5m new homes by 2022.

The government has also issued a challenge to the industry to increase diversity in terms of gender, ethnicity and disability as well as ‘actively promote construction careers across society’.

Infrastructure and exports

The Sector Deal reaffirms the government’s commitment to £460bn of planned infrastructure investment including £70bn in transport infrastructure and more than £43bn in social infrastructure such as schools and healthcare. It also seeks to work with the industry to position the UK as a leader in global infrastructure – a market currently worth an estimated $2.5tn.

Despite the focus on how the industry can improve, it also recognises the success that the UK has had as an exporter of construction products, contracting and professional services. In 2016 the sector exported over £6bn worth of goods and UK construction contracting businesses accounted for £1.79bn of exports. The Construction Sector Deal sets an objective to build on this by encouraging investment in digital and manufacturing
Technologies. The intention is that this will allow product and professional service suppliers to build on the strong position that has already been achieved.

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