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Construction sector must “modernise or die” 27/10/2016

Britain's construction industry faces "inexorable decline" unless radical steps are taken to address its longstanding problems, according to an independent review commissioned by two government departments.


The Farmer Review of the UK Construction Labour Model highlights construction's dysfunctional training model, its lack of innovation and collaboration as well as its non-existent research and development (R&D) culture.


The report says low productivity continues to hamper the sector, while recent high levels of cost inflation, driven by a shortage of workers, has stalled numerous housing schemes as they have become too expensive to build.


Led by Mark Farmer, chief executive of Cast, a real estate and construction consultancy, the hard-hitting report says we need to better align the needs of construction firms and the businesses who hire them:


"If you buy a new car, you expect it to have been built in a factory to exacting standards, to be delivered on time, to an agreed price and to a predetermined quality. This needs to happen more in construction, so that the investors, developers or building owners hiring construction firms increasingly dictate the use of modern methods of delivery and invest appropriately in the skills agenda to grow this part of the industry. There are more similarities between manufacturing and construction than many people are led to believe and this perception needs to change, starting in the housing market."


One recommendation set out for the medium term is a "carrier bag charge" style behavioural deterrent scheme. This would levy a tax on businesses who buy construction work in a way that doesn't support industry innovation or skills development. Clients could face paying a suggested levy equal to 0.5 percent of a scheme's construction cost but would have the ability to avoid paying this tax completely by commissioning construction in a more responsible way.


Farmer, a 25-year veteran of the industry, and former partner at EC Harris, said the industry needs to be far more joined-up with its clients in how it approaches R&D and skills. He also wants ministers to directly intervene in certain areas to ensure many of the issues identified are rectified.


Commissioned by the Department for Communities and Local Government and Department for Business, Energy and Industrial Strategy, the Report makes ten recommendations which include:


  • using the residential development sector as a pilot programme to drive forward the large scale use of pre-manufactured construction, for example, through off-site built or modular housing.
  • a wholesale reform of the current Construction Industry Training Board (CITB) and its related levy system, including a new mandate to properly fund and drive forward both appropriate skills development and innovation to suit a modern progressive industry.
  • government to use its education, fiscal, housing and planning policy measures to initiate change and create the right conditions that will support the construction sector's modernisation.


With more people leaving the industry each year than joining, the report identifies that the construction workforce is shrinking, placing increasingly severe constraints on its capacity to build housing and infrastructure. Reliance on a fractured supply chain and self-employment also means there is little incentive for contractors to invest in long term training for the labour force.


The situation is exacerbated by the fact that many school leavers and graduates don't view construction as an attractive career choice. A YouGov poll earlier this year found that two-thirds of Britons wouldn't consider a career in construction.


The report claims that if Brexit results in reduced migrant labour, the situation could be made even worse.


Crucially, the construction industry hasn't raised its productivity in decades so it urgently needs to explore ways to make the work less labour intensive, such as through offsite construction. This, in turn, could make a career in the sector more attractive for young people by moving the work from building sites to digitally enabled working in factories.


John Bibby ARCH CEO comments: "The findings of this report underpin the fact that the government's ambition of increasing housing supply and delivering a million new homes by the end of this Parliament is unlikely to be delivered without intervention from the government.


"Councils are willing to assist in driving change in the construction industry and commitment to delivery of a significant social rented housing programme, commissioned using modern methods of construction would help modernise the industry".


ARCH would be interested to hear from members who have or are using non-traditional methods of construction to deliver their social housing programmes. Please email:

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