Companies expected to contribute £250m in flagship construction sector deal

Greg Clark has revealed ambitious plans to transform the construction sector and tasked companies to contribute £250m in order to be awarded £170m of government investment in an approved sector deal aimed at transforming productivity.

The deal between the government and the construction sector, through the Construction Leadership Council, was announced on Monday with the initiative looking to boost the sector’s productivity, through greater investment in innovation and skills. The government hope to add billions of pounds to the economy by transforming the industry through better adoption of digital and manufacturing technologies and training the next generation of workers with new skills.

Supported by £170m of government investment over three years through the Industrial Strategy Challenge Fund and £250m of match funding from industry, Clark has today announced four targets of the deal to be achieved by 2025:

• 33% reduction in the cost of construction and the whole life cost of assets
• 50% reduction in the time taken from beginning-to-end of new build and refurbished assets
• 50% reduction in greenhouse gas emissions in the built environment
• 50% reduction in the trade gap between total exports and total imports of construction products and materials

Business secretary Greg Clark said: “Our construction industry makes a vital contribution to the UK economy and is one of our most important sectors, with businesses that add £138bn a year to the economy, contribute 8% of our GDP, and employ over 3.1 million workers. The Sector Deal we have announced today will see government and industry working together to support, invest and transform the construction sector, creating high-skilled and well-paying jobs, while delivering more housing for people across the country. 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.”

The deal announced in the Industrial Strategy white paper on Monday is the first of a series that the government intends to negotiate with the construction sector. The launch of the Centre for Digital Built Britain at the University of Cambridge was also revealed as part of today’s announcement, which will develop Building Information Modelling (BIM), sensors, data analytics and smart systems technologies that can be embedded in new building projects.

Commenting on the sector deal, Andrew Wolstenholme, chair of the Construction Leadership Council, said: “I am delighted that construction has been included in the first wave of sector deals. It presents a huge opportunity for one of the UK’s largest industries and the broader economy. With a projected £600 billion pipeline of infrastructure projects to be delivered over the coming decades, it is vital that the industry and government work together to realise the full potential of the deal.”

Tony Meggs, chief executive of the Infrastructure and Projects Authority (IPA) said: “This government has ambitious plans for infrastructure over the next decade. It is vital that the construction sector is modern and efficient in the way it delivers these plans. Only then will we see future investment continue to flow and make progress in closing the UK’s productivity gap. The IPA very much supports this Construction Sector Deal; we will support and align with industry as it implements the programme.”

Furthermore, Clark announced a £1.4m investment 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.