Government agrees construction sector deal to transform productivity

The government and the construction sector, through the Construction Leadership Council, have agreed a sector deal to transform the productivity of the sector benefiting the wider economy. 

The announcement of the deal follows on from the announcement in last week’s budget that the construction sector will receive £170m of government investment (through the Industrial Strategy Challenge Fund) to support innovation and productivity improvement in the sector.

The deal is designed to substantially boost the sector’s productivity, through greater investment in innovation and skills, creating new and well-paid jobs and maximising its export potential. This will also reduce the environmental impact, improve the efficiency and reduce whole life cost of new projects and buildings to help build the houses, schools, hospitals and major transport projects we need.

Announcing the deal, secretary of state for business, Greg Clark, said that construction is one of the largest sectors in the UK economy with a turnover of £370bn, contributing £138bn in value added to the UK economy and employing 3.1 million people (9% of the total UK workforce).

The deal, the first of a series that the government intends to negotiate with the construction sector, contains commitments to work collaboratively in three key areas:

Procuring for Value

In the months ahead the sector and the government will work to ensure construction projects across the public and private sectors are procured and built based on their whole life value, rather than just initial capital cost. The sector will aim to develop a procurement standard and work with the Infrastructure and Projects Authority to develop cost and performance benchmarks for assets and contractors and monitor outcomes including increased housing capacity, productivity and pre-manufactured value among other initiatives.

Industry-led Innovation

A joint commitment to invest in a transformative programme which brings 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 its 2015 commitment to deliver a million homes by the end of 2020 and half a million more by the end of 2022 are commercialised as quickly as possible.

Skills for the Future

The construction sector, with support from the government, will work closely in the coming months to drive increased investment in skills development, whilst adopting a more strategic and coordinated approach to recruitment, and equipping workers with the skills that they will need for the future. This will be achieved through a joint commitment to implement reforms to the Construction Industry Training Board to make it more strategic and industry led, and to enable the sector to make best use of funding from the Apprenticeship Levy.

Commenting on the sector deal, Nelson Ogunshakin, chief executive of the Association for Consultancy and Engineering, said: "The industrial strategy announced today is great news as it shows that the government can and does listen to our industry when we approach them with a united voice. ACE, alongside the rest of the construction industry, called for a construction sector deal and we achieved it. We called for infrastructure to be at the heart of the strategy and we achieved it. We said that skills will be crucial to delivery of the strategy and the government agreed and, finally, we said that artificial intelligence will be the key to the future and the business department has followed our lead. 

"It is now up to our industry to meet the challenge laid down by the government to improve the training of our staff, to provide more opportunities for people to join our profession, to modernise our business practices and to improve our productivity. All of this will be crucial if we are to have an industry that can compete as a global leader in this century."

Following today’s publication of the Industrial Strategy White Paper, the Construction Leadership Council will respond with a short statement from Andrew Wolstenholme. The full details of the sector deal will be published by the Department for Business, Energy and Industrial Strategy in a separate paper. The exact timing of the publication has yet to be fixed.

Click here to download Industrial Strategy: Building a Britain fit for the future.