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Wed May 12 2021

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Construction placed at centre of government industrial strategy

27 Nov 17 Construction is one of the first four industries to benefit from government backing in a new industrial strategy published by business secretary Greg Clark.

The much-heralded industrial strategy is the flagship policy of the Department for Business, Energy & Industrial Strategy to boost the UK’s flagging economy.

The aim is to use public money to encourage private sector investment in innovation, training and infrastructure.

Last week the Office for Budget Responsibility downgraded its growth forecasts for the UK economy. It predicts that the UK economy will grow by 1.4% in 2018, 1.3% in both 2019 and 2020, then by 1.5% and by 1.6% in 2022.

The 131-page document sets out a strategy of increasing government spending on research and development (R&D) to 2.4% of GDP by 2027, increasing the rate of R&D tax credit to 12% and investing £725m in new Industrial Strategy Challenge Fund programmes.

A series of so-called sector deals – partnerships between government and industry to increase sector productivity – will be rolled out. The first sector deals are in life sciences, construction, artificial intelligence and the automotive sector. At the heart of the deal is the £170m earmarked for the Transforming Construction challenge fund, announced in last week’s budget statement.

The government and the construction sector, through the Construction Leadership Council (CLC), have agreed a sector deal that they hope will transform the productivity of the sector.

To quote the policy document: “Our new Industrial Strategy ‘Transforming Construction’ programme will take full advantage of new technologies to provide safer, healthier and more affordable places to live and work that use dramatically less energy to build and run. It will ensure UK businesses develop world-leading capabilities in integrating construction, digital energy and efficiency technologies – the kind of system integration at which the UK excels. We have launched a call for evidence on additional measures to build a market for energy efficiency among homeowners. This will incentivise greater private investment in household and commercial building energy efficiency, to grow the markets for these types of buildings and technologies.”

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Business secretary Greg Clark said: “We have a thriving research and science base and are home to a wide range of innovative sectors, from advanced manufacturing and life sciences, to fintech and creative industries. The industrial strategy is an unashamedly ambitious vision for the future of our country, laying out how we tackle our productivity challenge, earn our way in the future, and improve living standards across the country.”

While the £170m will have to spent extremely imaginatively to have much impact on an industry that has an annual turnover of £370bn, construction trade associations are delighted to have the industry recognised by government as important.

Build UK chief executive Suzannah Nichol said: “Today’s commitment to a construction sector deal, coupled with the £170m announced in last week’s budget to increase productivity in the construction, is fantastic news for the whole sector.  It demonstrates the strength of partnership we have developed with the government and Build UK looks forward to working with the CLC and others to develop an effective and efficient industry capable of delivering the much needed infrastructure and housing across the UK.”

Civil Engineering Contractors Association director of external affairs Marie-Claude Hemming said: “It is encouraging news that the government has highlighted the construction sector as one of the sectors that is primed to drive economic growth in the UK’s economy in the years ahead.

“We believe the UK economy will grow if we take steps to boost productivity and drive innovation. We must also work to ensure that the current workforce in the infrastructure sector is upskilled, and sufficient new entrants are attracted to the industry, to deliver the government’s planned pipeline of investment.

“Government must work with industry to ensure the challenges facing our sector are addressed. Get it right and we could see our roads, rail, and utilities acting as a springboard for a resurgent economy, which will secure the economic health of UK plc after we leave the European Union.”

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