I am delighted that the Government and the Construction Leadership Council published yesterday the Construction Sector Deal. I want to thank the CLC, as well as colleagues from across the sector and Government for their tireless work over the past two years in developing it. It is an outstanding achievement and I have no doubt that it will be a catalyst for change.
As the Secretary of State made clear in his Northern Powerhouse Business Summit speech, securing this deal sends out a statement about the vital contribution our sector makes to the country. We build the schools to educate the young, the hospitals to care for the sick, the police stations to keep us safe, the roads and railways that get us to work, the power stations that keep us warm and the homes we return to each day. For those reasons and more, we are an industry that must be at the forefront of the UK’s future growth and prosperity.
The construction sector is massive, representing 8% of GDP and 9% of employment. It is 6 times larger than the automotive industry. Every year £150 billion is invested through the public and private sectors – creating the foundations for growth and helping the UK to achieve its wider social and environmental objectives.
And make no mistake: at our best we are world class. In my previous role at Crossrail, I welcomed delegations from over 60 countries that have come to London because the UK’s record of delivering mega-projects is the envy of the world. We have a global reputation for our architectural and engineering skills and for our ability to deliver low carbon and sustainable projects.
But we continue to face fundamental issues. A cyclical workload and inconsistent demand from clients have resulted in a fragmented supply chain which inhibits investment in innovation and skills. This has negatively affected our productivity, and over the last couple of decades we have fallen behind other sectors.
Furthermore, the tragedy at Grenfell means that we must redouble our efforts when it comes to building safety. The liquidation of Carillion has also exposed the fragility of our business model, and the impact it has on the thousands of SMEs in the supply chain. And of course, we face an unprecedented housing shortage, and a need to renew our infrastructure.
These are an imposing set of challenges – however the sector deal announced today represents a collaboration between industry and Government aimed at addressing them:
It is based on three simple principles:
- Digital – Delivering better, more certain outcomes using digital technologies
- Manufacturing – Improving productivity, quality and safety by increasing the use of manufacturing
- Performance – Optimising whole life performance through the development of energy efficient, smart assets
The centrepiece of the deal is a combined £420m investment by Government and industry in the development and commercialisation of digital and offsite manufacturing technology. This investment is vital, as the Government’s National Infrastructure and Construction Pipeline sets out £460billion worth of planned project pipeline over the next decade, and the Government made clear at last year’s Budget it should be delivered offsite where possible. So the widespread adoption of these new technologies and techniques will enable us to deliver those projects more quickly, at reduced cost, and ensure that the final product is safe, and energy efficient.
Secondly, we will tackle our impending labour shortage by increasing the number of construction sector apprenticeships to 25,000 by 2020 – and create new apprenticeship standards in areas like digital design and modelling, as well as the traditional professions – thus ensuring that we have the workforce we need both now and in the future.
And finally, we will harness the world leading technologies commercialised through the deal to boost our exporting capability, and improve our contractual and payment practices to ensure that everyone benefits from the increased profitability that these innovative technologies will generate.
I should stress that this deal is not an end, but a beginning. We have not tried to tackle every challenge in the sector but look at where we can make the biggest impacts. We will build on it over the coming months and years.
But I firmly believe the direction we have set out today will drive the changes that our industry needs.
The sector deal announced today is a vote of confidence in the future of our sector. Let’s work together to make it a reality.
Co-Chair, Construction Leadership Council