Construction in the UK faces some big changes and tough challenges. An initiative by CLC to launch an innovation hub can give us the tools – and the culture change – that the industry needs to succeed

This summer has featured some big developments for the construction industry which we should not let fade from memory.

Before parliament rose for its summer recess, the government issued its official response to the Farmer Review, which confirmed acceptance of the report’s somewhat stark prognosis: Modernise or Die. That response reminded us of the significant reform we must undertake, which includes investing intelligently to ensure we have the skills to meet future needs.

Helpfully, the government ministers responding to the Farmer Review took the opportunity to confirm their support for the continuation of the CITB, “with reforms to make it more responsive and focused”, and they encouraged the industry to support the continuation of the levy in the upcoming consensus process.

Another big development came in the form of the Construction Leadership Council (CLC)industry Leadership Event, held on 11 July at the Manufacturing Technology Centre in Coventry. Echoing the Farmer Review, the CLC event highlighted the need for change, especially in light of a productivity gap that continues to grow ever larger between construction and other industries. 

Recent figures by McKinsey show that globally, construction accounts for 13% of the world’s economic output, but productivity is the worst of any industry and this is effectively costing the world’s economies $600bn (£464bn) a year. In the UK, the gap between construction and the UK industry average is costing the UK construction industry about £15bn. And while the UK’s projected infrastructure projects pipeline of £650bn over the coming 10 years is good news for the sector generally and provides an opportunity for investment, McKinsey suggests that to deliver that investment with the current size of the UK workforce we would need to improve productivity by 22%. Compare that with the annual 0.49% increase we’ve been achieving for most of the past 50 years, and we have a problem. 

Targets identified in the past construction strategy are still valid – to lower costs, speed delivery, lower carbon emissions, and reduce the trade gap. At the same time, in addition to building better economic infrastructure, we need to be building more houses and investing in social infrastructure. 

Clearly the solution is complex, and the CLC presented the case for a sector deal for construction as part of the government’s industrial strategy. This would bring industry and government together under a single, cohesive agenda to deliver improvements in the built environment that will benefit everybody – more houses, increased rail capacity, cheaper energy, and better public services. At the heart of this will be how we create a more innovative sector – and develop the workforce skills and business models that will underpin it. Not surprisingly, industry-led innovation – particularly in better use of digital platforms and off-site manufacturing – is one of the keys to boosting productivity. 

In addition to building better economic infrastructure, we need to be building more houses and investing in social infrastructure

I was pleased to see a new initiative by the CLC to create an innovation hub, which would bring together and boost efforts already being made by a range of organisations such as BRE, the Manufacturing Technology Centre, and Digital Built Britain.

With a proposed £240m of funding from the government’s Industrial Strategy Challenge Fund, the innovation hub would boost the UK’s capabilities in digitally-enabled modular construction, and facilitate the development of product platforms – standard designs with components that can be manufactured off site and assembled on site. 

It’s an inspired vision, not just for creating a centre of excellence that would be world class, but for helping to change the industry’s culture and business model away from a short-term focus on individual projects. The idea is to create a modernisation ripple effect across the sector.

This hub will not just be for energy and transport infrastructure (the eye-wateringly big budget projects), but also for social infrastructure: residential buildings, and many other public and private sector projects.

I hope that a range of firms and organisations will be supporting it. CITB, which in April published a major report on modular construction and what it means for construction skills, should be involved with the development of the innovation hub and the sector deal. That way it can contribute its evidence base, help assess what technological changes mean for future skills needs, and explore how it can guide the availability of appropriate training courses.

The new hub aims to be a “learning factory” – using state of the art equipment and knowledge to train new and existing workers through a combination of apprenticeship placements, training courses, and support for other training providers at the “spokes” of the hub.

The concept is inspiring. There have already been some well-publicised initiatives to boost capacity for off-site manufacturing, and this is happening on a range of scales, including, for example, the off-site modular M&E work my company Wates Group is doing in our Prism facility. But the innovation hub can help us take a step change – ensuring access to innovation for more players right across the industry.

At the same time, by bringing together clients, researchers, contractors, specialists, trainers and other experts, it could really help foster the more collaborative mentality that UK construction must adopt to survive and thrive.

James Wates is chairman of Wates Group, the CITB and Build UK