Last week’s Budget made it clear that the construction industry needs to be more responsive if it is to play an influential role in the UK’s growth strategy

George Osborne singled out the role of inventors, product designers and manufacturers when he proclaimed the “march of the makers” in his Budget speech last week. Perhaps not surprisingly, builders didn’t get a mention. Given Infrastructure UK’s 2011 report on the international competitiveness of UK construction, it was unrealistic to expect our industry to be mentioned in dispatches so soon but we clearly have a job to do as the UK strives to move away from a “growth model that failed”.

In the final analysis, the uk growth strategy is asking the construction industry what it can do for the country - not describing what the country can do for construction

It is sobering to think that construction benefited so significantly from its stake in the property boom that HM Treasury now describes as unsustainable. The rebalancing of the economy will apply to construction as well as financial services.

The Plan for Growth, published alongside the Budget last week, sets out where the government thinks it can contribute to securing greater efficiency and value and, more to the point, outlines the landscape where the construction supply side will have to respond. Given the parlous state of the residential market and its pivotal role
in supporting labour mobility, the housebuilding industry has rightly received a high proportion of the support available. Shared equity grabbed the headlines, but in the long term, greater availability of public sector land and reforms to stamp duty should have more impact on housing supply shortages by encouraging institutional investors into the private rental sector.

Beyond the residential sectors, it is encouraging to see the government acting on its own advice set out in the Infrastructure Cost Review: undertaking to publish the long-term investment programme, simplify planning and eliminate inconsistent procurement. However, the announcement that gathered most headlines concerned the target to reduce construction costs by 20%, and here the focus is very much on the construction industry’s ability to respond to the challenge that it shares with its end-user client, the UK tax payer.

Without change, construction remains part of the UK’s competitiveness problem rather than part of the solution

Industry data from 2010 has shown that the industry owes the public sector a great favour - new build output in 2010 increased in real terms by 14% - saving countless jobs and businesses in the process. Public sector workload will fall away, but if the forecasts are to be believed, the fall-off in workload will be much less than the increase in volume recorded last year. The message from the government is very clear, that the expected payback will be investment in “people, improved supply chain integration and the development of innovative processes”. 

Some of the pull will come from the government client. The James Review may, for example, introduce retailer supply chain concepts such as category management into the delivery of schools. However, there is plenty of evidence of innovative thinking from our own industry bodies such as Constructing Excellence or the task group looking at Building Information Modelling, chaired by Paul Morrell and Mark Bew.

Constructing Excellence accepted in their 2009 report, “Never waste a good crisis”, that the decade of constant growth that followed the publication of the Egan Report in 1998 blunted construction’s incentive to reform and change. Since Egan was published, the UK has fallen from fourth to 12th in global competitiveness rankings. The fall down the rankings of construction’s role in the UK is more coincidental than causal, but it is fair to say that, without change, construction remains part of the UK’s competitiveness problem, rather than part of the solution. In the final analysis, the UK’s Plan for Growth is asking the construction industry what it can do for the country - not describing what the country can do for construction.

The potential investment opportunities in the UK are huge, as are the affordability challenges associated with them. Construction’s place in the growth strategy, for both the public and private sectors, is in delivering value and providing built assets that meet client needs at the lowest lifetime cost. The UK’s future growth strategy, focused on being an attractive location to invest, on being export-orientated and having a well-educated, flexible workforce depends, to a greater or lesser extent, on the contribution that a competitive construction industry can make. The “marching makers” may not count the construction industry in their ranks, but they must be able to rely on us pushing in the same direction.

Simon Rawlinson is head of strategic research and insight at EC Harris