UK Construction Industry in "Dire Need of Change"

25th October 2016

The UK's construction industry is in "dire need of change", according to a new Government-commissioned review on the sector.

A report by Mark Farmer, chief executive of industry consultancy Cast, has revealed the sector must make a series of drastic alterations in order to halt an "inexorable decline" over the next few years.

In his 'Farmer Review of the UK Construction Labour Model', the 25-year industry veteran highlights 10 key recommendations to be considered by the Government, the sector and its clients. These include:

• Using the residential development sector as a pilot programme to drive forward the large scale use of pre-manufactured construction, such as through off-site built or modular housing.

• A wholesale reform of the Construction Industry Training Board (CITB) and its related levy system, including a new mandate to properly fund and drive forward both appropriate skills development and innovation to suit a modern progressive industry.

• Government to use its education, fiscal, housing and planning policy measures to initiate change and create the right conditions that will support the construction sector's modernisation.

Mr Farmer said: "If you buy a new car, you expect it to have been built in a factory to exacting standards, to be delivered on time, to an agreed price and to a predetermined quality.

"This needs to happen more in construction, so that the investors, developers or building owners hiring construction firms increasingly dictate the use of modern methods of delivery and invest appropriately in the skills agenda to grow this part of the industry. 

"There are more similarities between manufacturing and construction than many people are led to believe and this perception needs to change, starting in the housing market."

Other recommendations include introducing a "carrier bag charge" type of initiative for businesses who buy construction work via a method which doesn't support industry innovation or skills development. Clients could face paying a suggested levy equal to 0.5% of a scheme's construction cost but would have the ability to avoid paying this tax completely by commissioning construction in a more responsible way.

Mr Farmer continued: "The construction industry is in dire need of change. What is clear to me following the nine months spent conducting this review is that carrying on as we are is simply not an option. With digital technology advancements pushing ahead in almost every other industry and with the construction labour pool coming under serious pressure, the time has come for action."

Paul Stanworth, Managing Director of Legal & General Capital, said the review "sets out a clear way" for the industry to "reinvent itself".

"With such a chronic shortage of homes in the UK, we see rapid evolution as a 'must have' for the industry, not just a 'nice to have'," he said.

"Having identified such a requirement, Legal & General is helping to address this problem by investing in a modern factory to produce homes using manufacturing processes seen in the production of cars and other consumer goods. This construction method is safe, clean, and fast, providing a high level of consistency and durability."

Ray O'Rourke, chairman and chief executive at Laing O'Rourke, said: "Laing O'Rourke has invested heavily in innovation and continuous improvement, and therefore I welcome many of the findings and recommendations of the Farmer review. The report shines a light on the serious and systemic issues in UK house building and the wider construction industry, and we cannot afford to ignore them any longer.

Stephen Radley, Director of Policy at CITB, said the organisation is already reforming to give it a "laser-like focus on careers, qualifications and standards and training and development".

"Employers have the opportunity to create a more profitable, innovation and sustainable construction industry and we look forward to helping them to do this," he said.