In the latest instalment of the top 50 construction issues for the new government, CN highlights Crossrail 2, the future of Network Rail, offsite construction and EU workers’ rights.
20) Settle the CITB’s future – and that of the levy
No industry would like the sound of a double-tax so it’s no surprise the apprenticeship levy isn’t going down well.
With the levy having come into force, construction leaders have pointed out that they had already been paying into a mandatory training levy for years – only to be landed with a new one.
In January the CITB set out plans to slash the levy by a third, and has also launched an initiative to develop offsite manufacture training courses as part of steps to prove its value. However, the next government would do well to provide clarity on this issue early in the next parliament.
Paul Morrell, a former chief construction adviser who is contributing to the government steering group reviewing the CITB, commented in CN this week: “To say that ‘we can only afford one levy’ or that profit margins are too narrow to justify an investment in training is simply nuts.”
He added: “Leadership needs to step up and take ownership of a strategy for a skills and training programme that is fit for purpose. Without that, it is at least presumptuous to assume that ministers will decide to support maintaining a statutory levy.”
The new era of industry training under the government’s apprenticeship levy will struggle to bed in without swift resolution as to the CITB’s future.
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19) Draw up a modern national transport strategy
Long considered a ministerial option that ambitious politicians would rather give a miss, transport is nevertheless vital to economic growth and social wellbeing – despite often being viewed through the narrow prism of how to get from A to B.
The next government could consider looking at how transport can be used to create better places, not just moving people and freight, and these considerations should be fed through to the planning system to ensure the design and provision of transport infrastructure is fit for purpose.
A national transport strategy is one way of achieving this, according to Chartered Institution of Highways & Transportation vice-president Matthew Lugg. “A UK transport strategy would provide the basis for an effective and co-ordinated programme of infrastructure investment that enables economic growth and gives business confidence to invest in the UK,” he says.
18) Deliver the industrial strategy with a construction sector deal
In January the government published a green paper on the much-vaunted industrial strategy.
This strategy aims to boost the economy through upgrades and innovation with bespoke sector deals – led by business. The government green paper states that the strategy is an “open call to business to organise behind strong leadership, like the automotive and aerospace sectors, to address shared challenges and opportunities”.
Yet despite broad recognition of challenges such as fragmented supply chains and infrastructure delivery – as discussed in CN’s top 50 – it remains unclear whether the industry will be able to negotiate its own sector deal, which many believe is essential if construction is to innovate.
Arcadis head of strategic research and insight Simon Rawlinson says: “Including construction within the scope of the industrial strategy is vital. It is also key to maintaining progress on the delivery of the announced capital programme.”
CECA head of external affairs Marie Claude-Hemming says: “The implementation of an industrial strategy for construction is vital. Our sector has historically suffered disproportionately when the wider economy slows down and as such we call on government to create the right conditions now to ensure the UK continues to be a key player in the global marketplace.”
Dr Diana Montgomery, Construction Products Association chief executive says: “The CPA will continue to make its case for commitment to an Industrial Strategy. In particular we would like to see a sector deal for the construction industry to help our companies improve productivity, pull though innovation and ensure the workforce is able to deliver through skills and training.
”The next government therefore must consult with the entire supply chain to shape this deal while the industry must continue to drive the kind of changes we know are necessary to sustain growth.”
Network Rail Trackwork at Shenfield 2
17) Back Network Rail’s five-year funding settlements
As one of the construction industry’s biggest clients, Network Rail’s investment plans are closely watched by civils contractors, architects and consultants across the country.
However, since the current control period (CP5) was launched, Network Rail has been taken onto the public books – as has its £51bn of debt – with many in the industry fearing that the body could be subject to stricter borrowing limits by the Treasury.
The High Level Output Statement (HLOS), which takes input on priorities for CP6, is being undertaken and projects in line for support include Euston’s redevelopment and potentially enabling works for Crossrail 2. Transport for London also drew up a £3.6bn improvement wishlist in April of what it would like to see funded.
The Office of Rail and Road, which regulates Network Rail, announced in May that it would be proposing changes to how Network Rail’s funding structure is set up, stating: “Network Rail is increasingly devolving responsibilities to local managers who can work with local communities and businesses. We propose to support this by regulating the company in a different way, looking separately at its national and local responsibilities.”
One step the next government could take would be to confirm funding levels and project priorities for CP6, which runs from 2019 to 2024. It could also signal that Network Rail will be able to continue on its current investment trajectory.
16) Put weight behind Crossrail 2
Providing clarity for Network Rail is one thing. But the sector could have been forgiven for thinking that Crossrail 2 secured approval only a year ago.
Former chancellor George Osborne, now editor of the Evening Standard, had pledged to back the project with £80m in funding.
The scheme was heavily referenced in the 2015 Conservative manifesto. However, since the resignation of David Cameron after the referendum vote in June last year, there have been signs that the government has changed its tune over commiting to the new £31bn route.
The industry has begun raising concerns, with David Leam, infrastructure director at lobby group London First, adding that he remained positive about Crossrail 2, describing it as “fundamentally still a strong project”.
He added: “There’s no doubt the Conservatives want to signal they are serious about doing something to improve transport links in the North. But I would resist the idea that we can only do one or the other. We can’t be that limited – we have to be more ambitious.”
CECA’s Ms Hemming says Crossrail 2 is one of a number of projects, such as Swansea Bay Tidal Lagoon (CN top 50: #21), that should be backed: “We are particularly keen to see progress where key decisions have been delayed due to the election purdah period.”
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15) Lay a path for new nuclear
A decade ago the idea of a new generation of nuclear power plants was still open to debate.
In the past year, however, the reality of energy shortages appeared to have finally dawned on government, settling the question over the need for new nuclear plants is settled. Or at least that’s what we thought.
The issue now revolves around not whether the UK needs more nuclear power, but how to deliver it.
Hinkley Point C is finally approved and work progressing, despite continued rumblings around worker disputes and contract details. However, the delays over plans for Moorside (pictured) have persisted and the future of the £10bn reactor appears in doubt.
The next government could do well to take a fresh look at the nuclear pipeline beyond Hinkley to assess how a sustainable funding and financing agreement can be reached to provide certainty for the industry. Also, have small modular reactors gone out of fashion now too?
14) Address the shortfall in construction workers
Britain lives in an ageing society, and the huge demographic changes are starting to become felt acutely in the construction sector.
Over the coming decade around 20 per cent of the construction workforce will retire – around 400,000 people. The industry could face a shortfall of 100,000 workers in the coming years, especially if new restrictions on immigration come into fore.
In April, CN published analysis outlining why construction can not afford to lose its over-50 workers. RICS president Amanda Clack adds: “We have a lot of people heading towards retirement and in particular people over 50.
“At the RICS we talk about four generations in the workplace and maybe encouraging people to not necessarily retire early but keep going – around 30 per cent of the workforce are aged over 50 and the sector is facing a real cliff edge if we do not tackle this demographic challenge.”
The industry is also at a tipping point regarding advanced manufacturing solutions (see #12) in construction. As they become more in vogue, is there a smarter way of ensuring the right workforce is in place to deliver infrastructure and how can the government help speed up that change?
13) Appoint a minister for infrastructure
Getting Crossrail 2 delivered, keeping HS2 on budget, driving regional transport priorities, progressing tidal lagoons, overseeing new nuclear: these are monumental tasks. Tasks that arguably justify having ministerial representation.
Infrastructure projects often fall victim to funding or budgetary challenges, and a minister representing both the views of the independent National Infrastructure Commission and the Infrastructure and Projects Authority may go some way to helping the UK get onto a long-term, sustainable path for infrastructure investment.
WSP planning and advisory MD Ian Liddell says: “A minister for infrastructure can provide a clear, strong focus in government and could head a fully fledged national infrastructure department. Clear leadership from government on key policy issues will reduce confusion and increase confidence.”
Although there are parts of the industry who wouldn’t want to see a specific minister (how do you wrap up all the briefs covered by construction into one role?), at present there is a lack of leadership for this industry within Whitehall. It’s time to think of a better way.
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12) Back offsite and modular construction
Offsite and modular construction has come to be seen as the answer to many problems facing the industry, from increasing margins for contractors to helping solve the housing crisis.
However, investing in offsite and modular methods comes with an inherent risk. Factories have to be built and workers reskilled or trained to be able to adopt these new methods.
Laing O’Rourke invested in offsite with its facility at Explore Industrial Park and drew praise for pursuing an advanced manufacturing vision. But O’Rourke can’t do it on its own.
Gleeds chair Richard Steer says: “Ray O’Rourke built a manufacturing plant in Nottingham but no one else can follow its lead, it is such as huge investment.
“Firms need to know that there’s enough work in the pipeline to be able to assess if investing is going to pay off.”
Legal & General has the financial weight to take offsite to a new level and has pressed ahead with its modular housing business. Similarly, Heathrow has pledged to build four offsite hubs to help make the UK a world leader in construction and Aecom has struck a deal to deliver 3,000 modular homes as part of the £3.5bn regeneration of Silvertown Quays in east London.
A new government could certainly provide the fresh impetus to enable other private firms to think of offsite as a way forward for their own business.
11) Back EU workers’ rights
It has dogged the post-referendum debate and is seen by all parties as a priority in the forthcoming negotiations. But one thing is for sure: the continued unease felt by EU nationals in the UK has started to take its toll.
In May, ONS figures found that 117,000 EU citizens left the UK in 2016, up 31,000 from the previous year and the highest level since 2009. The ONS described the figures as “statistically significant”.
The impact of EU citizens leaving the UK by the time Brexit negotiations are completed in early 2019 could have serious consequences on the sector.
Federation of Master Builders director of external affairs Sarah McMonagle says: “We risk these workers leaving the industry while the government uses them as a bargaining chip in its negotiations with the EU. Once they have left the UK, they are unlikely to return.”