The government should introduce a tax on clients that fail to innovate in the construction industry, a hard-hitting report requested by the government has proposed.
Under the recommendation, clients would pay no more than 0.5 per cent of the total construction value of a project, if they are unable to demonstrate how they are contributing to the modernisation of the industry.
This is one of 10 recommendations that have been laid out in a comprehensive report titled Modernise or Die [see attached] by Cast Consultancy chief executive and founder Mark Farmer.
The report said taxing clients would help to change behaviours in the industry and would supplement funding for skills and innovation.
Mr Farmer was asked by the government in February, via the Construction Leadership Council, to identify solutions to address the industry’s structural problems, including low margins, poor productivity and a looming skills shortage.
Other recommendations in the report include a complete reform of the CITB and a renewed focus on the CLC’s work streams of Business Models and Innovation, which Mr Farmer said are good starting points for change.
Comparing the built environment sector to a sick – even dying – patient, Mr Farmer said there must be a ”tripartite covenant” between industry, clients and the government, to overhaul the way they work together.
He also recommends that the government should encourage the use of pre-manufactured construction methods to boost housing in the UK through policy measures.
It could do this by incentivising institutional investment into the private rented sector, through favourable land release by central and local government on the condition of using pre-manufactured solutions.
The government could also encourage pre-manufactured solutions by working with register providers to develop a pre-manufactured social housing programme, which could also promote PRS.
Ministers are now reviewing the report and gauging industry response.
Industry minister Jesse Norman said: “This government is determined to support more housebuilding, more quickly and in the places people want to live.
“Given the launch of the £3bn Home Building Fund, Mark Farmer’s important review in this vital sector is very timely.”
He added: “It makes a strong case for change in the industry, identifies areas where it needs to improve, and sets out areas for action.
”We will now carefully consider his recommendations.”
Read the 10 recommendations and more in CN’s analysis of the Farmer Review.
Mark Farmer writes a column for CN on why the construction industry must modernise or die.
CN editor Rebecca Evans: ”[Mark Farmer] paints a persuasive, coherent and comprehensive picture of the sector’s structure and behavioural tendencies to illustrate the urgent need for change.”
Farmer review: Tax clients that fail to innovate and reform CITB