Exclusive: A new construction council will be formed as part of the government’s Industrial Strategy for Construction to help oversee improvements to the industry from now until 2025, Construction News understands.
The new council has been established to implement the new industrial strategy, being led by chief construction adviser Peter Hansford and due to be published at the Government Construction Summit next week.
It is expected that a government minister will sit on the panel. Business secretary Vince Cable is secretary and co-chair of the Automotive Council, which is seen as highly effective for an industry often hailed as being a more effective communicator with government than construction.
The new group’s establishment is likely to lead to questions over the future of the Strategic Forum for Construction which has been overseeing work streams on areas like SMEs, skills and innovation to support production of the industrial strategy.
However, the next scheduled meeting of the forum will go ahead as planned in September.
Construction News understands that the full make-up of the council is likely to be broadly similar to the members of the Construction Industrial Strategy advisory body announced in January, but full details are expected to be set out at the summit next week.
The advisory body was widely praised for being inclusive of multiple parts of industry ranging from SMEs and main contractors to finance experts, academia and product manufacturers.
High-profile industry leaders and advisory body members, including Kier chief executive Paul Sheffield and Skanska UK chief executive Mike Putnam, have been invited to sit on the new construction council.
The CBI Construction Council will continue in its current guise, with the aim of talking to government about the state of the industry, while the new construction council is expected to oversee the implementation of recommendations from the industrial strategy.
The strategy is expected to include a focus on solutions to both improve the industry’s image and meet new skills, research and development and low-carbon targets up to 2025. It is also expected to recommend a study on the need for licensed builders in the UK.
The CBI commissioned independent research from the Centre of Economic & Business Research for its submission (see box, below) to the Industrial Strategy for Construction.
CEBR forecasting suggests that growth in the construction industry will be modest in the short term, averaging 1.3 per cent from 2014 to 2017.
However, the data also shows that construction output may not surpass 2007 levels until 2023 and construction sector employment may not rise above 2007 levels until 2024.
CBI sets new targets in industrial strategy submission
The CBI has set out a series of KPIs for the construction industry, including increasing the use of UK-sourced building products and materials on construction sites from today’s level of around 75 per cent to 85 per cent.
It said this could be achieved through “stronger integration and a robust domestic supply chain”.
In its industrial strategy submission, shared with Construction News, the CBI also set a target of tripling the level of UK exports of construction services by 2025, as well as an increase in private sector spending on research and development by 20 per cent, based on today’s figures, by 2025.
The government and the construction industry should also consider the feasibility of an ‘innovation levy’, it said.
CBI head of construction Lucy Thornycroft told Construction News that having sought the views of the CBI Construction Council, wider construction members and clients, there were two common themes in their responses in particular.
She said that while there was a “welcome focus” on innovation within the industry at present, it was clear from the responses to their enquiries that increased levels of innovation are crucial to growth and what clients want, while sustainability and the role low carbon would play in the vision to 2025 was also important.
CBI director for business environment Rhian Kelly added that one of the challenges for the strategy was in predicting long-term needs, whereas today if you talk to “companies big and small, they are focused on how they can get through the next six months”.
She added that the CBI aim of increasing UK building products and materials was a reflection of the fact the CBI represents more than just main contractors, and reflected where government thinking had shifted from a main contractor focus to the whole value chain for construction.
Asked whether setting targets for increased UK materials to be used on site could fall foul of EU legislation, Ms Kelly said the CBI was currently looking at procurement processes and how “we can be more flexible in the UK” compared with the rest of Europe.
She said it was about looking at what other countries were doing within the correct legal frameworks that the UK could learn from.
Crunch talks were held on the future of the strategic forum last year, after criticism that it was not having enough impact.
Construction News revealed at the time that proposals were being put forward to change the forum, including one from then chief construction adviser Paul Morrell that a new advisory council to the Government Construction Board be established in consultation with the strategic forum.
That proposal was rejected, however, and the UK Contractors Group insisted it wanted to deal with government through the CBI Construction Council, rather than the strategic forum.
The UKCG then left the forum last year. Director Stephen Ratcliffe said: “The UKCG has thought [the strategic forum] has lost its way some while back and resigned from it last year.
“UKCG certainly welcomes the industrial strategy and wants to play a part on the construction council; UKCG members have already been invited to sit on it.”
Bill Bolsover was appointed as the forum’s new chairman in December as it looked to increase government lobbying.
In January, strategic forum members committed to oversee eight separate work streams to support the production of the Industrial Strategy for Construction.
The work streams were skills; overseas trade; supply chain; access to finance; image of industry; whole-life value; SMEs; and innovation.
Specialist Engineering Contractors’ Group chief executive Rudi Klein said: “Over the next 12 years we need to see actions in place that are going to transform the industry.”
He pointed to the publication in 2002 of the strategic forum’s Accelerating Change report and said that the progress over the past 12 years had “not been that eye-catching” and that “over the next 12 years the industry needs to learn the lessons of why we have not made that progress and to ensure we don’t repeat those mistakes”.
He said unnecessary cost burdens around payment and cashflow needed to be eliminated from the industry in the coming years.
A spokesman for the Strategic Forum for Construction said: “We have welcomed the opportunity for members of the forum to make a positive contribution to the Industrial Strategy for Construction, and we look forward to continuing to find ways to help improve the industry.
“Clearly the strategy itself will not be published until July. As such we will use the next meeting of the forum in September to formally review the strategy, and to consider how we will work together to support its implementation.”
What clients want to see
When asked about the future, clients told the CBI they would like to see:
- A planning system that works for businesses;
- Greater collaboration across the industry, government agencies and the supply chain;
- Ongoing improvements in innovation and efficiency;
- Low-carbon design and sustainability at the heart of how the industry works and responds to the demands of clients;
- The UK being able to beat the increase in competition from overseas companies where expertise in areas such as high-end design and delivery is getting better.