Policy paper

Construction Sector Deal: one year on

Updated 22 July 2019

This was published under the 2016 to 2019 May Conservative government

Background

Construction is one of the largest sectors in the UK economy – with a turnover of £386 billion in 2017, contributing £142 billion in value added to the UK economy and employing 3.2 million people (9% of the total UK workforce).

The government, working in partnership with the Construction Leadership Council (CLC) and the wider industry, launched the Construction Sector Deal in July 2018, in order to deliver a substantial improvement in the productivity growth of the sector in the coming years – by increasing the use of digital and offsite manufacturing technologies, increasing the number of apprentices and investment in training and retraining, and improving payment and contractual practices to strengthen supply chains in the UK.

Today

One year after the publication of the Construction Sector Deal in July 2018, government and industry have worked together to deliver significant progress in implementing the commitments made.

The actions to date have focussed on establishing the Construction Innovation Hub, increasing the number of Institute for Apprenticeships and Technical Education approved standards and removing barriers to the uptake of modern methods of construction.

There have been important achievements across the Industrial Strategy’s 5 foundations of productivity.

Ideas

As part of the Sector Deal, the government committed to investing up to £170 million through the Transforming Construction Programme, to develop and commercialise the digital and offsite manufacturing technologies to produce safe, energy efficient buildings that perform better throughout their life cycle. The programme will support industry in adopting technologies that will enable infrastructure and buildings to be constructed 50% faster, 33% cheaper and with 50% lower lifetime carbon emissions.

As part of the programme, £72 million has been invested in the Construction Innovation Hub. This is a consortium of the Centre for Digital Built Britain, the Manufacturing Technology Centre and the Building Research Establishment, working in partnership with the Construction Scotland Innovation Centre. The Hub is working with universities, firms in the construction sector and public and private sector construction clients to transform the built environment. The Hub is focusing on developing standardised designs, platforms and components for buildings such as schools and hospitals, together with the manufacturing processes, product and process standards, testing processes and skills that will be needed to produce these. It will also develop the next stage of building information management (BIM) processes, tools and standards for the whole lifecycle of an asset to ensure the UK remains the world leader in digital construction.

An additional investment of £36 million has been provided to the Active Building Centre at Swansea University, to develop integration of energy generation and storage technologies, with the aim of making buildings energy positive – producing more energy than they consume.

Funding has also been allocated to the Transforming Construction Network Plus, a collaboration between University College London, Imperial College and Warwick Manufacturing Group. This initiative brings together researchers from a range of disciplines, to improve the use of digital, energy, construction and manufacturing technologies to improve the productivity of the industry and create better infrastructure and buildings. This will invest over £1 million in research projects during the next 3 years, as well as managing a network to share knowledge and best practice.

The Transforming Construction Programme is also supporting firms to innovate. Large firms, over 30 SMEs, universities and Research & Technology organisations have received funding from the £18 million that has been allocated to date to support 24 R&D projects. The range from the use of offsite manufacturing to produce large number of new homes, to Artificial Intelligence applications in construction, 3D printing of concrete, on-site and off-site robotic assistance with manufacturing and assembly, and digital design to improve sustainability.

The CLC’s Green Construction Board is championing the creation of a more environmentally sustainable construction – and is supporting the delivery of the government’s buildings mission which aims to achieve a 50% reduction in the energy used by new buildings by 2030 through the use of new technologies and techniques, such as those being developed as part of the Sector Deal.

People

The CLC Skills Workstream has brought together the Construction Industry Training Board (CITB) and large and small firms in the construction sector to develop a strategy for ensuring that the Construction Sector is able to attract, recruit and retain the skilled workforce it needs both now and in the future.

To date, 76 new Apprenticeship standards in construction related roles have been approved for delivery by the Institute for Apprenticeships and Technical Education, exceeding the target set in the Sector Deal of 50. A further 22 are in development. This provides more opportunities for Apprenticeship Levy paying employers to use the Levy to support training new entrants and retraining existing employees. This is helping deliver the commitment of increasing apprenticeship starts to 25,000 by 2020.

Additionally, the CITB is managing £20.8 million from the National Retraining Scheme, to train 13,000 workers to be employment and site ready. As of March 2019, 20 on-site training hubs are open and operating with over 1,200 people currently in training.

The construction sector has also worked to develop 3 new T-levels in construction, in Design, Surveying and Planning, Onsite Construction and Building Services Engineering. These T-levels will be introduced in 2020 and 2021 and help to train young people in a range of wills, including carpentry, bricklaying, gas engineering, electrotechnical engineering and surveying. These qualifications will be supported by up to 1,000 T-level placements of 45 days being made available by firms in the construction industry.

Finally, the workstream has published its Future Skills Report which follows a wide-ranging consultation exercise with a number of industry bodies, client organisations, government and a large number of construction delivery organisations. The report sets out the skills the industry will need in future and will guide investments in skills made by the CITB and firms in the industry.

Infrastructure

The Chancellor of the Exchequer announced at Budget 2017 that 5 central government departments would adopt a presumption in favour of offsite construction. This signalled that the government was committed to leveraging its buying power to support the modernisation of the construction sector.

The government has since taken steps to implement this measure, by consulting on how government departments can take a consistent approach to construction through using standardised and inter-operable components from a wide base of suppliers to deliver different types of building. This will drive a new market for manufacturing in construction and thereby take advantage of economies and efficiencies of scale. The government will publish its response to the consultation shortly.

Business environment

In order to fully capture the benefits that offsite manufacturing can deliver, public and private sector clients need to focus procurement on delivering value over the whole life of the building rather than initial capital cost. The Construction Sector Deal committed to develop a standard approach for the procurement for value, with benchmarks that will allow performance to be measured clearly.

Good progress has been made. The CLC’s Business Models workstream has brought together government with a range of industry stakeholders, to develop a model for procuring for value, which will be refined over the coming months.

The CLC’s Innovation in Buildings workstream have also identified a number of barriers to the uptake of modern methods of construction in housing – from a lack of a clear, aggregated pipeline of demand, a risk averse culture and a lack of cross-supply chain collaboration – and is bringing together industry, research organisations and government to address them.

Build UK and the Civil Engineering Contractors Association (CECA) have announced the launch of the first phase of a new pre-qualification (PQ) system designed to reduce inefficiencies that are costing the construction industry up to £1 billion a year. The current system is complex and repetitive and therefore major barrier to improved productivity. Under the new model, companies will not have to be certified by more than one recognised assessment body – thereby creating much greater consistency and efficiency in how companies become pre-qualified to work on construction projects.

The Construction Sector Deal also set the aspiration of establishing the UK as a leader in delivering infrastructure projects, through the use of digital technologies such as Building Information Modelling, and to promoting the adoption of these overseas. Through the Global Infrastructure Programme funded by the Prosperity Fund, the Centre for Digital Built Britain and the Infrastructure & Projects Authority have worked with countries including Indonesia, Vietnam, Brazil and Peru to build their capacity to use UK approaches to deliver better-performing infrastructure.

Place

Through the Sector Deal, the government is generating investment and creating skilled jobs across the length and breadth of the UK. The Construction Innovation Hub brings together institutions based in Cambridge, Watford and Coventry. The Active Building Centre is creating a centre of expertise in ‘energy positive’ technology in South Wales. Finally, through the Transforming Construction Programme, a total of £13.3 million has been allocated to 24 projects operating across all regions and nations of the UK.

Looking ahead

The final round of Transforming Construction Programme funding will launch in August 2019 – with £26 million available for demonstrator projects, and a further £10 million for collaborative R&D. Successful bidders will be announced in late Autumn 2019 – with work commencing in April 2020. The competition will cover themes such modern methods of construction, whole life performance as well as changes to the construction business model and procurement practices – and is therefore wholly aligned with the objectives of the Sector Deal.

Over the coming year, the Skills workstream will focus on implementing recommendations of its Future Skills report: increasing direct employment to incentivise employers in invest in training and development and ensuring the industry qualifications are updated to include offsite manufacturing and smart construction – working with the CITB to ensure funding is made available to accelerate adoption.

The CLC’s Business Models workstream will continue to refine the Procuring for Value model, and work with the relevant professional bodies and government to start to develop training standards.

Implementation plan

Date	Milestone
August 2019	Launch of £36 million Transforming Construction Programme (TCP) R&D and demonstration project competitions
November 2019	National Infrastructure and Construction Pipeline published
December 2019	Successful TCP projects announced
December 2019	Complete implementation of the recommendations of the Construction Industry Training Board (CITB) Review
January 2020	Deliver an enhanced Go Construct online platform providing a single hub of information about careers in the Construction sector
April 2020	Commencement of successful TCP projects
July 2020	Draft roadmap to Zero Avoidable Waste in the construction sector produced by Green Construction Board
July 2020	‘Minimum viable product’ for Procuring for Value model developed (working with the Construction Innovation Hub)
September 2020	First construction T-Level courses start, with 45 day employer placements taking place during 2020-21
December 2020	Increase the total number of apprenticeship starts per year to 25,000
December 2021	Finalise the Procuring for Value model by producing a standard methodology for procurement and promote common and consistent standards across industry.