Ministers have endorsed a construction industry review which said the sector needs to “modernise or die”.
The government-commissioned Farmer review of the UK construction labour model, by Mark Farmer, was published in October last year and outlined 10 policy recommendations to support the sector’s innovation and growth.
In an official response to the review’s findings published today, the ministers for housing, education and construction accepted nearly all the policy recommendations, which focused on improving training and boosting modern methods of construction.
The Farmer Review recommendations
Recommendation 1: Reform Construction Leadership Council around tripartite government, industry and client covenant in order to drive recommendations.
Response: Agree there should be closer working between the construction industry, its clients and government. This is being supported through “better, more consistent” procurement and through the further development of Building Information Modelling. Also agree CLC should have strategic oversight of the agenda set out in Modernise or die but the council should decide, in consultation with others, precisely how this is done.
Recommendation 2: Reform the Construction Industry Training Board to be more efficient, fund innovation and include related sectors.
Response: Agree the CITB needs to be reformed and the board is now embarking on a major reform programme to reduce the size of the organisation and make it more focused on aspects of the skills agenda where there is a clear market failure or where a collective approach to training can deliver real benefits to employers.
Recommendation 3: Industry, government and clients to work together to reform industry business models and increase investment and innovation in construction by changing commissioning trends from traditional to pre-manufactured approaches.
Response: The focus of the CLC’s work is not exclusively on pre-manufactured approaches to construction and government believes it is important that CLC also seeks to drive improvements in commissioning and client/contractor relationships where traditional methods are used. The CLC should continue to develop better models of client commissioning, with an emphasis on building longer term collaborative relationships and utilising technology to improve performance and productivity.
Recommendation 4: Industry, government and clients should deliver an innovation programme with residential focus.
Response: In the context of the industrial strategy, will work closely with CLC to understand the industry’s priorities, remove barriers to innovation in the sector and develop a shared innovation programme. Agree it is important to monitor the sector’s innovation performance and we are working with the CLC to develop common metrics to be used in in an industry dashboard. Will consider the CLC’s Innovation in Buildings recommendations on supporting uptake of ‘smart construction’ methods.
Recommendation 5: CITB should align grant funding to a reformed industry.
Response: The CITB can only contribute effectively in the context of a wider industry commitment to modernisation, led by the CLC and the professional and other industry bodies. The industry needs to support the development of standards and invest in providing apprenticeships, placements and training opportunities for people looking to develop the skills to work in the modernised, digitally enabled industry of the future.
Recommendation 6: CITB or stand-alone body should specifically work on improving public image of construction.
Response: Government is committed to delivering more apprenticeships, including more degree and higher apprenticeships. Together with the introduction of 15 technical education routes (including one for construction), this will create easier to navigate pathways to technical and higher technical professions.
Recommendation 7: Government to intervene in further education sector, planning and tax/employment policies to produce right skills.
Response: Commitment to continue to work closely with CLC, its working groups and the wider industry to address barriers to growth in the sector. Will carefully consider any proposals which come forward for a “sector deal” for construction and ensure that the objectives of the industrial strategy are taken account of in the planning system.
Recommendation 8: Government to use existing funding streams and policy to promote pre-manufactured construction methods.
Response: The housing white paper sets out measures to stimulate innovation and increase the use of modern methods of construction in housebuilding. The government is determined to ensure more houses are built more quickly, while maintaining quality, and is keen to work with firms that can achieve these goals through innovative construction methods.
Recommendation 9: Government should publish a pipeline of housing developments.
Response: Government is committed to making useful data more readily available to industry to aid planning and investment decisions and encourage new entrants to the house building market and we will work with CLC to continue to improve understanding of aggregate demand across the industry and how this can be made more visible.
Recommendation 10: Government to impose construction industry client levy set at no more than 0.5% construction value if above measures shown not to be working.
Response: The introduction of a client charge to encourage and fund modernisation could risk damaging developer confidence and increasing costs, at least in the short term. Our focus at this stage is on the measures already outlined together with steps the industry may itself take following the Farmer Review.
“Alongside its recommendations to government, ‘Modernise or Die’ poses a stark challenge to industry to up its game on skills, embrace new and more productive ways of working, ensure the quality of design and workmanship and be more innovative,” the ministers said.
“The challenging context of an ageing workforce, alongside the need to deliver a step change in housing quality and output and major infrastructure improvements, highlights the importance of rising to this challenge.”
The review was commissioned by the Construction Leadership Council in response to concerns that productivity and capacity in the construction sector are undermined by its reliance on subcontracted labour, and low levels of investment in skills and innovation.
Farmer said: “I recognise that driving industry change is a long haul but with a supportive government, both acting as an intelligent public client and in terms of setting wider policy, this can only help realise my vision of a modern and fit-for-purpose construction industry.
“I also feel that industry itself is becoming increasingly aware of the unprecedented challenges it now faces and I believe this ‘burning platform’ is starting to accelerate its own thinking in how it embraces modernisation, albeit this also needs to be supported by the clients that the industry serves.
He added: “A modern, robust construction sector that is innovative, forward-thinking and ultimately more productive and predictable is vital to deliver on the government’s ambitious housing targets, as well as large-scale infrastructure projects such as HS2 and Hinkley Point.”
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