Construction sector must “modernise or die”, says Government commissioned review

A Government-commissioned independent review has found that the UK’s construction industry faces “inexorable decline” unless radical steps are taken to address its longstanding problems.

The Farmer Review of the UK Construction Labour Model highlights construction’s dysfunctional training model, its lack of innovation and collaboration as well as its non-existent research and development (R&D) culture.  Low productivity continues to hamper the sector, while recent high levels of cost inflation, driven by a shortage of workers, has stalled numerous housing schemes as they have become too expensive to build.

Led by Mark Farmer, chief executive of Cast, a real estate and construction consultancy, the hard-hitting report says we need to better align the needs of construction firms and the businesses who hire them.  “If you buy a new car, you expect it to have been built in a factory to exacting standards, to be delivered on time, to an agreed price and to a predetermined quality,” said Farmer.

“This needs to happen more in construction, so that the investors, developers or building owners hiring construction firms increasingly dictate the use of modern methods of delivery and invest appropriately in the skills agenda to grow this part of the industry. There are more similarities between manufacturing and construction than many people are led to believe and this perception needs to change, starting in the housing market”

One of the recommendations set out for the medium term is a deterrent scheme that would see a tax levy placed on businesses that buy construction work in a way that doesn’t support industry innovation or skills development.

Under the proposed scheme, clients could face paying a suggested levy equal to 0.5% of a scheme’s construction cost but would have the ability to avoid paying this tax completely by commissioning construction in a more responsible way.

Farmer, a 25-year veteran of the industry, and former partner at EC Harris, said the industry needs to be far more joined-up with its clients in how it approaches R&D and skills. He also wants ministers to directly intervene in certain areas to ensure many of the issues identified are rectified.

Farmer added: “The construction industry is in dire need of change. What is clear to me following the nine months spent conducting this review is that carrying on as we are is simply not an option. With digital technology advancements pushing ahead in almost every other industry and with the construction labour pool coming under serious pressure, the time has come for action. The construction industry doesn’t have the impetus needed for this change, it requires external action to initiate change.

“Unless we find some way of promoting innovation in construction and making the work less labour intensive and more attractive to new entrants, there’s a very real danger of the construction sector going into an inexorable decline over the next few years. I hope this review generates some debate in the sector and all involved can consider their role in safeguarding the industry’s long term health.”

The Farmer Review of the UK Construction Labour Model

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