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The construction industry provides employment for more than 2.8 million people. The sector contributed 8.7% of the UK economy's gross value-added (GVA) in 2006—twice that produced by the energy, automotive and aerospace sectors combined. The built environment—the roads, houses, offices, factories, etc, which represent the output of the industry—is estimated to account for some 70% of UK manufactured wealth. Hence, the industry's ability to deliver projects successfully in terms of time, cost and design quality has a major impact on the economy's wider performance.
Construction is vital for the provision of good quality public services. It plays a role in the delivery of just over half of the Government's 30 public service agreements. It is also key to the long-term objective of making the UK a low-carbon society: buildings account for around half of greenhouse gas emissions.
The health of the construction industry is accordingly a matter of public concern. In some areas it is a world beater: but there are also significant problems. The industry is complex and fragmented; it operates on low profit margins. There are difficulties in ensuring that lessons from experience are shared; that the workforce is sufficiently trained, particularly regarding the provision of apprenticeships; and that appropriate contractual relationships are in place between different parts of the supply chain. There is also a high risk attached to innovative approaches which could save costs, time or carbon emissions.
The construction industry has enjoyed a period of sustained growth for over a decade, in sharp contrast to the cycles typical of much of the post-war era. Construction output in parts of the industry, particularly house-building, is experiencing a sharp downturn in the wake of the fall-out from the sub-prime mortgage market crisis. While public sector expenditure is always subject to a degree of political uncertainty, in the coming years the industry currently expects to benefit from rising infrastructure investment and greater spending in areas such as social housing and education.
Government can help by setting the regulatory framework and providing support for training, but ultimately standards are driven by the sector's clients. The industry itself has shown a willingness to change; but it can only do so if its customers support that change. The public sector is the industry's biggest customer, accounting for around a third of construction output—it has the leverage to force improvement.
The industry has set new targets for itself, and, in conjunction with government, established a Strategy for Sustainable Construction. We hope these developments and this Report will provide the impetus for widespread long-term improvement in the sector's performance, recognising the significant challenges it faces in light of the current economic downturn. The Government, because of its roles as both client and regulator, can and must be at the forefront of the drive to embed best practice, and to ensure the transfer of learning from frequent to infrequent clients. It must provide organisations such as BERR, the Office of Government Commerce and the Health and Safety Executive with the resources and power to achieve this. The sector also needs strategic leadership. There must be someone both government and the industry accept as having overall responsibility for construction. Truly joined-up working between government and industry, and between different government departments, would be immeasurably improved by the creation of a post of Chief Construction Officer. And the Government should remember that, as the industry's largest single client, helping the sector to improve means that it and the taxpayer will directly benefit.
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