Supplementary evidence from the Building
Research Establishment (BRE)
THE CRISIS
IN CONSTRUCTION
R & I
The issue
Construction differs from Manufacture. It delivers
one-off bespoke designs using borrowed capital through one-off
teams of multiple designers and contractors into local conditions
using an itinerant work force. The risk of adopting innovation
is high and the ability to protect innovation is low.
Consequently, other than in the product manufacturing
part of the construction supply chain, the usual commercial drivers
which result in businesses investing in R&I are missing or
very weak. This is clear from UK construction's R&I investment
performance (only 0.05% of turnover) which, in turn, is mirrored
around much of the world.
This "market failure" in R&I expenditure
has been understood and recognised worldwide for over fifty years
and has led to most advanced societies collectively investing
in applied construction R&I "for the competitiveness
of the industry and society as a whole". These days, such
"industry improvement funding" is usually in the form
of government co-funding with industry against a stakeholder led
agenda.
From 1926 to 2004 the UK government co-funded
such a programme with industry. In 2002 the value of that support
was about £23 million per annum. Much of this supported the
maintenance of the "knowledge economy" function of construction
consultancy which has net exports of £3.8 billion per annum
(2003).
In 2004 the programme was terminated by the
DTI without industry consultation and in direct contradiction
to the recommendations contained its own Fairclough Review
that "such support should continue at at least the current
level". Although the Review was welcomed by Ministers and
Government, who have since recognised the value of Fairclough's
conclusions, no Department of Government has taken "ownership"
or action. The UK is now almost alone in advanced societies in
not addressing the chronic market failure leading to low investment
in construction R&I.
The present funding mechanisms focussed on "advanced
technology", at both National and EU level, whilst welcome
and necessary, do not support the continued development of the
UK's sophisticated "construction knowledge supply chain"
involving the universities (basic research) and industry based
applied research and technology. This is evidenced by the collapse
in provision of new technical standards and guidance.
The Consequences
Our ability to implement technological and process
innovation is being compromised and with it our ability to export
these skills. Whilst the industry has previously displayed a strong
willingness to contribute time and effort to work in partnership
with Government on these issues it is unable to fund them itself
as there is no commercial advantage to any individual business
in doing so.
This is a "slow crisis", unnoticed
by most, whereby a critical part of the UK's competitive position
and delivery capacity is being steadily undermined. The cracks
and consequences are already appearing. In a time of rapid change
and unprecedented demand for more product with greater sustainability,
we are:
— no longer monitoring the performance
of new technologies and techniques so as learn what works and
what does not;
— no longer translating university
research into "applied advice" for industry;
— absent from international fora
and are no longer learning internationally;
— increasingly basing "government
policy" on focus group "opinion" and not science;
— ceding almost all of our influence
within Europe in standards making;
— not providing sufficient generic
guidance on the proper selection and deployment of new techniques
and technologies; and
— wasting public money on sub-standard
buildings (including hospitals and schools) at an alarming rate.
The solution
Given its size, commercial importance and role
in the reduction of environmental impact and global warming, Construction
needs a single, more focussed, properly funded and influential
voice within government.
Specifically we need to re-energise the R&I
partnership between Government (both as client and in the national
interest) and the wider industry. R&I funding is available,
without additional taxation, by use of a small proportion of Landfill
Tax Credits, Carbon Levy and Aggregates Levy. Much of this funding
arises directly from the construction industry and its product
but it is currently being spent through multiple agencies, without
those agencies having any joined up remit, or indeed any remit
at all, for construction industry improvement.
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