Select Committee on Business and Enterprise Written Evidence


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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