Our view
How to realise the construction industry’s potential
A review of the proposed new industrial strategy suggests a promising outlook for construction, even with ongoing fiscal restraint. This will however depend on the appetite of the private sector to invest in major government led projects.
Successive governments have largely prioritised other sectors of the economy at the expense of the construction industry. What the industry needs now is a prolonged period of stability and consistency, prioritising the following areas.
1
A clear long-term strategy for growth
The government needs to provide clarity. A long-term growth strategy, outlining the application of key innovations such as modern construction methods, would provide confidence for industry investment. Additionally, a properly costed and delivered infrastructure plan is essential to avoid past volatility that hampered initiatives like the NHP and HS2.
2
Labour and skills shortages
Delivering the government's ambitious housing target of over one and a half million homes hinges on resolving a shortage of skilled labour. The Skills England bill will see the creation of a new body with strategic oversight for the skills system. Labour has also committed to reforming the apprenticeship levy and now needs to ensure that the reformed levy does not hinder the progression of apprenticeships but allows businesses to make full use of their levy funds.
3
Planning reform
Current legislation, both statutory and common law, hinders industry's ability to participate in local and national planning. This complexity discourages investment and slows project execution. By prioritising planning reform, the government can expedite project delivery, particularly those supporting economic development. Whilst it’s encouraging to see the planning and infrastructure bill make up one of the government’s main measures to streamline and speed up planning, a lot more detail is required on how these measures will be implemented.
4
PPP and PFI
High national debt and a low-tax pledge create a fiscal challenge. Public private partnerships (PPPs) offer a potential solution. Combined with a National Wealth Fund which could crowd-in private investment, a revamped PPP model could benefit both the public sector (reduced financial burden) and institutional investors (long-term investment opportunities).
Private Finance Initiatives (PFI) successfully delivered over 700 projects between 1997 and 2010. A new PPP model, with political backing, could address past shortcomings and unlock private capital efficiently.
5
Net zero and clean energy
There is a clear focus from government to deliver net zero. But the challenge is matched by the cost of developing wind, nuclear, and solar infrastructure. Private capital can likely play a significant role. However, funding isn't the sole focus. A clear net zero plan is crucial. This requires a detailed energy mix, achievable targets, and realistic timelines and costs.
6
Alignment between government departments
Whitehall's fragmented construction oversight, spread across departments, hinders efficiency. The new government should address this by considering the reinstatement of a Chief Construction Adviser. Furthermore, long-standing silos in both government and the industry have impeded progress. A new political era presents a chance for enhanced collaboration and a more unified approach.