Britain’s construction industry faces ‘inexorable decline’ unless longstanding problems are addressed, according to an independent review kick-started by the government.

The review, commissioned in February by the Department for Communities and Local Government and the Department for Business, Energy and Industrial Strategy, sets out 10 recommendations.

Mark Farmer – a quantity surveyor and chief executive of real estate and construction consultancy Cast – highlights the industry’s “dysfunctional” training model, its “lack of collaboration” and its “non-existent research and development culture”.   

The Farmer Review of the UK Construction Labour Model, subtitled Modernise or Die, also says that 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.

The report argues that the needs of construction firms need to be more closely aligned to those of the customers that hire them.

Farmer says: “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. This needs to happen more in construction.                                           

“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.

“The prognosis for the industry, if action is not taken quickly, is that it will become seriously debilitated,” Farmer warns.

He highlights the “ticking timebomb” posed by a shrinking workforce, which could decline by 20-25% within a decade. More people are leaving than joining the industry each year and Brexit is likely to exacerbate the situation by restricting the inflow of foreign workers.

The review makes 10 recommends …

1.  Reform the Construction Leadership Council around a government, industry and client covenant in order to drive recommendations.

2. Reform the Construct6ion Industry Training Board to be more efficient, fund innovation and include related sectors.

3. Encourage the government, industry and clients to work together to reform industry business models around value for building end users

4.  Institute an innovation programme with its focus on residential developments

5.  CITB to align grant funding to a reformed industry

6.  CITB or purpose made vehicle to specifically work on improving the public image of construction

7.  The government to re-engineer further education sector, planning and tax/employment policies to produce right skills

8.  The government to use existing funding streams and policy to stimulate pre-manufacture of construction projects

9.   The government to publish a pipeline of housing developments

10. Government to impose client levy if above measures shown not to be working.

Specifically, the report argues for the introduction of a carrier bag charge-style behavioural deterrent scheme. This would levy a tax on businesses that buy construction work in a way that doesn’t support industry innovation or skills development.

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

It also wants the industry to explore ways of making work less labour intensive, such as through offsite construction that would see the residential development sector start a pilot programme to drive forward the large-scale use of pre-manufactured construction.

Farmer says the industry needs to be “far more joined up” with its clients in how it approaches research, development and skills. He also wants ministers to directly intervene in certain areas to ensure that many of the issues identified are rectified.

Additionally, as more people are leaving the industry than joining it, the workforce is shrinking – placing constraints on its capacity to deliver housing and infrastructure.  

The review warns that substituting the domestic workforce with migrant labour comes with “substantial risks” and now it is uncertain how the UK’s vote to leave the European Union might affect the availability of migrant labour.

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