Sector Deal for construction in Industrial Strategy

Geoff White

Acting Head of UK External Affairs (RICS)

Business, Energy and Industrial Strategy Secretary Greg Clark launched his long-awaited Industrial Strategy White Paper this week and the good news is that there is a Sector Deal for construction.

The new strategy underlines a government priority to ensure a healthy construction sector in the United Kingdom - the significance of which we did not doubt.

Teesside-born Clark believes 'Industrial Strategy: building a Britain fit for the future' will boost the economy, build on the country’s strengths and embrace the opportunities of technological change. The strategy Challenge Fund will invest £725 million in new programmes to capture the value of innovation.

Five themes

There are five themes within the policy paper: Ideas (R&D and innovation); people (education and skills); infrastructure; business environment (finance, business support, inward investment); and places (regional growth). They link up with 10 strategic 'pillars' or areas that the government see as crucial to improving productivity and creating growth. They include developing skills, upgrading infrastructure, improving procurement and delivering affordable energy and clean growth.

Prime Minister Theresa May highlighted the importance of this post-Brexit, saying it would “shape a stronger and fairer economy for decades to come. It will help create the conditions where successful businesses can emerge and grow”.

RICS delivered a full response to the Industrial Strategy Green Paper consultation at the beginning of the year in which we stated the following:

A document entitled Building our Industrial Strategy needs to acknowledge the fundamental importance of the actual built and natural environment in providing the fabric of the places we live, work and play as well as the infrastructure that we need to travel between them.

Unless the land, property and construction development triangle is healthy and vibrant then there is a danger that the ambitions the government has for the 10 pillars and the business sectors identified will not be achieved. This underlines the need for a Sector Deal.

Clearly the government has done just that. Signifying a new understanding and rapport for the sector with government, the deal is in effect a contract in which the sector is expected to deliver greater productivity, better performance, reduced costs and improved workforce skills and in return we get a new and special relationship with Westminster.

One of the first

A large number of industries signalled their interest in developing a Sector Deal, and the fact that Construction is one of the first to be announced is cleary significant. The bid for a sector deal was led by the influential Cionstruction Leadership Council. Other deals were announced for Life Sciences, Automotive and Artificial Intelligence and more will be revealed in the New Year.

Of the new deal, the government said:

The government and the construction sector, through the Construction Leadership Council, have agreed a Sector Deal to transform the productivity of the sector benefiting the wider economy.

Construction is one of the largest sectors in the UK economy – with a turnover of £370 billion, contributing £138 billion in value added to the UK economy and employing 3.1 million people (9% of the total UK workforce).

The deal will substantially boost the sector’s productivity, through greater investment in innovation and skills, creating new and well-paid jobs and maximising its export potential. This will also reduce the environmental impact, improve the efficiency and reduce whole life cost of new projects and buildings to help build the houses, schools, hospitals and major transport projects we need.

Further details on the deal and how it will work are expected to be published at the end of this week or the beginning of next week.

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