Although the construction industry, as a sector, has often been overlooked, it is now firmly on the government’s radar.

As part of the government’s industrial sector strategy to boost productivity across the economy, it plans to invest £170 million in Research & Design, referred to as ‘the Construction Sector Deal’, in an attempt to improve the way the industry operates and help it generate better profits.

What is a sector deal?

The sector deal is agreed through the Construction Leadership Council and is promoted by the Department for Business Energy and Industrial Strategy on the basis that: “Partnerships between the government and industry on sector-specific issues can create significant opportunities to boost productivity, employment, innovation and skills.”

What is in the Construction Sector Deal?

  • £170million investment over three years through the Industrial Strategy Challenge Fund with £250m of match funding from construction firms in the industry intended to bring together the construction, manufacturing, energy, and digital sectors to advance R&D and innovation.
  • A push towards better outcome-based procurement, driving efficiency in capital programme delivery
  • Coupled with a pledge in the Industrial Strategy to give £64m to improve digital and construction training. The sector deal will provide investment to equip workers with the skills that they need for the future.
  • The Construction Leadership Council will use the deal to hit four core targets:

      (i)             Reduce time taken to build and refurbish projects by 50%

      (ii)            Cut the cost of construction by 33%

      (iii)           Reduce trade gap between total exports and imports of construction materials by 50%

      (iv)          Halve the level of greenhouse gas emissions across construction by 2025

Clearly additional funding will benefit the industry. R&D tax credits will also help to make this money stretch further for construction companies. It is also encouraging that construction was included in the first round of sector deals announced in November 2017, alongside automotive, life sciences and AI. 

Whilst the injection of capital from the government is a welcome move, there are some immediate questions that need answers: is the deal enough to make a meaningful change to the industry or is the investment likely to be lost in the ether? Can the industry find the match funding necessary to take advantage of the deal?  There is cautious optimism as 2018 dawns.

About the author

Jugdeep Chaggar Solicitor

Jugdeep is a construction lawyer who deals with both contentious and non-contentious construction matters.