UK puts cleaner construction at heart of industrial strategy
David Thorpe | 28 November 2017
The British government has surprised some of its critics by producing a new Industrial Strategy that puts construction and clean technology at its heart, and has been broadly welcomed.
Business secretary Greg Clark called the strategy “an unashamedly ambitious vision for the future of our country”.
It pledges to develop smart systems for cheap and clean energy across power, heating and transport, and hopes to address the needs of a rapidly urbanising world, which “needs buildings that can be constructed and operated more efficiently”.
In a section titled “Transforming Construction”, the government promises to ensure UK businesses develop world-leading capabilities in integrating construction, digital energy and efficiency technologies, with a call for evidence on measures to build a market for energy efficiency among homeowners.
This is a most difficult market to tap. Many home energy efficiency measures are not affordable under conventional financing schemes, as previous schemes such as the ill-fated and poorly financed Green Deal, have demonstrated.
The UK government now recognises the need to encourage greater private investment in household and commercial building energy efficiency, to grow the markets for these types of requirements.
Housing sector deal
Three so-called “sector deals” are announced in the strategy, which commit three industrial sectors to work with government to achieve the strategy’s ambition.
The first of these is a real estate sector deal that seeks to maximise the real estate industry’s contribution to the economy. The government will work with the construction sector through the Construction Leadership Council, to transform the productivity of the sector.
The council’s aim is, by 2025, to obtain a 33 per cent reduction in cost, and to slash by half the project time, carbon emissions and the UK’s trade gap associated with construction.
The British Property Federation immediately announced that it has submitted a sector deal proposal to government on behalf of the real estate industry.
This would deliver, it said, £120 billion (AU$210b) of new investment in housing and 500,000 additional homes by 2030, with a long-term strategy to ensure that good quality homes are accessible for all. It promised 50,000 new jobs and a £2.5 million (AU$4.4m) research program.
Melanie Leech, chief executive of the British Property Federation, said: “We look forward to an early discussion with ministers. It is essential that the real estate and construction sectors work together to build capacity and skills to deliver an ambitious building program.”
Build UK’s chief executive Suzannah Nichol called the commitment “fantastic news for the whole sector” on Twitter.
The Civil Engineering Contractors Association’s director of external affairs Marie-Claude Hemming added that it was “encouraging news that the government has highlighted the construction sector as one of the sectors that is primed to drive economic growth in the UK’s economy in the years ahead”.
Julie Hirigoyen, chief executive at the UK Green Building Council, also called it “very encouraging” and welcomed the construction sector deal, but added that “to ensure this approach gathers pace, the focus on whole life costs must be reflected across all relevant policy areas, including building regulations and government procurement standards”.
“Future deals with construction must also go further by recognising the importance of our existing building stock as an opportunity to create jobs and cut emissions,” she said.
Challenge fund for construction
Pledging to stay at the forefront of the technology revolution that is sweeping the world, the industrial strategy white paper promises support for electric vehicles, autonomous vehicles, smart metering, new transport models, renewable energy and even more efficient land use for agriculture, by investing more in R&D using an Industrial Strategy Challenge Fund.
£170 million (AU$298m) of this is allocated to construction. Ideas are being sought to change the way buildings are created. Acknowledging that construction is currently expensive and too many buildings waste energy, the paper says: “We need to transform construction so that we can create affordable places to live and work that are, safer, healthier and use less energy.”
Off-site construction is at the heart of this, with new off-site construction methods exportable because “global demand for efficient buildings is rising rapidly, driven by the pressures of urbanisation, affordability and the need to cut emissions.”
The export potential of these new processes is the motivation behind many of the strategy’s ideas, with the thinking that, post-Brexit, the UK will be liberated to more effectively tackle markets everywhere in the world in order to boost the languishing productivity of its long-neglected manufacturing base.
There will also be a national retraining scheme that will “initially target skills shortages in key sectors”, which are seen as “digital and construction”.
“We will provide £34 million [AU$59.5m] to expand innovative construction training programs across the country, including a program in the West Midlands, focused on supporting the country’s housing needs and building upon existing good practice,” the white paper says.
Industrial innovation depends on research and development, which governments support. The government has faced howls of anguish from the many academics involved in joint research programs with European research establishments since the Brexit vote because it means they will no longer be permitted to join such collaborations, as they are supported by the EU Research and Innovation Framework.
The UK has received 20 per cent of all European Research Council grants, totalling €3.6 billion (AU$5.6b), through the Horizon 2020 research scheme alone. This would end following Brexit.
But the white paper signals that the UK hopes to continue to take part because the programs “are greatly to the UK and the EU’s joint advantage”. Whether this happens or not, however, will be subject to the detail of the ongoing negotiations.
National Productivity Investment Fund
The UK’s National Productivity Investment Fund, currently worth around £23 billion (AU$40b), is pledged to increase to £31 billion (AU$54b) by 2023. Just over a third of that is aimed at housing.
Priority areas of future investment will be £400 million (AU$700m) for electric vehicles charging infrastructure investment and a further £100 million (AU$175m) to encourage people to buy plug-in cars, £176 million (AU$308m) for 5G telecoms and £200 million (AU$350m) to enable local areas roll out full-fibre networks.
Clean technology is seen as and priority, with an estimate that the UK’s clean economy could grow at four times the rate of average GDP, helping of annual exports grow by £100 billion (AU$175b).
The paper therefore offers backing for “smart systems” that “can link energy supply, storage and use, and join up power, heating and transport to increase efficiency dramatically”, with support for energy storage, smart meters, vehicle-to-grid charging and heat networks.
The paper also recommits to the High Speed 2 Rail line from London to Leeds and Manchester, with construction continuing until 2033.
The circular economy
The strategy also pledges support for the “circular economy”, raising productivity by using resources more efficiently, by promoting more recycling, creating a market for recycled and reusable materials, and encouraging the design of products that use materials efficiently and are built for being recyclable at the end of their lives, like BMW’s i3 car and Apple’s new iPhone.
The document is unabashedly optimistic, a rare thing to find in Britain these days. It declares that “up to £6 billion [AU$10.5b] could be saved in 2030 through investment in cost effective energy saving technologies in the industrial and commercial sector”, and that it could lead to the UK becoming “a world leader in 5G, and provide reliable, high-speed connectivity to our towns, cities and rural areas”.
Is it enough?
The Institute of Directors sounded a note of caution. Its director general Stephen Martin called the white paper a “big first step” but added it would work “only if what has been announced today is followed through, not just in this parliament, but over many parliaments to come”.
Carolyn Fairbairn, director general of the Confederation of British Industry, agreed that it was only the start, offering that “the creation of an independent council with teeth to monitor progress will help this”.
And the head of climate and energy at WWF, Gareth Redmond-King, cricitised the level of detail in the plans.
“At some point, there really does need to be some detail on how the UK government plans to seize them, rather than a series of strategy papers setting out how important they are,” he said.
“We don’t need new research into energy efficiency, and why no mention of onshore wind and solar as clean growth success stories?”