The CEA’s First Power Hour – Government Support in the Time of COVID

“Knowledge is power. Knowledge shared is power multiplied”

The CEA’s new initiative, the Power Hour, kicked off in style on 24 July with guest presenter, Fergus Harradence, Deputy Director for Construction at BEIS. Fergus took a retrospective look at the dramatic effects of COVID-19 on the UK’s construction sector, moving on to an overview of the Construction Roadmap to Recovery, where collaboration will be the new normal.

The Fall

As the world stopped turning under a COVID-19 lockdown, construction output fell by a record 29.8% in the 3 months to May 2020 – including a decline of 40.2% in April. Infrastructure and non-housing public investment were the least affected by -6% to -10%). The most significant impact was on private new housing (-42.5%) and commercial construction (-29.5%), as well as repair and maintenance (-28.9%).

Initial estimates are that around 54,000 construction businesses are at high risk of insolvency (Construction Industry Training Board). Construction contracting could lose between 7% to 14% of its workforce by end of 2020 / early 2021, around 170,000 – 280,000 jobs according to CITB. There is a risk of a disproportionate impact on micro and small firms. Businesses with fewer than ten employees account for 94% of construction businesses and deliver a significant proportion of apprenticeships. CITB estimates construction apprenticeships will decline by 60%. Graduate recruitment is down by 12%.

The short term construction outlook was bleak, with a predicted contraction in the sector overall of 24.4% in 2020. 2021 was expected to see growth of 13.9% with a further expansion of 8.6% in 2022. The sector expected a recovery equivalent to 2016 levels of activity by 2022. (Experian Construction Forecast – Summer 2020.)

The Recovery

Government estimates predicted an overall recovery for construction output in 2021 of 28%, with Infrastructure and Private Housing leading the way at 40% and 37% respectively. Public non-housing and non-housing R&M predicted the slowest recovery at 8% and 5% respectively.

Cognisant of the urgency to speed construction project starts, Fergus the spoke of the schemes that government had put in place to expedite the sector’s recovery including the Chancellor’s Project Speed and the Prime Minister’s Build Back Better. The Roadmap to Recovery action plan, divided into three timed phases aims to stimulate demand, secure jobs and improve productivity.

Restart, 1-3 months: it was encouraging to hear that the government’s approach to the recovery was to promote a significantly higher level of collaborative working with respect to both government and private projects. Planning, payment and contractual dispute resolution were to be simplified in order to get ongoing projects back on track, bring workers back from furlough and retain jobs.

Reset, 3-12 months: Demand and Pipeline, to increase the workload across infrastructure, construction, housing and RMI, develop a robust pipeline of work across the whole construction ecosystem including, contracting, SMEs, merchants and manufacturers.

Productivity, new approaches across the construction sector to implement government guidelines.

Professionalism, investing in training, collaborative not competitive business models and fairer contracts and payment.

Reinvent, 12+ months: Transformation, sustain economic growth through the adoption of digital manufacturing technologies to consistently deliver low carbon, sustainable and better quality outputs and outcomes.

Value, adopting procurement models and approaches across the industry and clients better value and whole life performance.

Partnership stronger partnerships between the industry and its clients, supply chains and investment in upskilling the workforce…

It was refreshing to hear from a government official that, going forward, procurement would not solely be based on the cheapest bid, but on whole life costs and collaboration. The CEA is very grateful to Fergus for his presentation and look forward to seeing the Roadmap to Recovery deliver real results.

A copy of Fergus’s the slides and a recording of the Power Hour are available on the CEA website here.

The next CEA Power Hour webinar is on Tuesday 25 August from 13.00 – 14.00 on the topic of maximising your R&D tax credits. Register here and see Power Hour programme in this bulletin for details.