Overview : The Construction Sector: a Brief Overview
The Construction Sector: a Brief Overview
For a more in depth overview of the UK Construction industry, please see UK Construction Industry Overview.
The construction sector is very important for the UK economy. It accounts for 10% of the UK's GDP and employs 1.5 million people. The announcement in the 2000 Budget of substantial increases in expenditure to improve public services will increase the sector's significance further. By 2003-4, an extra £33 billion will have been made available for this work, which includes £4,200 million for transport, £137,000 million for health, and £1,600 million for housing.
The sector is investment-led and therefore susceptible to economic downturns. It suffered badly during the recessions in the mid 1980s and early 1990s. In the late 1990s, it took an upturn, particularly in response to government infrastructure investment programmes including PFIs in health, education and transport.[i]
The construction industry is large, complex and diverse and covers a wide range of business interests and activities, united by their common usage and development of land.
The construction industry is comprised of clients (including house-builders and commercial property developers who determine what should be built and where); designers (who decide on the detail of what should be built); materials and components suppliers (who extract and/or manufacture materials and components) and contractors (who carry out the building).
Some of the key construction clients are the EA, water companies, British Waterways, British Energy, Railtrack, the Highways Agency, port authorities, major retailers and house-builders. The government accounts for 40% of the construction industry's output.[ii]
Absence of Strong Overseas Competition
'The UK construction industry, geographically removed from mainland Europe, does not experience the full influence of cross-border competition on its domestic market. The historical absence of strong overseas competition in the domestic market (outside of construction products) has resulted in a culture that does not perceive the imperative for change experienced by other UK industries in the post-war period. The gap between the best, which is world class, and the average is thought by some to be too great.'[iii]
Key Shapers - Defining the Rules of the Game
DTI's Construction Directorate and DTLR's Planning Directorate play a key role in defining the rules of the game on a national level. Both directories set the overall policy framework and political climate within which the sector operates.[iv]
More information regarding the Construction Directorate can be found on its website at: http://www.dti.gov.uk/construction/help/aboutcd.htm
More information regarding the Planning Directorate can be found on its website at: http://www.planning.dtlr.gov.uk/pdstruct.htm
At regional and local levels, the Regional Development Agencies (RDAs) and local planning authorities provide incentive and regulatory control respectively. Bodies such as the British Property Federation (BPF) represent the owners and investors in commercial and residential property. Property assets held by BFP members are worth over £70 billion. It plays a leading role in representing the interests of the clients of the construction industry, and liases closely with the government via its construction committee.
-'Sector Analysis: Construction', report by Helen Doran, English Nature, June 2001
-'Written contributions for Sir John Fairclough's Review of Construction Competences', DTI web-site: http://www.dti.gov.uk/construction/rcf.html accessed 6 March 2002
[i] 'Sector Analysis: Construction', report by Helen Doran, English Nature, June 2001