The Construction
Sector: a Brief Overview
Note: this overview is under construction! A more elaborate
overview will be finalized within the next months.
Economic
Importance
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]
Players
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.
References
-'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
