Related Literature
Concretion and Its Effect on Economy
Christ Rhodes (2015) stated in his research entitled Construction Industry, Statistics and Policy that the construction industry is a major contributor in the United Kingdom’s Gross Domestic Product accounting for 6.5 percent equivalent to GBP 1.3 billion. The construction industry also generated additional 2.1 million jobs in the first quarter of 2015 (Rhodes, 2015).
The contribution of the construction industry varied over years depending on the condition of the economy. Rhodes (2015) revealed that the construction industry contributed 6.8 percent of the total UK economic output from 2003-2006, and 6.9 percent in 2007.
During the economic recession in 2008-2009, the industry’s contribution was down to 6.6 and 6 percent respectively. It went up to 6.3 percent in 2011 during the economic recovery and reached 6.5 percent in 2014 (Rhodes, 2015). However, the jobs generated by the construction industry had been declining since 2008 from 7.1 percent to 6.2 percent in 2015 (Rhodes, 2015).
The government sector’s contribution to the construction industry remained lower than the private sector’s. The private sector housing orders accounted for 83 percent of the total orders while the remaining 17 percent are from the government in 2015 (Rhodes, 2015).
In the same year, the private sector’s infrastructure orders accounted for 58 percent of the total orders while 42 percent are government orders (Rhodes, 2015). The government orders are greater than the private sector orders during the economic recession in 2008 and 2009 according to Rhodes (2015).
A LEK’s (2015) research report stated that the construction industry is an enabler of economic activities and a huge contributor in realizing economic and social objectives. The construction industry is also a driver of growth for other sectors, and it accounts for about 300,000 firms (LEK, 2015).
The construction industry supports and benefits the following sectors: renting machinery, architectural and technical consultancy, plastic, wood, and metal products, mining, banking and finance, market research and management consultancy, education, and motor vehicle distribution, repair, and fuel retail (LEK, 2015). The analysts of LEK (2015) said that the construction is the most effective sector where the government can invest to stimulate activity.
Sustainability
The Department for Business and Innovation & Skills (2015) reiterated the economic significance of the construction mentioned by the two reports of Christ Rhodes and LEK, and it mentioned that it can support the eco-friendly trend through environment-friendly construction.
A report from The Chartered Institute of Building (CIOB) (2015) listed three environment regulations involving the construction industry. The Feed-in Tariffs (FITs) and the Renewable Heat Incentive (RHI) that required all new construction developments to use 20 percent renewables and the government and that all businesses and communities who use renewable energy will have lower taxes and electricity consumption rates (CIOB, 2015).
The Enhanced Capital Allowance lets businesses have 100 percent first-year capital allowances when spending on energy-saving plant and machinery, low carbon dioxide emission cars, natural gas, and hydrogen refueling infrastructure, and water conserving plant and machinery (CIOB, 2015). The government, through companies, supports and finances businesses for energy and monetary savings (CIOB, 2015).
A report from GVA (2011) stated that the government should do more in stimulating sustainable construction in the United Kingdom. The government need to include Display Energy Certificate (DEC) and Energy Performance Certificate (EPC) in the assessment to decide which among the buildings and services are of good quality, GVA (2011) report said.
Construction 2025, a review on its purpose
A document of HM Government (2014) revealed that the visions of Construction 2025 are to bring in talented and diverse work, use efficient and technology advance products, lead the industry to low carbon and green construction exports, drive growth in the economy, and achieve leadership.
Its purposes include lowering the initial costs of construction and the whole life cost of built assets by 33 percent, reduction on delivery time for new build and refurbished assets by 50 percent, lower gas emissions in the built environment by 50 percent and reduction of trade gap in the construction products and materials by 50 percent (HM Government, 2014).
Nitesh Magdani (2014), Director of BAM Construct UK, said that the Construction 2025 is ambitious, and the government needs to surpass the challenges. Magdani (2014) advised to innovate and apply the concepts of bio mimicry and circular economy, and Ecobuild as business models and import self-healing concrete and tarmacs to have huge impact in the industry.
Tom Fitzpatrick (2012) said in the Architect’s Journal that the government does not consider the purposes/goals are ambitious, and there are organizations who even call for the government to do more.
Tony Bingham (2013), a construction officer from the private sector, expressed his negative sentiment and said that the government must be unserious as it seeks rampant partnership and investment from the private sector for the Construction 2025 for a small return.
Stuart Smith (2013) of the Infrastructure Intelligence said that the Construction 2025 may lead to following loopholes including GBP 15 billion-20 billion overspending per year, overruns on project delivery, failure to deliver the emissions targets associated to whole life costs, possible shortage on capable people, reliance on solutions and resources available outside the country which will adversely affect trade gap.
Advantages and Disadvantages of the Government Investment on Construction Industry
An article from the Federation of Master Builders (2015) said that the government should invest in the construction industry to generate more jobs, create new and green homes and infrastructure, and to provide small and medium enterprises greater access to finance.
However, the disadvantages of the government’s higher involvement and investment in the construction industry in relation to Construction 2025 is the perceived low returns for the public sector and anticipated overspending and higher trade gap due to potential dependence on imported construction materials (Bingham, 2013 and Smith, 2013).
The data shown by Christ Rhodes (2015) revealed huge gap between housing and infrastructure orders of the government sector and private sector. The advantages of the government’s investment on the construction weighs more than the disadvantages in so far as the economy is concern as it will create great impact in the increase of employment and financial and business development of the small and medium enterprises.
References
Rhodes, Chris. 2015. Construction Industry. Statistics and Policy. House of Commons Library. Retrieved from www.parliament.uk/briefing-papers/sn01432.pdf
LEK. 2009. Construction in the UK Economy. Retrieved from http://www.nasc.org.uk/NASC/files/ea/eabc21b4-91d3-4e44-8f0f-ab27a7a0a4b1.pdf
The Chartered Institute of Building (CIOB). 2015. Carbon Action 2050 Basics of Sustainability. Retrieved from http://www.carbonaction2050.com/sites/carbonaction.ciobrebuild.io1dev.com/files/document-attachment/4%20-%20Environmental%20Legislation%20and%20Incentives%20in%20the%20UK.pdf
GVA. 2011. Stimulating Sustainable Construction in the in the United Kingdom. Retrieved from https://www.gva.co.uk/sustainability/stimulating-sustainable-construction-in-the-uk
HM Government 2014. Construction 2025. Retrieved from https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/210099/bis-13-955-construction-2025-industrial-strategy.pdf
Magdani, Nitesh. 2025. Are the Government’s Construction 2025 targets achievable? BAM Construct UK. Retrieved from http://www.bam.co.uk/media-centre/blog/bamblog/2015/03/20/are-the-government-s-construction-2025-targets-achievable
Fitzpatrick, Tom. 2012. UK construction strategy aims to halve project lengths by 2025. The Architect’s Journal. Retrieved from http://www.architectsjournal.co.uk/news/uk-construction-strategy-aims-to-halve-project-lengths-by-2025/8650131.fullarticle
Bingham, Tony. 2013. Building.co.uk. Retrieved from http://www.building.co.uk/construction-2025-you-cannot-be-serious/5059021.article
Smith, Stuart. 2014. Construction 2025 – from ambition to reality. Infrastructure Intelligence. Retrieved from http://www.infrastructure-intelligence.com/article/oct-2014/construction-2025-%E2%80%93-ambition-reality
Federation of Master Builders. 2015. Government 'must invest in construction to secure jobs and homes'. Politics Home. Retrieved from https://www.politicshome.com/home-affairs/articles/opinion/federation-master-builders/government-must-invest-construction-secur-0
