A stark new industry report has issued a severe warning about the state of Britain's construction sector, revealing that productivity has fallen below levels last seen in the 1990s.
The study, titled 'Half-Built Britain' and produced by Oxford Economics for the Construction Plant-hire Association (CPA), blames decades of under-investment for leaving the industry's delivery capacity "dangerously thin".
A Wake-Up Call for the Industry
Steven Mulholland, Chief of the CPA, stated that the findings must serve as a critical wake-up call. He emphasised that the nation cannot hope to achieve modern economic growth with productivity figures stuck in a bygone era.
"Every year we fall behind, projects take longer, costs rise and confidence weakens across the supply chain," Mulholland explained, highlighting a self-reinforcing cycle of decline.
The analysis presents a damning comparison. It found that since 1997, construction output per worker has declined by an average of 0.1 per cent per year. This stands in sharp contrast to the UK manufacturing sector, which has enjoyed a 3.5 per cent annual productivity rise over the same period.
Why is Construction Productivity So Low?
The report identifies a root cause in the chronic lack of investment in machinery, technology, and infrastructure. This has resulted in an outdated and under-utilised capital stock that cannot compete with modern standards.
Compounding this issue is the industry's reputation for being slow to adopt new technological developments. The potential for digitisation to rapidly boost efficiency is being largely missed.
External shocks, including Brexit and the Covid-19 pandemic, have worsened the situation. They have intensified existing labour shortages and created persistent supply chain disruptions.
More recently, high interest rates, ballooning material costs, and regulatory delays have fostered a climate of risk aversion, causing further delays in decision-making. The sector's contraction is evident, with the rate of job cuts in November hitting its steepest level in over five years.
Will Government Spending Plans Be Enough?
The government's Comprehensive Spending Review outlines significant capital expenditure plans. It proposes boosting departmental spending by £95.9 billion, representing an average annual real-terms increase of 3.6 per cent between 2023 and 2030.
Oxford Economics suggests this additional public investment could have a powerful multiplier effect, potentially raising long-run output by £315 billion by 2039—a return of around £3.30 for every £1 invested.
However, the CPA has expressed caution. It notes that it "remains to be seen" whether the government's planning reforms, such as the Planning and Infrastructure Bill currently in Parliament, will have the necessary impact on infrastructure growth.
The industry body is calling for the government to publish a stable, long-term infrastructure pipeline to give private investors the confidence to commit funds. It also advocates for backing off-site construction methods and extending full expensing tax rules to leased and hired plant machinery, which would encourage reinvestment in modern, efficient equipment.
