Introduction
In recent years ICE, through its annual State of the Nation reports, has made repeated calls for greater investment in the infrastructure critical to the UK's economic and social well-being. Those calls have met with some success as demonstrated by the commitments in the recent Comprehensive Spending Review. Across the UK there are important road, rail, energy, flood defence, waste management, water supply and many other infrastructure schemes in the pipeline.
In addition, major infrastructure works will be needed to facilitate initiatives such as the government´s house building programme and the 2012 Olympic Games.
Civil engineering provides the infrastructure for sustainable growth and community well-being. The outlook for the industry has rarely been more buoyant and exciting. The purpose of this State of the Nation report is to consider capacity and skills constraints, and propose strategic solutions to ensure a vibrant and responsive industry, better able to deliver the government's infrastructure ambition. Independent research for ICE, including interviews with 30 industry leaders, has revealed the true scale of the challenge.
We can see that, as demand reaches record levels and globalisation fuels competition for resources, capacity issues that have long troubled the delivery of schemes need urgently to be addressed.
The UK civil engineering industry faces a capacity and skills crisis. In the unprecedented global rush for resources expected over the next five years, demands on the currently limited capacity of the sector could cause construction inflation to spiral, taking a heavy toll on project budgets and timescales.
Construction inflation has been running at a rate well above the Consumer Price Index (CPI), the measure used by government to calculate inflation across the economy as a whole. We have calculated that, if left unchecked, this gap will have reached nearly £8 billion by 20151. Inflation on this scale threatens vital investments as government, which is by far the biggest client for infrastructure, only allows for CPI inflation in its future spending plans2.
Investment now in skills and innovation will help to stem those added costs and safeguard public works that the UK cannot do without. Government can help to give industry the confidence to make these investments by providing a higher degree of visibility and certainty on its own investment plans for the UK´s infrastructure.
What is urgently needed is an independent national commission for strategic infrastructure planning, tasked to coordinate spending programmes across government and bring an end to unpredictable, stop-start procurement.
A virtuous circle must be established (see Figure 1). Greater client leadership and transparent forward planning will provide a much needed, clearer picture of demand across the nation´s infrastructure and the confidence to schedule their own projects to avoid supply problems. A more visible, even flow of work will provide the industry with the assurance to be able to go ahead and invest in its workforce and innovative practices.
Figure 1: a virtuous circle of infrastructure planning, investment and delivery
A more dynamic, modern industry will be able to attract a more diverse workforce. Graduates of UK universities, both home-grown and from overseas, will be encouraged to enter the UK civil engineering profession in greater numbers. The government's spending plans would be implemented more effectively, with reduced stress on the supply of skills and other resources.
Most importantly, the UK would receive the modern, efficient, sustainable infrastructure it needs to prosper, at prices it can afford.
Recommendations
- Long-term, strategic plans for the development of the UK´s infrastructure
- An end to stop-start development and short-term planning
- A Commission for Strategic Infrastructure Planning to take responsibility for planning the development of the UK´s infrastructure
1University of Warwick, Institute for Employment Research (IER)
2HM Treasury (2007) Meeting the Aspirations of the British People, 2007 Pre Budget Report and Comprehensive Spending Review, HMSO, London.
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