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My Lords, it is a pleasure to open this debate on the Science and Technology Committee inquiry, Off-site Manufacture for Construction: Building for Change. I should begin with some important thank yous: to our committee clerk, Donna Davidson; to our policy analyst, Dr Daniel Rathbone; and to our committee assistant Cerise Burnett-Stuart. All of them, as always, worked hard throughout the inquiry. I should also like to thank, most sincerely, our specialist adviser, Mike Putnam. His experience and expertise were much appreciated. On behalf of the committee, I also thank Laing O’Rourke for arranging for some members of the committee to visit its facilities to view aspects of digital construction.
I thank all the committee members, not hesitatingly at all, for their diligence and support. I mention particularly the noble Lord, Lord Mair, who persuaded us to conduct this inquiry. I know he will speak at some length about several of the issues involved and on the key aspects of our inquiry, which allows me to make my contribution shorter. I will do so by summarising the key findings of the report, allowing others to speak in more detail. I thank all the noble Lords taking part in this debate today, and I am delighted to see that some non-members of the committee have put their names down to speak, including the noble Lord, Lord Stunell, who has vast experience in construction in this area.
I also thank the Minister, for personally attending to give oral evidence to the committee, and the subsequent government response. It is not a frequent occurrence that the Government find inquiry reports agreeable. I am pleased that the Government agreed with much that we recommended. My colleagues and I will therefore no doubt focus in the debate on those aspects where the Government were less in agreement. I hope the Minister will find appropriate and agreeable answers today.
The findings of our inquiry are covered in six chapters. We make 10 key recommendations and reach several conclusions. I will attempt to summarise some of these. In their response, the Government recognised the construction sector’s contribution to the economy and to employment. It contributes over £138 billion of gross value to the economy and employs over 3.1 million workers. However, despite its importance, the sector fails to match the productivity improvements seen in other sectors of the economy. Labour productivity, for instance, is nearly a fifth lower in the construction industry than in other sectors. We believe that, if implemented, our inquiry findings and recommendations will go some way to improving the performance of the construction sector.
The combined effects of the problems characterising the construction sector mean that it cannot meet the needs of housing and will struggle to meet the needs of infrastructure. Off-site manufacture for construction can help it meet those needs. Off-site manufacture has several tangible benefits, including better-quality buildings, fewer labourers, increased productivity, the opportunity to create more regional jobs and better building safety, to list but a few. Those all make a compelling case for the wider use of off-site manufacture for construction.
Despite those obvious benefits, the uptake of off-site manufacture is limited, and that will need to change. For change to occur, the regulatory, financial and commercial environments that currently operate in the sector need to be addressed, and action is needed not only from the sector but from the Government. I acknowledge that the Government have made a start, particularly in their publication of the construction sector deal, and this is a very important step forward. I hope that the Minister will agree that, for it to succeed, the Government and the Construction Leadership Council will need to work together, and a key component of that should be the development of a clear forward plan, including timelines and indicators of performance management. Can the Minister say when this might happen and who will lead on it?
I very much welcome the Government’s announcement of presumption in favour of off-site manufacture and their investment in digital design for building and manufacture. We look forward to plans for its implementation. Again, perhaps the Minister can say more about when this might be implemented.
To meet the current housing shortage, the Government have set ambitious targets for housebuilding and have announced investment in the construction sector deal. Can the Minister specify what conditions they will attach to this investment to drive the use of off-site manufacture for construction? The Government have several levers they can use to optimise this. Although we recognise that they are taking some action, in Chapter 6 we outline further steps that they can take, including developing and publishing a series of key performance indicators against which the success of “presumption in favour”, which the Government have now said they will commit to, can be assessed. What plans do they have to do this?
Much of the evidence we received suggested a construction sector that is fragmented and lacking in trust. This a reflection of current business models and traditional ways of managing finance and cash flow. The Construction Leadership Council has an important role in providing resources and leadership to overcome this. We welcome the Government’s commitment to changing the public sector procurement model to procure for whole-life value rather than up-front costs. This, together with presumption in favour of off-site manufacture, is an important signal to the industry. The Science and Technology Committee will follow future developments with interest and may well revisit the situation with a follow-up inquiry to track the Government’s record in fulfilling their commitments. In the meantime, I beg to move.