Is British construction being undervalued?

The construction industry is huge and a major contributor to the UK economy. However, a recent report suggests that the UK construction industry is undervalued by the government.

Image Credit

A report entitled “The Real Face of Construction 2020”, published by the Chartered Institute of Building, argues that when valuing the construction industry, the government should include some elements of the manufacturing and service sector which are closely linked with construction .

What is the official value of the construction industry?

The government’s official statistics value the construction industry’s contribution to the UK economy in 2018 at £116.3 billion. This is based upon economic activity within the standard industrial classification covering the construction industry.

What additional value do other elements of the industry add?

The Chartered Institute of Building report concludes that the value of the construction industry should be increased by £98 billion per year. The Chartered Institute of Building calls upon the government’s statistics body, the Office for National Statistics, to include an additional set of accounts to show the true size of the industry’s contribution to the economy.

Image Credit

Why has the undervaluation of British construction occurred?

The undervaluation has occured because the standard industrial classification used to value the size of the construction industry excludes professionals offering services feeding into the industry such as engineers, quantity surveyors, contractors, architects, surveyors and designers. Suppliers of plant, products, material and equipment to the industry, for example a davit crane such as https://www.gmh.co.uk/davit-cranes/, are also excluded from the classification.

What effect would correctly valuing the industry have?

If the additional information was included in the government’s statistics, the Chartered Institute of Building argues that we would be able to more accurately assess productivity and activity in the construction sector. We would also be able to monitor employment and demand in the sector as a whole, rather than in the narrowly defined sector at present. More accurate information would produce better informed government policy and decision making, for example government investment could be more accurately targeted.

The construction sector affects everyone in the UK. A quality built environment has a major impact on society, and the industry creates wealth and jobs. It is important that its true value to the UK economy is recognised and that the whole ecosystem which contributes to the industry is valued.