Essential Infrastructure 2018

The report has shone a light on the delivery of infrastructure projects across the UK since 1997. New data reveals that despite record investment in infrastructure, the construction supply chain has not seen an equivalent increase in activity.

Our Essential Infrastructure report reveals that UK construction output on infrastructure, which measures the value of construction activity on public and private infrastructure projects, has increased by just £6.4bn or £70 per person in real terms between 1997 and 2017.

The report analysed publicly available Office for National Statistics (ONS) and Northern Ireland Statistics and Research Agency (NISRA) construction output data, adjusted for inflation, over the past two decades. Construction output is a key measure of UK Gross Domestic Product (GDP) and shows the value of work being undertaken by construction companies.

Rethinking the regional divide

London has seen the most construction output on infrastructure projects across the UK in the past two decades (£54.14bn). However, when analysing the data relative to the population of each region, the North East is the most active region relative to its size. Per person in 2017 the North East experienced 40% more construction output on infrastructure projects than London, whilst the North West saw 27% more – suggesting that these regions are catching up with the capital and ending the traditional North-South divide.

In London, infrastructure output spiked from 2010, closely aligned to investment around the Olympic Games and Crossrail. Output has since dropped down to pre-2010 levels, whilst other regions are experiencing increased per capita output. For the last three years infrastructure output per person has been higher in the North East of England (£1,156) and North West (£901) than in London (£864) and the South East (£799).

The West Midlands has had the lowest infrastructure output per person since 2010. Positioned at the centre of the UK geographically this should make the region a hub for economic growth, but with a population of 5.8 million and £1.1 billion in output last year it is seeing just £194 per person in construction output on infrastructure.

Scotland has consistently experienced high levels of construction output on infrastructure - £36.09 billion since 1997 a huge £6,678 per person and the highest output anywhere in the UK. Per capita, Wales comes in third, after Scotland and London, at £5,176.

In our report, recommendations to improve the efficient decision-making and delivery of UK infrastructure include:

1. A removal of retentions throughout the construction industry and a commitment from clients to ensure payments to Tier 1 contractors within 14 days, for contractors to pay Tier 2 suppliers within 19 days and Tier 3 suppliers within 23 days, improving upon the current requirements of the Construction Supply Chain Payment Charter.
2. A commitment to driving forward the devolution agenda to support the joined up delivery of infrastructure.
3. A widening of the National Infrastructure Commission’s remit to prevent the ‘politicisation’ of infrastructure decisions.
4. A commitment to ensuring that all public sector contracts valued at £10m or more, produce at least 20 per cent of that figure in Social Value to the community.