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The Rt. Hon. Stephen Timms MP, Former Minister of State for Competitiveness
Westminster Central Hall, London, 13 November 2007
I am delighted to be here this morning.
My previous Ministerial roles have included three separate stints at the Treasury – most recently until June as Chief Secretary – and that work has given me a very clear sense of the significance of construction for the wealth of the nation and the wellbeing of the economy:
The industry has been a major beneficiary from the long period of stability we have enjoyed in the economy: a strong market, healthy order books and buoyant forecast growth.
But the importance of construction goes far beyond its economic contribution, massive though that is. It’s also central to our social ambitions for Britain. The performance of this industry will have a big impact on whether people feel the Government has been successful in the key tasks we have set out to achieve – to improve schools, hospitals and housing.
My Department – for Business, Enterprise and Regulatory Reform – has been given a very clear remit by the Prime Minister: to act as a strong and effective voice for Business across Whitehall. We care about productivity, enterprise, competition, trade, de-regulation. We lead in Whitehall on the crucial cross Government targets for productivity, business success and regional economic performance.
To act succeed, we will need to engage more effectively with businesses, so that we understand properly the issues that matter most. When we need to, we will argue industry’s case.
Over the last few months, I have enjoyed meeting some of the main companies, unions and construction bodies, and I look forward to meeting more. Its giving me a good briefing on the industry’s challenges and concerns.
Construction is a people industry. Over the last few years, media campaigns and programmes with schools have resulted in more and more young people wanting to get into construction. We certainly need them and I welcome what has been achieved. I look forward to young people in my area, in East London, being able to take up opportunities in this industry as we build the facilities for the Olympic Games.
There is a strong link between the way the industry treats its people and works with the communities in which it operates, and its image. People rightly expect to work in a safe environment. They are attracted by a structured career path, opportunities for training and development, and a working environment where they are treated with dignity and respect. In September Constructing Excellence published case studies highlighting the business benefits of Respect for People. The report shows a solid business case for Respect for People principles, and I commend it to you.
How the industry works with communities has a major impact on how it is perceived. Considerate Constructors, and equivalent schemes, are hugely influential. Participating companies project a strong image for the industry in the areas where they work.
We need desperately to get back on our previous track for improvements in health and safety. Last year’s increased fatality figures are not only a tragedy for the families concerned, but they do huge damage to the reputation of the industry as well.
What construction delivers really captures people’s imaginations and is a great advertisement for the industry. Success stories like the Eden Project, Terminal 5 and the high-speed rail link from the magnificent new St Pancras are powerful advocates for this industry. The big challenge is to ensure that the whole industry is seen in this positive way.
Industry performance in the run up to the 2012 Olympics will be under particular scrutiny and I am delighted that John Armitt will be speaking to you today. The 2012 Construction Commitments, with their vision for a better industry, is a huge step forward.
One of the key elements is Integrated Working, and clearly identified and committed leadership will be central if more integrated working is to happen. The 2012 Roadshows have shown that this will not be easy to achieve.
The Strategic Forum set itself a target that 50% of projects by value would be undertaken in an integrated way by the end of 2007. I think everyone is agreed that we are unlikely to meet that target. I am glad the Strategic Forum is providing renewed input and focus to this topic, with Constructing Excellence playing a full role. I look forward to discussing the output of the Strategic Forum’s Integration Working Group with Mike Davies in due course.
We need to maintain momentum. The demonstration projects show the promise of a big prize:
But to win the prize, an empowered, committed leadership, clearly identified and equipped with the necessary skills, will be vital.
Over the past year, as many here know, my Department has been leading development of a joint industry / Government Strategy for Sustainable Construction. The aim is to set the direction in which government and industry, together, should be heading, to provide a clear route-map through the raft of sustainability-related challenges facing the industry.
A consultation paper was published in July, and we are looking for a wide spectrum of responses from around the industry, to inform the process. The closing date for contributions is 30 November and I do hope everyone here will respond.
Skills is a top priority for the industry leaders I meet:
Research commissioned by the Office for Government Commerce last year reported particular concerns about availability of project management, mechanical and electrical design, civil engineering, bidding and client-side leadership skills.
The challenges cannot be solved overnight. Industry, the Sector Skills Councils, and Government need to continue to work together on the solutions. Let’s work hard to persuade companies of the business benefits of training - that investing in skills is not an employment cost or overhead, but rather a contributor to business competitiveness.
The public sector can do some things to help. The use of long-term Framework contracts can provide stability, and a continuity of work which can help firms plan ahead, and see their way to taking on apprentices. The recent report ‘Taking Advantage – how SMEs can become successful framework contractors’, published by the Local Government Task Force, presents the advantages of Framework Agreements and gives examples of their use. I hope this good practice will be taken up as widely as possible.
Over a third of the output of this industry is for the public sector. So, on many issues, Government - the public sector - can make a big difference through how it buys construction.
The public sector construction client function, rather like the industry, is very fragmented. That is a challenge as we try and get widespread adoption for the very good best practice guidance which the Office of Government Commerce has produced with the Public Sector Construction Clients Forum – together with Achieving Excellence in Construction, and the Common Minimum Standards in particular.
I am delighted that industry and Government have come together to agree principles of fair payment which should apply on construction projects. The Public Sector Construction Clients Forum departments have already signed up to the Fair Payment Guide and Charter, and they have agreed for OGC to measure the improvement between now and 2010. I know that the industry will play its part, and I warmly welcome the fact that the Charter has been signed by all parts of industry.
If you come across an example of a Government Department not following the best practice set out in guidance – whether that is overarching guidance, such as Achieving Excellence in Construction and Common Minimum Standards, or specific guidance such as that on Fair Payment – let me know, and I will ensure with my colleagues at the Office of Government Commerce that the matter is taken up. We want to give it our best shot.
The Economist said of Britain’s economic success over the past decade – and I quote – that: “There are lots of reasons why Britain has done well, and most of them are connected to the country's enthusiastic embrace of globalisation … Britain is remarkably at ease with globalisation.”
We want Britain to be the success story of the next global economic era, Government working alongside businesses to make the most of the worldwide opportunities from which we believe Britain is uniquely well placed to benefit – with construction close to the top of the list.
But it won’t just happen. According to Davis Langdon, global construction spending reached $4.6 trillion in 2006, a 4.9% increase over the previous year. Even with slightly more subdued growth rates expected this year, the figures are staggering, and nowhere more so than in China. UK Trade and Investment is working to foster closer ties with Chinese interests, to bring more construction contracts to Britain.
We have many world-class companies, and a well established reputation for excellence in areas like architecture and engineering. I want the UK to do better still.
Leaders set the framework of values under which an organisation works. Five years ago, as a Minister in the old DTI, I spoke to the Construction Industry Environmental Forum CSR Conference. I said then that I see Corporate Responsibility as offering an approach that gets away from the idea that economic, social and environmental goals must always be in conflict. Doing well and doing good can go hand in hand. Corporate Responsibility is by definition a voluntary activity – it is about organisations choosing to go beyond what the law requires, drawing on their own strengths and analysis and developing initiatives to make a contribution beyond their own immediate economic interests. I am encouraged that more construction firms are getting involved, and that its led from the top. It is more relevant than ever, with challenges such as health and safety in the industry.
Construction managers have to focus on short term delivery. They need to be problem solvers; fire fighters. But good leaders need to be able to see beyond the here and now. In my role I can see that issues faced by one sector are usually confronting others too. It’s important for the industry to bear in mind the wider business context in which it operates, in particular for the managers and leaders of the future.
Consider what can be learnt from other sectors. Work with other sectors having a shared interest. It will help maximise your influence with policy makers.
I hope that some probing questions will be asked during today’s sessions to challenge conventional thinking in construction. That is the role of leaders too.
And leadership is certainly not just something for the Board. It is crucial for effective team working.
Surveys suggest a large ‘inspiration gap’ in leadership capability across UK organisations. The single most important characteristic people said they would most like in their leaders was ‘inspiration’. But only 11% actually saw it in their leaders. The top two attributes actually observed were ‘knowledge’ and ‘ambition’.
Our department has developed an Inspirational Leadership Benchmark Index to help industry develop management and leadership capability, and I hope this industry will benefit from it
To meet the challenge of globalisation, managers and leaders have to be a key target, as they are the ones who make the key business decisions, and influence change. That is why events like this are really helpful in clarifying issues, and as an influence for change and improvement.
You have great speakers ready to share experiences and insights on leadership. You will hear plenty to challenge and inspire you. Have a great day and thank you for giving me the chance to be with you.