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The Rt. Hon. Stephen Timms MP, Former Minister of State for Competitiveness
London, 18 October 2007
I am delighted to be here today. I am the Minister for Competitiveness and have within my portfolio both the Construction industry and e-commerce. So this is an unusual occasion for me, bringing together different parts of my portfolio, and I warmly welcome the initiative which RICS has taken.
In my few remarks, I’d like to cover three areas:
The new Department first of all. There was a lot of speculation before the summer that there would be no Department for Business in the new Government. In fact, Gordon Brown has made clear in establishing the new Department that the concerns of business will be at the top of the priorities of Government.
The Department has been given a very clear remit from the Prime Minister personally, to be a strong and effective voice for business at the heart of Government, right across Whitehall – and indeed beyond. Our focus is on promoting productivity, enterprise, competition and trade – all of them vital for a strong UK business sector – and for the strong construction industry which is such an important contributor to the UK economy.
My previous Ministerial roles have included three separate stints at the Treasury – most recently until June as Chief Secretary. 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:
But its significance is greater than these numbers alone, impressive though they are. It is not by accident that the 2005 National Audit Office report was called “Improving public services through better construction”. Evidence from the National Audit Office (NAO), the Commission for Architecture and the Built Environment (CABE) and others shows that the way in which schools and hospitals are designed and built affects the educational and healthcare outcomes delivered through them subsequently. So the construction industry plays a major part in determining the degree of success in the Government’s key mission – the mast to which we have nailed our colours – of improving public services.
The construction industry also has a vital contribution to make to the challenge of global warming: zero carbon housing; reducing waste; improving the use of natural resources. These are challenges for us all, and for the construction industry in particular.
One of the first publications from our new department, in collaboration with the Departments for Communities & Local Government and for the Environment, Food and Rural Affairs, was the Consultation Document on Sustainable Construction. Do have a look at that if you haven’t already, consider the targets and look at how priorities can be implemented and let us know what you think.
I had the privilege last month of visiting Heathrow’s stunning new Terminal 5, and discussing with those involved how the new approach to construction, set out perhaps most famously in Sir John Egan’s 1998 report on “Rethinking Construction”, has been successfully adopted in what looks like being a huge success – a new icon for London, to give London a new competitive edge.
There are important lessons from that success, not least for the Olympics construction project – which are going to be an even bigger London icon. From my perspective as an MP for East London, where the Olympics will be focused and where massive construction work is transforming the cityscape, our whole future depends on the construction industry doing a superb job, as we have every confidence it will. And I want to see it as well providing great careers for young people growing up in our area, people who will be excited and enthused by the transformation under way in city centres across the country, using smart technology, building a better future for all our citizens.
It is almost 10 years now since Sir John Egan produced Rethinking Construction. The themes it set out have endured:
Rethinking Construction was boosted by the launch of the industry report Accelerating Change in 2002, which has been bringing these principles forward. It has a number of targets for construction to meet in order to implement the Egan principles.
And we are seeing the results. In 1998 a Bath University study found that 30% of public construction projects were on time and 27% were within budget. The most recent figures put those figures at 74% and 70% respectively. By any measure that is significant progress. But that doesn’t mean we should be complacent. There is more we need to do, and improving procurement and making better use of technology are central to what we still need to achieve.
Procurement in construction needs to be more lean and more efficient, and we need to find ways of reducing waste in procurement for both purchasers and suppliers throughout the supply chain, at the tendering stage and beyond.
There are a number of initiatives under way. The two which are perhaps closest to Government are Constructionline – the construction tender prequalification system – and Supply2.gov.uk – the small firms portal for public contracts. They show how we can seek to streamline procurement – and I hope RICS eTendering will be another helpful tool, contributing to what the industry needs to achieve to modernise, and to deliver the best possible value for its clients in the public and private sectors.
I am in my second stint as Minister responsible for e-commerce. I was appointed first time just over five years ago, and - I think it was in the week I was appointed - Computing ran a headline saying that, on broadband, the UK was neck and neck with Croatia. The position has dramatically changed. Britain is now in a leading position on broadband availability and use, ahead of France, ahead of Germany, ahead as well of the US. I am starting to look now at Next Generation Broadband – as we see fibre to the home being deployed in those other countries, with potentially much higher speeds available to users, we need to ensure that we don’t lose over the next couple of years the competitive advantage we have gained.
The Information Age Partnership which I now chair recently compiled and published evidence from the UK to highlight how effective use of information and communication technology enables productivity growth. As the technology evolves and becomes pervasive, it creates new market opportunities, leading to the emergence of innovative products and services, and challenges to existing business models.
E-procurement has great potential to deliver some of those productivity gains. It needs to be built on a foundation of sound procurement principles. There need to be checks and balances to avoid fraud and anti-competitive bidding practices. And I hope e-procurement in construction can help us avoid an unhealthy focus on lowest initial price rather than whole life value – to lock in some of the vital lessons which the industry and its customers have been learning over the past decade.
The construction industry is benefiting from the long period we have enjoyed of stability in the economy. It is in the middle of significant change, in a buoyant market, and is improving significantly. The change involves adoption of new techniques, tools, processes and products.
If the industry is to continue to be world class, as it must, and maintain its big presence on the world market, widespread use of modern computing and communications technology are essential.
RICS eTendering adds to the armoury of tools the industry has at its disposal, and I wish it well.
Thank you.
