Off-site Manufacture for Construction (Science and Technology Committee Report)

Lord Mair Excerpts

Wednesday 12th December 2018 Lords Chamber

[Lord Mair (CB)]

My Lords, it has been a privilege to be a member of the Select Committee undertaking this inquiry under the expert chairmanship of my noble friend Lord Patel. I declare the following interests: I am head of the Centre for Smart Infrastructure and Construction—CSIC—at Cambridge University, and until a few weeks ago I was president of the Institution of Civil Engineers. I am also an adviser to the construction company Laing O’Rourke.

I draw attention to key words in the title of our Committee’s report Off-site manufacture for construction: Building for change. Building for change is so important and so badly needed. I shall first provide some background. The UK construction industry contributes more than £100 billion annually to the economy. It is vital to solving some of the pressing problems facing us. There is a lack of affordable housing. We have ageing infrastructure that needs replacing or increasing in capacity. However, the construction industry suffers from poor productivity. New technologies, such as off-site manufacture, could considerably improve the productivity of the construction industry. In November 2017 the Government announced the construction sector deal as part of their Industrial Strategy White Paper. This aims to transform the productivity of the sector, focusing on the building of houses, schools, hospitals and major transport projects.

A key innovation contained in the sector deal is the development and commercialisation of off-site manufacturing technologies, which have the potential to transform the construction industry. This is particularly significant for housing: to address the housing crisis at least 300,000 new homes are needed annually for the foreseeable future. Off-site manufacture can lead to lower costs and faster delivery, as well as increased quality. There are preconceptions about what has in the past been referred to as pre-fab construction; these need to be dispelled. As the noble Lord, Lord Borwick, said, off-site does not mean uniform, nor does it in any way mean shoddy—at least nowadays. Bringing a manufacturing mindset to the design and construction of infrastructure, especially buildings, offers huge opportunities for harnessing the benefits of standardisation and factory manufacture without hampering architectural ambition. There is a need for new thinking at all levels: from clients, through to architects and engineering design consultants, contractors and the supply chain.

Our inquiry explored whether off-site manufacturing of buildings and infrastructure, or the components thereof, could improve productivity in the construction sector. We examined the potential benefits and drawbacks of the wider uptake of off-site manufacture, as well as how government policy, particularly around public procurement, might need to change to facilitate it. We also considered what actions the construction sector could take to drive the further use of off-site techniques. We explored not only the unrealised opportunities for off-site manufacture in construction but, more importantly, the barriers to its uptake. At the outset of our inquiry we found it useful to clarify what is meant by off-site manufacture for construction. Broadly there are two main groups. In the first, components of a building are manufactured off site then brought together on site—such as columns, floor slabs and beams. This includes pre-cast concrete, which is applicable to high-rise buildings and other infrastructure. In the second, buildings can be manufactured volumetrically, or in modules: whole segments of the buildings are manufactured and assembled off site, then the completed modules are fitted together on site. This is especially relevant to housing.

Our inquiry concluded that there are clear and tangible benefits for construction from off-site manufacture which make a compelling case for its widespread use. These include: better quality buildings and infrastructure; enhanced client experience; fewer labourers and hence increased productivity; the creation of more regional jobs; improved health and safety for workers; improved sustainability of buildings and infrastructure; and reduced disruption to the local community during construction.

In July of this year, as we were finalising our report, the Government published the details of the construction sector deal. Our committee was pleased to see that off-site manufacturing was one of the deal’s three strategic areas of focus: digital, manufacture and performance. I shall refer to the importance of digital and performance later.

The evidence we received in our inquiry revealed a strong case for the use of off-site manufacture for construction, but its use today is by no means widespread. What are the barriers? Why has off-site manufacture not been more widely adopted? The principal barrier has been the fragmentation and lack of collaboration in the construction industry. This fragmentation makes it difficult for all parties—clients, designers and contractors—to be involved from the beginning of a project. Lack of trust, and therefore a lack of collaboration, and attitudes to risk are cultural within the whole sector. This often leads to disputes which are all too often part and parcel of the construction industry.

It was clear to our committee that the construction sector needs to build trust and partnerships so that companies can work together to improve the uptake of off-site manufacture. We welcomed initiatives such as the Construction Leadership Council and the Infrastructure Client Group’s Project 13.

Project 13, published by the Institution of Civil Engineers in May 2018, is an extremely important industry-led initiative. It will improve the way high-performing infrastructure is delivered and managed. It seeks to establish a new approach within the construction sector, based on enterprise, not on traditional transactional arrangements. The most significant changes in an enterprise structure, as opposed to a transactional structure, are that the owner is central and leads the enterprise, defining long-term value; contractors, suppliers and advisers have direct relationships with the owner; and an integrator actively engages and integrates all tiers of the market. Most importantly, in an enterprise model the key contractors, suppliers, owner, adviser and integrator all work as one team to optimise value. All parties—client, architect, engineering designer and contractors—must be involved from the beginning of a project, rather than, as so often at present, the contractors only being involved at a late stage when the project has already been pre-determined, fixed and designed, with all the risk being transferred to the contractors. A key element of a successful enterprise model is risk sharing as opposed to risk transfer.

Following these principles, our report recommends that designers, contractors and suppliers must all have early involvement in a project if off-site manufacture is to be successful. This requires a change in business models in the whole sector and among clients—both private and public sector—as well as far greater collaboration. There is a need for a client’s professional team or advisers to adopt a different approach, as outlined by the Infrastructure Client Group’s Project 13, to enable off-site manufacture. Our report welcomed moves in the construction sector deal to improve the sustainability of new business models such as this.

The Government and the wider public sector are by far the biggest clients of the construction sector. The Government therefore have a key role in encouraging and facilitating the uptake of off-site manufacture.

I welcome the Government’s response to our committee’s recommendation regarding new business models for the construction sector. It is encouraging that the Government are very supportive of the initiative taken by the Infrastructure Client Group in developing Project 13: a new approach to commissioning and delivering infrastructure and construction projects.

The Government have also recognised the importance of funding research and development. The construction sector typically spends very little on R&D—the spend is much too low, as the noble Lord, Lord Stunell, has already noted, and lower than in any other sector. One of the welcome aims of the construction sector deal is to increase spending on R&D. Alongside the initial sector deal announcement, the Government announced a £170 million investment in the transforming construction programme, as part of the Industrial Strategy Challenge Fund. Innovate UK estimates that this government investment will leverage around £250 million of match funding from the industry through its contribution to funding R&D projects. We all welcome this important initiative.

Our committee recommended that a portion of Government funding for R&D in the construction sector should focus on detailed performance data for the lifetime of buildings and infrastructure. This will provide an important evidence base for improving future designs, thereby achieving significant economies. By measuring the performance we can establish the degree of overdesign of much of our infrastructure; only by doing so will real advances be made. The Government’s positive response to this recommendation confirmed their support for optimising whole-life performance of buildings and infrastructure, which is part of the transforming construction programme. This approach will also combine the rapid advances in the digital revolution with major developments in innovative sensor technologies, many of them made recently by the engineering department of the Cambridge Centre for Smart Infrastructure and Construction. These have already been deployed successfully on over 100 construction sites. Industry should aim to routinely equip new components manufactured in the factory with fibre-optic and wireless sensors. These will deliver vital digital data on the performance of infrastructure, during construction and throughout its life.

In summary, our inquiry found that there is a compelling case for off-site manufacture in construction. The Government’s overall response to our report and recommendations has been very positive, as stated by the noble Lord, Lord Patel. We highlighted that in the Autumn Budget of 2017, the Government announced the very welcome “presumption in favour” of off-site manufacture by 2019 across five departments responsible for the construction of buildings and infrastructure: the departments for transport, health, education, defence and the Ministry of Justice. Our committee strongly supported this direction of travel.

As stated by the noble Lord, Lord Patel, we recommended that the Government develop and publish a series of key performance indicators against which the success of the presumption in favour can be assessed. We also recommended that where the presumption in favour is set aside and a project goes ahead that does not use off-site manufacture, the Government should publish a statement explaining why it has not been used and justifying that decision. The Government’s response to these two recommendations appears to be somewhat lukewarm, although they did state their intention to review the position on an ongoing basis. In the light of the Government’s otherwise enthusiastic response to our report, will the Minister clarify how the presumption in favour will be given more teeth? This could have a very important influence on the uptake of off-site manufacture, a well-proven innovation that has enormous potential to transform the construction industry.

Life Sciences Industrial Strategy (Science and Technology Committee Report)

Lord Mair Excerpts

Tuesday 23rd October 2018 Lords Chamber

[Lord Mair (CB)]

My Lords, it is a privilege to have been a member of the Select Committee undertaking the inquiry into the Life Sciences Industrial Strategy, under the expert chairmanship of the noble Lord, Lord Patel. I should declare the following interests: I am a fellow of the Royal Academy of Engineering and of the Royal Society, and an emeritus professor of engineering and director of research at Cambridge University.

There can be no question but that the UK life sciences sector makes a substantial contribution to the UK economy and to the health and well-being of society. Modern medicine and healthcare rely heavily on science and engineering to deliver improved prevention, diagnosis and treatment of illness. But above all, the continuing success of the life sciences depends crucially on its researchers—the people referred to by the noble Lord, Lord Fox. Before addressing the key issue of recruitment of researchers, I will comment on the importance of entrepreneurship. Our committee heard from business, investors and academics that the UK performs well in translating science and engineering research into innovation through university spin-outs and other early-stage businesses. We also heard persuasive evidence that the UK is less successful in growing small firms into much larger companies. In his report, Sir John Bell highlighted that the UK has more small biotech firms than anywhere else in Europe. Entrepreneurship is fundamental to the success of such enterprises and to their growth.

Our committee heard from many witnesses that entrepreneurship training was a significant skills gap within the life sciences sector. The UK’s world-leading academic research base provides an excellent source of new ideas and discoveries, the commercialisation of which is crucial in the context of the Life Sciences Industrial Strategy. This requires successful entrepreneur- ship. Closely related to this, our committee heard evidence on convergent training, from which individuals become knowledgeable about science, engineering and business. This would aid the all-important flow of capital to innovative UK firms. The Bell report emphasised the need for entrepreneurship training at all levels, incentivising varied careers and the migration of academic scientists and engineers into industry and back into academia—importantly, to increase the influx of talented scientists, engineers and entrepreneurs in the public and private sectors.

University postgraduate education therefore needs to focus strongly on equipping young scientists and engineers with the entrepreneurship skills needed to establish and manage companies. The increasing emphasis on this in many of the centres for doctoral training funded by the EPSRC and UKRI is to be welcomed. This should be mirrored in other funding schemes for PhD students. Schemes such as the enterprise fellowships run by the Royal Academy of Engineering are also an excellent way of supporting innovative young scientists and engineers in managing spin-out companies and enhancing their entrepreneurial skills. This and other such schemes should be strongly supported and encouraged as part of the industrial strategy.

I will now comment on the recruitment of international talent. I fully agree with the points made by the noble Lords, Lord Patel and Lord Fox. Our committee heard from many witnesses about the paramount importance of retaining the ability to recruit the very best researchers from around the world. Many businesses in the life sciences sector, and most universities and research establishments, rely on access to international talent from within and outside the EU. There is a real danger that this crucial access to international talent is now under threat. Research and innovation are increasingly global. Numerous witnesses from business and academia told our inquiry that freedom of movement within the EU has been an essential ingredient of the success of our life sciences sector. Without this freedom of movement, ambitions for our world-class life sciences industry will inevitably be curtailed. Sir Paul Nurse, a former president of the Royal Society and now director of the Francis Crick Institute, told our inquiry that the UK’s image is suffering terribly at the moment as a consequence of Brexit uncertainty. He highlighted the crucial importance of our ability to recruit the very best from around the world.

As referred to by the noble Lord, Lord Patel, Sir Paul also emphasised that the current visa system for individuals coming to work in the UK from outside the EU is expensive and tedious, and puts people off. The whole tone of the present system is wrong. It is essential that the Government do not apply the same system to EU nationals post Brexit. Whatever Brexit deal is reached, any new immigration policy must result in a streamlined system for the frictionless movement of researchers. This is a widely held view from everyone involved in the life sciences sector—indeed, in the whole science, engineering and innovation community. International talent at all levels must be welcomed by the UK and not made to feel unwanted. The system must also be fair, transparent and efficient.

Another key issue is the cost of necessary visas. These are often prohibitive for young researchers but should be commensurate with typical academic salaries and with the length of stay requested, from a day visit to longer-term appointments. According to the Royal Society, if the Government decide to apply immigration charges to EU nationals then, based on the current system, an EU academic with a partner and two children entering the UK on a three-year tier 2 visa would have to pay up-front costs equivalent to 14% of their annual salary. This is a major deterrent for young researchers.

The noble Lord, Lord Patel, referred to the report by the Migration Advisory Committee, commissioned by the Home Secretary and published in September. The report recommends that any new immigration policy should have a less restrictive regime for higher-skilled workers than for lower-skilled workers. It also recommends that the Government should do what they can to reduce the bureaucratic burden of the system. Nevertheless, the report’s underlying suggestion that the tier 2 visa route be extended to EU nationals is disappointing because it is currently an expensive and burdensome route. The tier 2 visa route is not welcoming and is a deterrent to attracting talent. In the rest of Europe, talented people will be able to move freely between EU states, yet to work in the UK they will require a visa, obtained through one of the most onerous and expensive visa routes. This is certain to stifle the attraction and retention of talent in the UK. Why would a talented French researcher choose to come to the UK when it is so much simpler to go to Germany or Italy?

The recent report by the House of Commons Science and Technology Select Committee highlighted a number of key principles that should underpin a successful immigration system. They include the need for an efficient, streamlined and low-cost application process for employees and employers and the need readily to recruit highly skilled people, wherever they are from, without being subject to an annual limit.

In summary, there can be no question but that immigration policy is central to the continued success of the life sciences sector. In 2015 more than half of the UK’s research output was the result of international collaborations. These collaborations are increasing, both in absolute terms and as a proportion of the UK’s research output. These collaborations must not be put at risk. As the president of the Royal Society, Sir Venki Ramakrishnan, put it:

“The UK is a global leader in science because top home-grown and international scientists want to work here. We must do everything we can to ensure that the UK maintains its role at the heart of European science, because that is in everyone’s best interests. If science loses, everyone loses”.


Any science or engineering researcher appointed by business or academia should be allowed to come to the UK without feeling unwelcome and without encountering unnecessary bureaucratic barriers. Can the Minister give an assurance that his department will endeavour to ensure that any post-Brexit immigration policy will be proportionate, light-touch, inexpensive, easy to navigate and welcoming? This is certainly what is needed if the life sciences industrial strategy is to flourish.

Industrial Strategy

Lord Mair Excerpts

Monday 8th January 2018 Lords Chamber

[Lord Mair (CB)]

My Lords, I give a warm welcome to the Industrial Strategy White Paper. I will focus my remarks on its infrastructure aspects and the construction sector deal. I fully support the concerns expressed by the noble Lord, Lord Stunell, on the shortage of skills in the construction industry and the implications for it of Brexit.

I declare my interests as head of the Centre for Smart Infrastructure and Construction at Cambridge University, president of the Institution of Civil Engineers, and chairman of the Department for Transport’s Science Advisory Council.

The White Paper has much in it to be applauded and many important aspects. It is—like the Green Paper—a much needed document, and gives strong emphasis to collaboration between government, business, science and technology. The test is whether it has the capacity to make a powerful difference. I recently chaired an event at the Institution of Civil Engineers, soon after the White Paper was published, at which three new infrastructure reports were launched. The Treasury’s Infrastructure and Projects Authority and the Department for Transport joined together to launch these reports to form the Government’s future agenda for infrastructure delivery. These were: Transforming Infrastructure Performance; Transport Infrastructure Efficiency Strategy; and an update to the National Infrastructure and Construction Pipeline. Put together with the White Paper, we now have four substantive documents from three government departments. All of these recognise the urgent need to improve the performance of our infrastructure to help boost the productivity of the industry and deliver better outcomes for society.

The White Paper also considers the broader societal outcomes from infrastructure investment, and their influence on decision making. This will go some way to address the more chronic problems of regional imbalances, low wage growth and weakness in skills. The confirmed increase in size of the National Productivity Investment Fund—the NPIF—will help to address these problems, but this must be done in a transparent and considered way to maximise the benefits from the investment. Infrastructure covers eight government departments and 26 Ministers. It is a sector that for every £1 billion spent increases overall economic activity by around £2.8 billion. It is therefore of the utmost importance for the Government to work across all their departments and the industry to ensure that the NPIF is spent on projects that will maximise this return.

I praise the Construction Leadership Council’s efforts to ensure that the construction sector deal was in the first round of such deals to be announced in the White Paper. It has real potential to make a powerful difference not only to the infrastructure sector but to the UK’s economy and productivity. Underpinning the sector deal will be three key strategic themes that will potentially transform the construction industry. The first is digital: delivering better, more certain outcomes using digital technologies, particularly building information modelling. We are in the midst of a digital revolution that must be fully exploited, including artificial intelligence and machine learning.

The second strategic theme is manufacturing: improving productivity, quality and safety by increasing the use of off-site manufacturing. This also has the potential to rebalance jobs more equitably throughout the country, improve value for money from public investment and minimise disruption to local communities during the construction process. An excellent illustration of this is a comparison of two stations being built for Crossrail. At Tottenham Court Road, the platforms were built using conventional in-situ concrete technology—casting concrete on site—whereas at Liverpool Street station the platforms were built using off-site manufacture, the key concrete components being cast in a factory in the Midlands, brought to London and assembled on site. This off-site manufacture resulted in hugely increased productivity. The Government have made off-site manufacture for construction an immediate priority as the delivery mechanism of choice for five government departments. This is to be welcomed.

The third strategic theme of the construction-sector deal is whole-life performance: getting more out of both new and existing infrastructure through the use of smart technologies, especially sensors and data analytics. This “smart infrastructure” will certainly lead to improved and more economic designs. It will also revolutionise asset management: data generated by sensors will enable continuous monitoring of an infrastructure asset throughout its life, providing information for more rational maintenance and repair strategies. We will be able to understand exactly how a building, tunnel, bridge or railway line is performing during construction and throughout its lifetime. This will substantially reduce infrastructure operating costs. Importantly, it will also enable much more rational prioritisation of the nation’s infrastructure requirements.

Close to £500 million will support the construction sector deal. Part of this investment will support the new Centre for Digital Built Britain, based at Cambridge University. This will develop and commercialise the digital technologies behind the smart systems at the heart of tomorrow’s homes, as well as new and innovative construction techniques. This should mean housing, schools and hospitals that are not only quicker and cheaper to build but cost less to run and are more energy efficient.

Finally, it is important that we do not look at the Industrial Strategy White Paper as one stand-alone document from one stand-alone government department. As emphasised by the noble Lords, Lord Mandelson and Lord Heseltine, it should be a working document that does not stand still in time. It should catalyse continuous collaboration between all relevant government departments, industry and trade bodies. This includes working with the National Infrastructure Commission to ensure that its national infrastructure assessment is incorporated in the future development of the White Paper, together with the Institution of Civil Engineers’ National Needs Assessment.

In his introduction to this debate, the Minister rightly emphasised that if we want to be a world-class economy, we need world-class infrastructure. To achieve this we need drive, vision and expertise, as envisaged in the construction sector deal. The timing of an industrial strategy that transforms our infrastructure could not be more appropriate—2018 is the Year of Engineering, as has already been pointed out by my fellow engineer, the noble Lord, Lord Bhattacharyya. It is also the 200th anniversary of the founding of the Institution of Civil Engineers, the oldest professional engineering body in the world. The engineers of the past knew how to build and operate effective infrastructure for society. We must exploit innovative, modern technology and continue this great tradition.