Showhouse: Construction increases R&D spending to record high

Date: November 25, 2019

Housebuilders have been told to modernise or die for years, despite housing delivery being at its highest level since the 1980s. The latest data suggests a fresh determination to modernise how the built environment is cradled, with Research and Development spending at record highs.

The UK construction industry has increased its R&D spending to a record high of £351m, the latest ONS data shows. This can largely be attributed to government-led initiatives promoting Modern Methods of Construction (MMC), and the clout carried by the emerging Prop Tech sector.

The total amount spent on R&D by businesses in the construction sector rose 9.7% annually, analysis by R&D tax relief specialist Catax revealed, a rise of £31m year-on-year.

MMC has soaked up huge resources as the UK harbours hopes of becoming a world leader in offsite construction. The government recently announced a £30m investment into a modular housebuilder, which followed news of a £90m deal with sumo-sized Japanese housebuilder Sekisui House.

Mark Tighe, chief executive of R&D tax relief specialists Catax, said: “The construction industry is a huge employer in this country but contributes a relatively small amount to the UK total of R&D spending. However, the sector is experiencing some interesting changes, not least the rapid growth of offsite construction methods. This is likely to be a contributing factor behind this large jump in overall R&D spending last year.

“More broadly, this is the second full year that Brexit Britain has shrugged off the political poison after the EU referendum and posted great gains in terms of R&D investment, running head and shoulders above the long-term average.”

The UK Prop Tech sector, a growing industry potentially worth £6 billion in the UK, is already leading the world in the property market with the UK sector receiving 10% of global prop tech investment.

The UK is well placed to capture the lead as a global hub for real estate technology and innovation, research from PropTech expert Dan Hughes found earlier in the year.

The LIQUID Report: Leading the Digital Transformation of Global Real Estate, commissioned by the British Property Foundation, showed that the UK is already a front runner in terms of its capacity for innovation, data infrastructure, market transparency and quality of education, but falls behind other countries in terms of venture capital investment and technology infrastructure.

Despite these attributes, some of which have high barriers to entry for other nations, the research highlighted the need for the UK to develop a joined-up prop tech strategy and roadmap to remain competitive on the global stage.

Hearing the call, last month Housing Minister Esther McVey unveiled a new digital innovation council to turbocharge innovation in the housebuilding sector. As Britain mulls a future outside the EU, keeping up this momentum could be pivotal to its standing on the global stage.

“For the first time in history a quarter of a million people nationwide are engaged full time in keeping the UK at the cutting edge,” said Tighe. “This is going to make a huge difference to Britain’s prospects outside the EU. The rate at which UK businesses are adding R&D staff to the workforce remains impressive, virtually matching the previous year with a rise of 7.3%.”

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Construction increases R&D spending to record high

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