In a major new study, Capacity Constraints in Construction: Rethinking the Business Environment, CIOB argues that firms are acting rationally in a dysfunctional system defined by extreme volatility, fragmented policymaking and a lack of reliable data.
Rather than trying to fix the industry through piecemeal reforms and short-term schemes, the institute is calling for the creation of an independent expert oversight body, similar in stature to the Office for Budget Responsibility or the new National Infrastructure and Service Transformation Authority, to oversee both the built and natural environment.
The proposed body would be staffed by construction and infrastructure specialists with a deep understanding of how the sector operates.
Its mission: to smooth out destructive boom-and-bust cycles, coordinate government investment, and provide clear, data-driven long-term guidance on what gets built, where, and when.
CIOB says the damage caused by market volatility is more severe in construction than almost any other industry, bar oil and gas.
This instability, it warns, destroys capacity, prevents firms from investing in technology and skills, and pushes many to collapse during downturns.
The report argues that the current fragmented approach to policymaking – with responsibility for the built environment spread across multiple departments – leads to confusion and inefficiency.
A single, independent body would join the dots between housing, infrastructure, energy and planning, creating a unified national strategy with consistent signals to the market.
Construction economist Brian Green, who authored the report, said: “This report takes a different tack. It assumes firms are likely to be responding rationally to their business environment.
“So it argues that rather than simply seeking to force changes on the industry we should look to change the environment within which it operates. The industry and its firms would naturally adapt of their own accord. The trick is in making the right changes.””
The approach has drawn strong backing from across the sector. Professor Noble Francis, Economics director at the Construction Products Association, said: “This research is extremely valuable as it goes beyond the vast array of reports and policies, each aimed at addressing just one symptom of problems in the UK construction industry, and instead focuses on addressing the initial key issues that cause the vast majority of its problems.
“It rightly highlights how the government can help reduce volatility in the sector.”
Lee Bryer, research strategy lead at the Construction Industry Training Board, said: “Rather than seeing construction as inherently dysfunctional, it presents the sector as rationally adapted to a dysfunctional environment.
“That distinction matters. It suggests that if policymakers want lasting change, they must look beyond industry prescriptions and instead focus on reshaping the conditions in which the sector operates.”
CIOB also highlights the huge wave of work ahead warning that without a stable long-term framework, the UK risks failing to deliver.
The report’s five key policy aims include reducing volatility through smarter, counter-cyclical public investment; creating open, transparent and consistent market data to guide decision-making; improving policy coordination across government; strengthening policy effectiveness by targeting causes, not symptoms; and accelerating innovation diffusion through open-access knowledge hubs.
For the report, click here.
