New figures show sector still in “troubled waters”

CONSTRUCTION output in the UK has continued its recent decline, with new figures revealing the largest ‘three-month on three-month’ series drop since August 2012, falling by 3.4% in April.

The stats, released by the ONS, revealed the three-month on three-month decrease was driven by falls in both repair and maintenance and new work, which fell 3.0% and 3.7% respectively.

However, following three straight months of contraction in the month-on-month series at the start of 2018, construction output did increase by 0.5% in April.

Total construction new orders decreased in Quarter 1, falling by 4.6%.

Allan Callaghan, managing director of Cruden Building, said the decline in output reflects recent “gloomy news” for the industry. He added, “In contrast, Cruden is bucking the trend and experiencing positive performance and growth – including being named as a contractor on the £1.5 billion Scottish Procurement Alliance housing building framework, coupled with being on the procurement shortlist for both hub West and hub South West frameworks.

Allan Callaghan

“However, given the challenges being experienced right across the industry, I suspect these figures will fall again if we don’t get on the front foot in fixing some fundamental issues – most recently the updated Scottish Planning Bill. The Stage One report of this crucial legislation shows that the Bill contains no proposals to reform the stumbling blocks of the system, nor make any recommendations, other than asking Ministers to consider the issues further.

“The country is in the grip of a housing shortage and the industry and government needs to act now to ensure that the Planning Bill delivers all that we need it to and have planning system is collaborative, fully-resourced and able to deliver decisions quickly if we want construction output to flourish in the future.”

Michael Thirkettle, chief executive of construction consulting and design agency McBains commented, “Today’s statistics prove the construction sector is still in troubled waters with continuing uncertainties, borne from Brexit, and the poor value of sterling impacting on the cost of imported materials, meaning many UK companies are delaying investment decisions. The real test, however, will be in the months to come, given the uncertainty over issues like Brexit that have impacted on UK companies’ commitment to new projects over the last two years.”

Scape Group chief executive Mark Robinson said the “uncertainty” around Brexit is having a “very real impact” on the ground. He added, “There is less appetite for big projects in both the private and public sector and this should be a concern for the Government. Sadly, the Government’s failure to provide clarity on its Brexit policy is damaging both the construction industry and the wider economy.

“The need for investment is clear, however, particularly in housing, infrastructure and the NHS, and there is an opportunity for the Government to push ahead with big projects to provide an economic boost that will support SMEs and supply chains in a time of relative uncertainty. If the Government could extend the right of local authorities to borrow to build council housing, this would provide a welcome boost to supply chains at a regional level.”

Following publication of the figures, the union Unite called for “urgent government intervention” and a ‘sensible infrastructure plan” to be implemented. Unite assistant general secretary Gail Cartmail said, “The Government’s failure to provide proper support to construction has resulted in growth in the industry first stalling and now dropping. The Government needs to establish a coherent infrastructure plan which establishes long-term projects throughout the UK, to benefit all regions. Construction is a key part of the economy and a further contraction in the sector will be bad news for the UK’s economic performance.

“For too long we have seen a two speed construction industry with London and parts of the south east booming and the rest of the UK never having recovered from the 2008 crash. A sensible infrastructure plan is vital for the long-term health of construction and with the correct government policies should benefit other industries including steel, which also urgently needs central intervention and support.

“Construction urgently needs a shot in the arm as new orders are plunging. Continuing Brexit uncertainty and the fallout from Carillion’s collapse is destroying confidence in the industry, with projects being delayed or cancelled. We also urgently need the Government to introduce policies which will end the ‘race to the bottom’ it is quite clear that cut-throat tendering on projects is making an already bad situation worse.”