Mixed messages for UK

The mixed messages for the future of the UK construction market have again been highlighted with a report from the Construction Skills Network predicting “10 more years of pain”.

This comes a week or so after the UK’s Royal Institution of Chartered Surveyors (RICS) presented a more upbeat view of the market, suggesting that the UK construction market “could turn a corner this year, albeit only in first gear”.

The Construction Skills Network said today that with 60,000 jobs lost, and a 9% fall in output, 2012 had seen UK construction tip back deep into recession.

“Over the past five years the construction industry has gone through one of its most difficult periods since the Second World War,” it said, “and the prospects are for 10 more years of pain.”

The Construction Skills Network report – the industry’s annual skills forecast prepared by CITB-ConstructionSkills (the national training organisation for construction in the UK) with input from employers across the UK – paints a stark picture of 2012.

It pointed to a 20% downturn in public sector housing and non-housing construction; a 5% downturn in private housing construction; a 10% downturn in commercial sector construction; and a 15% downturn in infrastructure construction.

It added, “The prospects for the next five years (2013 to 2017) are equally discouraging. Nearly every sector of the industry will continue to struggle, with only the private housing, repair and maintenance, and industrial sectors predicted to achieve anything like consistent growth.

“As a whole, the industry will only grow at an average of 0.8%, and will not match its 2007 output peak until 2022.”

The report said this weakness in performance was reflected in a predicted fall in construction employment every year from 2013 to 2016, reaching a low of 2.36 million – the lowest employment level in the industry since 2000.

Recruitment to the industry is predicted to run at an average of 29,050 a year from now until 2017 – largely to fill vacancies arising from those leaving the sector, it claimed. The report forecast that, across the UK, only Greater London and the East of England could expect to see employment actively grow in this period.

While Wales, Greater London and the North East of England are predicted to show the greatest increase in output during 2013 to 2017, the Construction Skills Network said that the North East was recovering from sharp declines in previous years, and it pointed out that much of the growth in Wales was linked to the Wylfa nuclear power build.

In contrast, the construction industry in the North West of England, the Midlands and Yorkshire & Humberside is expected to shrink still further, according to the report.

Underemployment

Underemployment is an increasing concern, with three regions – Northern Ireland, the North West of England and Yorkshire & Humberside – showing a gap of over 15% between falls in output and falls in employment over the last five years. It said this suggested an unsustainable level of capacity in the system.

Judy Lowe, deputy chairman of CITB-ConstructionSkills, said, “Construction found itself at the heart of a perfect storm in 2012 – hit hard by a combination of public sector spending cuts and a lack of investment in the private sector. Client and consumer confidence is low and it is keeping growth levels down.

“Worryingly, the outlook doesn’t look much better – by 2017, construction output will still be 12% down on its 2007 peak, and employment 17% down on its peak in 2008.”

She added that CITB-ConstructionSkills did not foresee the industry returning to its former levels until at least 2022 – meaning this would be one of the most difficult periods for construction on record.

“Construction is a vital engine of UK growth. While construction struggles for its survival, it’s impossible to see how the UK economy can generate significant growth.”

Ms Lowe said, “What’s bad for construction is bad for the economy, so doing nothing is not an option. There is too much at stake.

“Construction remains the only industry that can kick start the economy in the short, medium and long term. We know that for every £1 invested in construction, £2.84 is generated for the wider economy. There are currently over 150,000 unemployed construction workers. This potentially costs the economy £2.1 billion (€2.5 billion) a year in unemployment benefit and lost tax revenue.”

She said, “The actions we are proposing are straightforward, easy to implement and will deliver the results that re-establish construction as an essential element of economic growth.”

Tackling the growth challenge head-on, over 1,400 construction bodies and employers have joined forces in the CITB-ConstructionSkills-inspired Construction4Growth campaign.

A deputation from the campaign will meet UK government ministers tomorrow (17 January) at a summit, where a 10-point plan for working with government to secure growth and support the industry will be discussed.

The plan examines ways to get projects delivered as part of the government’s pledged capital investment in construction; investment in shovel-ready repair and maintenance projects to get unemployed construction workers back on site; and a mandatory requirement for teachers to undertake taster courses to understand the value of a vocational career.