Headlines: January 27th, 2011

Deficit reduction measures across the public sector are impacting heavily on the construction industry. ConstructionSkills, the Sector Skills Council for the construction industry, is predicting a steep fall off in projects for 2011 with a continuing decline for the next five years. The outlook for infrastructure projects, such as rail and road construction is much better.

Following expenditure cuts, publicly funded housing projects will fall by 20 per cent this year, and by an average of 5.6 per cent over the period 2011-15. The public non housing sector, which covers the construction of schools and hospitals, will contract by 10 per cent in 2011 and by an average of 12.4 per cent a year over the next five years.

The National Affordable Housing Programme saw around 11,500 public sector starts come through in 2010, and the Kickstart Housing Delivery programme meant that 7,000 affordable housing projects were restarted. This resulted in a strong performance for publicly funded housing last year. However, the less generous public funding regime going forward will mean that there will be a sharp decline in output for public sector housing, especially in the short term.

Public sector non housing is estimated to have reached an all time high in 2010, dominated in recent years by education construction. However, factors including the cancellation of the Building Schools for the Future programme and the completion of the main works on the Olympic Park, will contribute to a sharp fall off in the sector over the next few years.

ConstructionSkills has also highlighted a growing north – south divide. Figures show that regions such as the East of England, the South East and Greater London will experience higher than the national average annual growth at rates of 2.4 per cent, 2.2 percent and 1.8 per cent respectively. Meanwhile, industries in the North West, the North East and Yorkshire & Humber will all shrink between 0.4 and 0.6 per cent.

The infrastructure sector will continue to boost to the UK’s construction industry through the continuation of key projects such as Crossrail, the M74 completion and the Manchester Metrolink expansion. It will grow by 7 per cent in 2011 and at an average annual rate of 4.4 per cent to 2015.