What is the Construction Industry up to?

The construction industry in Britain has been on its knees for a long time, but with 4% year-on-year growth forecasts, are things looking up? As the construction industry emerges from the shadows of the recession, there are clear signs that there’s a golden future ahead for all concerned.

Despite the optimism, some concerns remain. Repair and maintenance work isn’t growing well and, as such, most of the positive forecasts surround house building and infrastructure developments.

The building of new properties has been a particular issue for the whole of the UK, not just the construction industry. There is a huge housing shortage in the UK, yet the population of the UK is obviously increasing. The fact is, Britain is caught up in the worst housing crisis of recent times.

Demand is outstripping supply, particularly in London, but this issue presents an opportunity in itself.

The government is trying to help. They want 200,000 new homes on brownfield land by 2020 and, more specifically, 50,000 new homes across 20 new housing zones across the capital. They’ve said that they’ll set aside an initial £5million fund to help local authorities create the first 100 sites and this fund could grow to £500million.

The government is addressing the other obstacle to sustained property development – that of beaurocracy. They will be putting a lot of pressure on local councils to rattle through the admin and policy issues to prioritise the building of property on this derelict land. Put simply, the growth of the construction industry must not be held back by the red tape that goes hand-in-hand with planning permission and suchlike.

Work on housing is to account for an estimated 37% of the UK’s total construction output, from now until 2018. Also, the growth will be likely to mean 182,000 new construction jobs.

The increase in the number of skilled construction workers of all levels will be needed, especially with the challenging targets that the government has set for the construction industry to hit by 2025. There must be a 33% reduction in the initial cost of construction and the whole life cost of built assets. There needs to be a 50% reduction in the time taken from inception to completion for new and refurbished assets. There must be a 50% reduction in the trade gap between total exports and total imports for construction products and materials.

And of course, as an added bonus, the still relatively new Help to Buy scheme (with required deposits being as low as 5%) is helping more people to afford to buy these new properties. Which is the whole point.

Construction Industry Forecast

Personally, I expect to see the construction industry as a whole to still feel flat over the next couple of years, but insolvency numbers to level off. It’s going to take time for bank finance to filter back into construction in any meaningful way, although there is alternative finance available.

If you own a business with the construction sector fell free to get in contact for advice of guidance with insolvency (whether your business or your customers’

You can phone me on 01325 365 950 or email ewall@robsonscott.co.uk.

 

Best wishes

 

Eamonn Wall