Building News is an information portal for all professional building specifiers. Here you can find all of the latest construction news from around the UK and the rest of the world.

Construction projects starts upturn

  • Starts in the three months to April rose 7% against the preceding three months and were 4% higher than a year ago
  • Residential starts were 4% lower than a year ago and unchanged on the preceding three months
  • Non-residential project starts were 3% higher than a year ago, lifted by a rise in commercial work
  • Civil engineering starts rose 18% against the preceding three months and were 50% higher than a year ago

The value of work starting on site during the three months to April was 4% higher than a year earlier, according to the latest Glenigan Index. Starts were also 7% higher against the previous three months on a seasonally adjusted basis.

Glenigan

Commenting on this month’s figures, Allan Wilén, Glenigan’s Economics Director, said “An improved April performance has provided a spring time lift, with the residential, non-residential and civil engineering sectors all seeing a rise in projects starts. Private sector and infrastructure projects provided the upturn in project starts, while government funded areas such as health, education and social housing remained weak.

“Private residential starts steadied during the three months to April. Project starts had been weakening since last autumn against a backdrop of fewer property transactions and weaker house price inflation in the wider housing market. However private housing starts rose 3% during the three months to April against the preceding three months on a seasonally adjusted basis, although starts were 7% down on a year ago. Social housing starts fell 6% against the three months to January, but were 4% up on a year ago.

“Overall non-residential projects rose 3% against the preceding three months on a seasonally adjusted basis and were 11% higher than a year ago. Private sector starts picked up from their recent weak performance with office, retail and hotel & leisure work rising during the three months to April rising by 13%, 39% and 32% respectively against a year ago. In contrast government funded sectors remain weak, with education starts 20% down on a year ago, and health and community & amenity sectors dropping by 6% and 41% respectively.

“Civil engineering starts rose 18% against the three months to January on a seasonally adjusted basis and were 50% higher than on a year ago. The rise in project starts was driven by a 35% rise (seasonally adjusted) in infrastructure work against the previous three months, while utilities projects rose 4% during the same period.

There was a sharp variation in the industry’s performance across the UK. Regionally the sharpest falls were in the East of England and Scotland with declines of 18% and 22% respectively. Starts in the North East, North West, West Midlands and South West also declined. In contrast, the value of starts in London, Wales and Northern Ireland were 85%, 50% and 97% higher than a year ago, while the East of Midlands, South East and Yorkshire & the Humber all saw double digit growth.

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Housing delivery will be hampered by skills shortage, warns experts

Small house builders predict that skills shortages in the building industry will hamper housing delivery and will eventually overtake access to finance as a bigger barrier to building new homes, according to recent research conducted by industry experts, the Federation of Master Builders.

Key results from the FMB’s House Builders’ Survey, the only annual assessment of small and medium sized (SME) house builders in England, include:

  • A lack of available and viable land tops the list as the most commonly cited barrier (59%) to increasing housing delivery and almost two-thirds of SME house builders (62%) believe that the number of opportunities for small site development are actually decreasing (up from 54% in 2017)
  • The percentage of SME house builders saying that a shortage of skilled workers is a major barrier to their ability to build more new homes rose to 44% (up from 42% in 2017)
  • Nearly half of small house builders (46%) say access to finance is a major barrier to their ability to build more new homes
  • More than half (51%) of SME house builders view the planning system as a major constraint on their ability to grow and ‘inadequate resourcing of planning departments’ was again rated as the most significant cause of delay in the planning application process for the third year in a row
  • When asked to look ahead over the next three years, more firms cited skills shortages as a likely barrier to growth than access to finance

Brian Berry, Chief Executive of the FMB, said “Nearly half of builders believe the skills shortage is a major barrier to their ability to build new homes. The construction sector is heavily reliant on EU workers with just under one in ten workers in the sector born in the EU. Brexit, coupled with the end of free movement, threatens to further intensify the skills shortages we already face. Given that the UK will leave the EU in less than six months, house builders are understandably concerned that skills shortages could worsen and choke housing delivery. In order to combat this skills crisis, the construction industry needs to encourage more entrants into the industry and develop higher quality qualifications. It is critical therefore that the Government doesn’t pull the rug out from under the sector by introducing an inflexible and unresponsive immigration system.”

“Our research also shows that the Government must continue to address the issue of access to finance for SME house builders. Although concerns over access to finance have eased slightly in recent years, in part thanks to the Government’s funding schemes such as the Home Building Fund, there is more that can be done. Our research suggests that it is the low percentages of project cost that builders are able to borrow that remain the greatest financial barrier to increasing their levels of house building. This latest research suggests that if firms were able to borrow 80 per cent, rather than the current 60 to 65 per cent of project cost, SME builders would be able to bring forward on average 40 per cent more new homes. Given the ambitious house building targets the Government is working towards, we cannot afford to ignore such a chance to significantly increase housing delivery.”

“A lack of available and viable small sites tops the list of frustrations for SME house builders for the fourth year in a row. Worse still, nearly two-thirds of these small builders believe that the number of opportunities for small site development are decreasing. However, the recent reforms to the National Planning Policy Framework, which specify that 10 per cent of a local authority’s housing delivery must be on sites no larger than one hectare, will help to address this problem. This will help to speed up the delivery of homes and lead to a more diverse and resilient housing supply.”

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5 of the most expensive megaprojects in the World

A megaproject can be defined as a long term project that involves huge economic investment, vast complexity and precipitates a long-lasting impact on the economy, society and environment of the region in which it is being constructed. For profiles of five of the most startlingly expensive megaprojects currently in progress, see below:

#5 – Dubailand, UAE – $64 billion

Dubailand

When it was announced in 2003, at $64 billion, Dubailand was far and away the most ambitious and expensive leisure development ever proposed. Set to open in 2025, Dubailand plans to house everything from theme parks to science attractions to gargantuan hotels – the largest of which is purported to have 6500 rooms. It has been scaled down since its initial announcement; the recession has caused the funding for Dubailand to dip from $64 billion to $55 billion.

#4 – California High Speed Rail, USA – $68.4 billion

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By bestowing Californians with the ability to travel between Los Angeles and San Francisco in a mere 2 hours and 48 minutes, the state has hopes of generating hundreds of thousands of jobs and billions in annual revenue. Estimates of funding for the construction of California’s very own bullet train have risen to as high as approximately $68.4 billion. This already enormous cost however, is likely to continue to increase. The Los Angeles Times have reported discrepancies between initial estimates and the actual cost of completing the project. For example, the construction of 119 miles of bullet train track in Central Valley was originally touted to cost $6 billion, but this number has since risen sharply to $10.6 billion.

#3 South – North Water Transfer Project, China – $78 billion

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The South-North Water Transfer Project is the one of the most ambitious feats of engineering ever undertaken. By circumventing water from the more abundant rivers of humid south and transporting it to the industrialised north, the government is aiming to prevent a water crisis from afflicting the country. However, the South-North Water Transfer Project has proved even more controversial than the Three Gorges Dam, which cost less than a third of the price of the former.

#2 Al Maktoum International Airport, Dubai, UAE – $82 billion

Al maktoum

Designed to bolster Dubai’s capacity to take passengers to 220 million, the Al Maktoum International Airport has been a costly investment for the Dubai government. If developments go as planned, it would make Al Maktoum the biggest airport in the world. As well as increasing the number of passengers the city is able to fly in and out, it also allows the airport to serve as a significant port – with over 12 million tonnes of freight being moved annually.

#1 International Space Station – $150 billion

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The International Space Station is indisputably the most expensive item ever constructed. While the project is framed as a collective effort between the world’s leading superpowers, the US/NASA bears the brunt of the exorbitant cost – contributing the lion’s share of $58 million towards the project over three decades. In 2010, the cost was estimated to be $150 billion, but it is expected to climb as staggeringly high as $1 trillion by 2020. The assembly of the ISS comprised over 40 individual missions, as each module joined the station one by one.

While megaprojects of this scale are rare in the UK, the construction of the HS2 railway, which is expected to cost close to £56 billion, began in 2017.

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Apprenticeship levy is exacerbating construction skills shortage

The Apprenticeship Levy is exacerbating the construction skills shortage and must be reformed urgently. The latest statistics released by the Department for Education show that the number of new construction apprenticeship starts for January 2019 has fallen to 950 compared with 1,216 the previous year. In particular, the number of starts for Level 2 apprenticeships, that is equivalent to GCSE level, has dropped to 555 in January 2019 from 712 in January 2018.

Brian Berry, Chief Executive of the FMB, said “These latest statistics point to a serious failure of the Government’s Apprenticeship Levy. Their publication comes at a time when 64 per cent of construction firms are already struggling to hire carpenters and joiners, and 61 per cent are struggling to hire bricklayers. The Government needs to make the Apprenticeship Levy work for small construction firms by increasing the proportion of Apprenticeship Levy vouchers that are permitted to be passed down the supply chain from large to small companies from 25 per cent to 100 per cent. After all, small and medium-sized construction firms train two-thirds of all apprentices in our sector and more importantly, they offer training in the skills the industry actually needs – the onsite trades like plasterers and plumbers.”

“Looking ahead, as part of its post-Brexit immigration proposals, Ministers want to close the door to Level 2 tradespeople by dubbing them ‘low skilled’ and preventing them from entering and working in the UK for more than 12 months at a time. It takes years to train quality tradespeople to become a Level 2 worker and even if we did have the time to train at this scale, there aren’t enough UK-born workers to go around as we are almost at full employment. The construction industry is facing a cliff-edge when it comes to skill shortages, and I’m concerned that we will not be able to continue growing and delivering on the Government’s housing and infrastructure targets if this state of affairs continues. The Government must fundamentally rethink the Apprenticeship Levy and its post-Brexit immigration proposals, or else the construction sector will not be able to deliver what’s required.”

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Employers and workers agree 2.75% pay rise in construction

A 2.75% pay rise for construction workers has been agreed for the year ahead following successful pay negotiations between the Federation of Master Builders (FMB) and Unite the union.

The Building and Allied Trades Joint Industrial Council (BATJIC) has agreed a one-year deal involving a 2.75% pay rise to come into effect in June 2019. This follows the successful conclusion of pay negotiations between the FMB, on behalf of SME construction employers, and Unite the Union, on behalf of operatives. BATJIC has also secured tax dispensation from HM Revenue and Customs for Lodging Allowance and Daily Fares Allowance for this year’s Working Rule Agreement after several years’ hiatus. The key information is as follows:

  • BATJIC has agreed a one-year deal involving a 2.75% pay rise over the next year
  • All apprentices and trainees will also benefit from a 2.75% pay increase
  • The adult general operatives’ rate increases by 26p per hour to £9.78
  • The NVQ3 advanced craft rate increases by 34p per hour to £12.79
  • The changes will come into effect as of Monday 24th June 2019

Brian Berry, Chief Executive of the FMB, said “This agreement strikes the right balance as it recognises the hard work that employees are putting into their work but at the same time, it reflects the uncertainty that many construction firms are facing. This increase is above last year’s rate of inflation, according to all three of the leading indexes, and sends out a strong message to tradespeople that we value them and want to retain them. It’s no secret that economic forecasts are quite conservative for the years ahead, given the unknown impact of Brexit, but I feel this is a good compromise from the perspective of both employers and workers.”

Jerry Swain, the National Officer for Construction at Unite the Union added “Unite welcomes this agreement which recognises inflation levels from last year and the high employment levels that we have at present. With construction skills shortages impacting on the industry, a 2.75 per cent pay rise will help encourage tradespeople to remain in the industry at a time when the current political uncertainty and drops in construction output are affecting confidence in the industry. I’m pleased that BATJIC has been further strengthened this year by successfully jointly lobbying for tax dispensation on key employee expenses. It was important that we secured the dispensation from HMRC in respect of lodge payments, as this now formalises the position regarding taxation of lodge payments. The dispensation gives peace of mind to our members and ensures that they will not face any claims for retrospective payment of tax when receiving lodge payments while working away from home.”

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Over 50% need help to keep skilled workers post-Brexit

A OnePoll survey commissioned by the Royal Institution of Chartered Surveyors (RICS) found that while reception of the apprenticeship levy looks positive, findings indicate concern for the more immediate pipeline of skilled workers in the construction industry.

Findings in brief

  • 42% of construction workers feel more confidence for the growing talent pool as a result of apprenticeship levy
  • 43% have felt a positive impact from apprenticeship levy
  • However, there are still concerns over skills available in UK as 56% think Government and construction workers should help skilled workers from abroad remain post-Brexit
  • 86% of construction workers agree that businesses should focus on skills and abilities for new hires

Is the levy working?

Though the apprenticeship levy only came into force in April 2017, indicators show that it has been well received so far. 43% of construction workers have noticed a positive impact and 42% say that they feel more confident in the growing talent pool as a result of the levy.

Since the introduction of the Levy, a third (36%) have noticed an increase in the number of apprentices employed, and 30% have also seen an increase in the number of apprenticeship applicants, although 15% said they now have more paperwork to fill in. And it would seem those in the south of England are the most positive about the levy, with more than the national average reporting positive impact. This rose to almost two thirds (63%) of construction workers in London and over half (52%) in the South West.
Are apprenticeships enough?

However, while the long-term talent pipeline outlook looks promising, there are concerns over home-grown talent being able to fulfil the demand for skills needed in the construction industry in the shorter term. Output in the construction market is expected to grow over the next 12 months, yet 53% of construction workers say that labour shortages are an issue for business.

With a predicted 8% of the UK’s construction workforce made up of European nationals[2], over half (56%) of construction workers across all levels feel that construction companies and Government should work together to ensure skilled workers in the sector can remain in the UK. This rises to over two thirds (66%) in London and is most keenly felt among senior and middle managers in construction (71% and 67%, respectively).

An RICS report found that 30% of construction professionals said that hiring non-UK workers was important to the success of their businesses. And this shows when it comes to priorities for hiring within the industry.

Barry Cullen, RICS Future Talent Director said “It is great to see such a positive reaction to the apprenticeship levy from the industry so early on and RICS is working with members and employers on schools programmes, to engage and inspire more young people into surveying, to fill a more diverse pipeline of talent. Encouraging the next generation and ensuring there is fresh and skilled talent to meet the demands of the future is vital to any industry’s success, and it’s clear that the construction industry is united in this belief.

“However, with Britain set to leave the European market we must ensure that we are not left in a skills vacuum. An estimated 176,000 EU citizens are employed in the construction business, so it is vital that government and businesses work together to ensure they are able to remain or risk leaving the industry short of the people they need.”

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Residential sector looking positive

The residential sector had a particularly positive February with £1.7 billion contracts awarded, an increase of 13.1% on January. Residential unit numbers also increased – up by 5.4% on January at 9,850 units. Following residential in terms of contracts awarded was infrastructure with a 13.9% share and education with a 12.3% share.

Barbour ABI

The latest edition of the Economic & Construction Market Review from industry analysts Barbour ABI highlights levels of construction contract values awarded across Great Britain. This month it shows the total value of construction contracts awarded in February 2019 was £5.4 billion which is a 0.5% decrease on January, but 10.6% higher than February 2018.

The top project awarded during February was the £250 million redevelopment of Chelsea Barracks which sees Multiplex Construction Europe provide a total of 88 residential units in a single 5 storey structure. The largest infrastructure contract was the £110 million redevelopment of the former Royal London Hospital site in Tower Hamlets to provide a new civic centre and council offices. The largest overall education contract was in Edinburgh and was the £90 million redevelopment and extension of the Darwin Building for the University of Edinburgh.

Barbour ABI

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Nearly 3 million children from working families in poverty

Figures released by the Government show a further rise in the number of children from working families living in poverty. This is an increase of 833,000 children since 2010.

National Housing Federation analysis shows there are now 847,000 children from working families living in poverty for the sole reason that their rent or mortgage is too expensive. This is a 30% increase – 193,000 children – since 2010.

National Housing Federation analysis shows that since 2010 housing has consistently been a key driver of poverty among working families. And this year the number of children pushed in to poverty before they’ve even paid for housing has shot up by 287,000 children.

As house prices have increased and rents continue to be extortionate, the National Housing Federation is worried children are being pushed even deeper into poverty by their housing costs.

The number of working families has been rising steadily over the past decade and today 86% of families have at least one adult in work; however alongside this rates of poverty among working families have also risen.

From 2010 to 2017 the Government stopped funding new social housing. Since then there has been a drastic fall in the number of homes being built that are affordable for families. Home ownership is now simply unattainable for low income families. This has led to a huge increase in families renting privately, with many unable to afford the high cost of rent, despite being in work.

Research last year by the National Housing Federation and Crisis showed that England needs to build 90,000 homes for social rent every year to meet the current need. Last year only 6,463 homes were built.

The National Housing Federation is calling on the Government to urgently invest more money in social housing at the next spending review.

Social housing is typically 51% of market rent. Analysis shows that the average household in poverty would be around £3,172 a year better off in social housing when compared to renting privately – which is equivalent to more than a year’s worth of food for an average household.

Kate Henderson Chief executive of the National Housing Federation said “Year after year hundreds of thousands of more hard working families are falling into poverty – forced to choose between feeding and clothing their children or providing a roof over their heads.

“We are now seeing the full effects of low pay, benefit cuts and the housing crisis. The lack of affordable homes is exacerbating in-work poverty. There could not be a clearer signal to the Government that the country desperately needs more social housing – direct investment in the upcoming spending review is the only way to provide truly affordable homes for these families. This is more crucial than ever in the midst of Brexit uncertainty.”

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Brexit uncertainty causes another drop in construction output

The Government and Parliament must break the Brexit deadlock and find a way forward warns the Federation of Master Builder (FMB), in response to the latest Construction PMI data, which shows another drop in construction output.

The March 2019 PMI data revealed an Index score of 49.7, up slightly from 49.5 in February, against the no change threshold of 50.0. This points to a sustained decline in construction output, representing the first back-to-back fall in construction output since 2016. While the residential building sector enjoyed an upturn, commercial construction was the worst performing area.

Commenting on the results, Sarah McMonagle, Director of Communications at the FMB, said “The construction industry is being seriously affected by Brexit uncertainty as evidenced by two very worrying sets of results for construction output in the first quarter of 2019. Businesses have been waiting for politicians to come to some resolution for far too long now, and it’s time that this deadlock was broken. It’s not surprising employers are finding it hard to plan for the future, when we don’t even know when, or indeed if, we’re leaving the EU. Today’s results are a reminder of just how vulnerable the construction industry is to political turmoil as confidence among consumers and contractors continues to wobble.”

“Brexit uncertainty and the construction skills shortage have created a perfect storm in our industry. Around 9 per cent of construction workers in the UK are from EU countries, but we know from speaking to small construction employers that many of these skilled workers are starting to return, whether that’s because of strengthening economies elsewhere, or that they simply don’t feel welcome anymore. This is compounding an already severe construction skills shortage, and I’m worried that the Government’s post-Brexit immigration system will make it even worse. For example, the system will not allow Level 2 tradespeople to live and work in the UK for more than 12 months at a time. At the same time, the Government’s figures last week show that the number of Level 2 apprenticeship starts among our domestic workforce is dropping. It’s quite simply not possible to build the homes and infrastructure we need without bricklayers, carpenters and plasterers. The Government and industry must work together to attract more people into the industry, by offering them high quality training with clear career pathways for progression but in the meantime we need sustained access to tradespeople of all skill levels for the industry to continue being open for business.”

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£3.7 million to fund 5 new garden towns across Britain

Five brand new garden towns have been unveiled unlocking up to 64,000 much-needed homes across England, the Minister of State for Housing has announced.

The locally-led new communities, from Hertfordshire to Gloucestershire, will receive a share of £3.7 million of funding to fast-track specialist survey work and planning works necessary for each new town’s development.

The funds will be spent by councils to help to deliver the homes and infrastructure needed for both neighbouring communities and future residents who will call the new town home. This includes specialist survey work and planning applications.

The 5 successful bids are:

  • Grazeley Garden Settlement, delivering up to 15,000 homes
  • Hemel Garden Communities, delivering up to 11,000 homes
  • Easton Park Garden Community, North Uttlesford Garden Community and West of Braintree Garden Community, an opportunity to deliver up to 18,500 homes
  • Tewkesbury Ashchurch Garden Community, delivering up to 10,195 homes
  • Meecebrook, in the north of Stafford borough, delivering around 10,000 homes

Councils and groups from around the country submitted more than 100 ambitious proposals with the 5 taken forward receiving an initial £750,000 to help develop plans for vibrant, thriving settlements where people can live, work and raise families.

The announcement is the next step in the government’s drive to build the homes this country needs, and follows the news last month of a £9 million investment to speed up the building of existing garden towns and villages.

Minister of State for Housing Kit Malthouse MP said “These new towns will not only provide homes for families, but will be vibrant communities where everyone, including neighbouring communities can benefit from new infrastructure – leaving a legacy for future generations to be proud of.

“I congratulate these councils who have put forward ambitious proposals, which will build many thousands of high-quality homes, and am pleased to support them as they work to make these plans a reality.”

Garden communities can take the form of new villages, towns or cities and have the potential to deliver well designed homes at an increased scale, boosting the local economy and creating new jobs.

The 5 new schemes will join the 23 existing garden communities the government is currently supporting, which are already delivering new homes today, bringing us closer to the government’s aim to deliver 300,000 new homes a year by the mid 2020s.

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