Archive for category: General News

At 51.1 in April, the latest PMI from S&P Global / CIPS UK pointed to only modest growth in construction output from 50.7 in March. But evidence of a significant easing in supply-chain frictions, a housing market proving more resilient than expected and the prospect of the wider economy returning to meaningful growth from the summer should lift the construction sector’s performance.

Construction still faces significant challenges. Higher interest rates will weigh on residential and commercial activity, changes to planning rules risk discouraging housebuilding, and still-serious financial pressures on households may hold back spending on home improvements.

However, housing market weakness appears to have passed its most significant point. Supply chain problems facing construction businesses have eased markedly, and more signs of a revival in consumer and business confidence should bolster the construction sector, as will falling energy costs and disinflationary pressures in general.

Tim Moore, economics director at S&P Global Market Intelligence, which compiles the survey said: “The construction sector stretched out its current phase of expansion to three months in April, signalling a modest rebound from the downturn seen at the turn of the year. Commercial building work continued to outperform, helped by stabilising domestic economic conditions and a gradual rebound in business confidence. Civil engineering activity was also a driver of construction growth during April, with rising infrastructure work contributing to the best phase of expansion in this segment since the first half of 2022.

“However, the return to growth for UK construction output appears worryingly lopsided as residential work decreased for the fifth successive month. Extended delays on new housing starts were reported again in April, due to a considerable headwind from elevated mortgage rates and weak demand. While there have been some signs of a recent stabilisation in market conditions, this has yet to feed through to construction activity. In fact, the latest reduction in residential building was the fastest since May 2020.

“On a more positive note, the latest survey illustrated a further slowdown in input price inflation across the construction sector. Softer cost pressures partly reflected a sustained improvement in supply chain performance, with lead-times for deliveries of products and materials shortening to the greatest extent since September 2009.”

Dr John Glen, chief economist at the Chartered Institute of Procurement & Supply (CIPS), said:

“The mixed picture found in the UK construction industry in April is representative of an economy still trying to recalibrate after being buffeted by the manifold challenges of political instability, lockdowns and supply chain pressures.

“The growth in the construction of commercial properties is welcome news, with the avoidance of a recession in the last quarter leading to clients being more willing to spend. The significant easing of supply chain disruption, with delays reduced and materials more readily available, also helped to alleviate cost pressures on the sector.

“However, the sharp decline in UK house building in April will be a cause for concern, as it becomes clear that the recent interest rate rises will continue to hamper consumer demand for some time to come. With a further rate rise expected next week there will be concerns that things will get worse before they get better for UK house builders.”

Yesterday, 12% of Scottish respondents to the latest Royal Institution of Chartered Surveyors (RICS) Construction Monitor said they believe workloads will be higher in a year’s time while, the latest State of Trade Survey from the Federation of Master Builders (FMB) highlighted a rebound in repair, maintenance, and improvement (RMI) building work for the first three months of this year.

Source: Scottish Construction Now

The UK must install around 200GW of low-carbon energy infrastructure in the next 12 years if it is to have any hope of decarbonising power and ending heavy industry’s reliance on costly fossil fuels.

That is the conclusion of a new report from the Aldersgate Group, 27 April.

The report, published in collaboration with University College London (UCL), outlines the policy measures required to deliver a decarbonised power system and support the electrification of heavy industrial sectors, in line with net-zero by 2050.

It outlines how sectors like steel, cement, glass and chemicals will need to increasingly run on clean and affordable electricity in order to rapidly decarbonise and remain competitive.

A total of 15 policy interventions are recommended

Measures to upgrade the power grid, facilitate continued investment in renewables, enable direct access to low-cost renewable power for heavy industry, accelerate low-carbon innovation and support the competitiveness of UK industry.

To reach net-zero by 2050, UK industrial emissions must fall by 70% by 2035 and 90% by 2040.

In many heavy industrial sectors, electrifying manufacturing processes that rely on fossil fuels is key.

Clean electricity also has an important role to play to support other processes such as hydrogen production and the operation of carbon capture and storage.

In all cases, access to high volumes of low-carbon and affordable electricity will be vital to the successful decarbonisation of heavy industries and their ability to be competitive in the global transition to net zero emissions.

Aldersgate Group senior policy officer Laith Whitwham said:

“Decarbonising industrial processes might be a significant challenge, but it’s one that offers UK sectors like steel, cement and chemicals the opportunity to compete in new, quickly growing markets for greener goods.

“That means new jobs, growth, and exports, instead of a continuation of the struggle to compete against high carbon imports. But to make this move, low-carbon electricity is key.

“This report outlines the policies needed to decarbonise the UK’s electricity supply, and accelerate the rollout of the new industrial infrastructure through which it will flow.”

National Grid future markets manager for heat decarbonisation Niki Kesharaju added: “Decarbonising energy-intensive industrial processes will be crucial to ensure the UK meets its net-zero targets, and the recommendations in this report set out ambitious action to help drive progress.”

The report comes less than a month after the UK Government’s ‘Green Day’ of policy announcements, which some have criticised for failing to appropriately cover heavy industry.

The City of Edinburgh Council has successfully secured a major new site for accessible affordable housing in the South of the city.

A successful £14.8m bid for Liberton Hospital and its grounds, including the former Blood Transfusion Centre, has been accepted by NHS Lothian – paving the way for around 400 hundred homes in the area, a significant number of which will be accessible and affordable for social or mid-market rent.

The NHS will continue to occupy the premises until March 2025 to allow the hospital’s remaining services to be gradually relocated. During this time, the council plans to appoint a development partner and consult with the local community to draw up plans for an accessible green neighbourhood – making sure to retain many original features of the historic hospital, gatehouse and gardens facing Lasswade Road.

The council’s vision for the site is to focus on supporting a range of housing needs while delivering homes at scale to help meet the city’s growing demand. It is anticipated that the regeneration will deliver at least 380 energy efficient mixed tenure homes for sale and rent, all of which could be fully accessible, with up to 50% affordable. This would exceed the council’s commitment of at least 35% affordable homes on residential developments.

The area already has a significant level of public amenity due to existing woodland and original hospital gardens, creating a fantastic opportunity for a range of high-quality public spaces as part of a wider green network. The regeneration of the land will retain as many of the existing trees as possible and incorporate them into green routes throughout the site, allowing for active travel connections to Burdiehouse Burn Valley Park, St Katharine’s Park and Liberton Park.

A Prior Information Notice (PIN) seeking interest from potential development partners has been issued and work will be carried out to prepare for construction, including developing detailed designs and agreeing a net zero carbon energy solution for the site, contributing to the Council’s ambitious target to reach net-zero emissions by 2030.

Councillor Jane Meagher, Housing, Homelessness and Fair Work Convener, said:

“For close to 150 years Edinburgh residents have been cared for under the roof of Liberton and Longmore Hospitals. I’m delighted that we’ll be able to pay that care forward as we convert the site into much needed new homes.

“By demolishing the 1960s built extensions, including the disused Blood Transfusion Service, we’ll be able to design an accessible green neighbourhood of low-carbon housing from scratch. This will help lots of people with specialist needs to live comfortably and with independence. Plus, it will allow us support people who are in desperate housing need as we’re looking for a developer who can commit to our vision of at least half of these new homes being affordable.

“We’re committed to putting care-based housing at the centre of this redevelopment and I’d like to thank our partners at the NHS for working with us to secure the land. It has been many years in the making.”

Without a change in attitudes and government action the UK could face a building retrofit crisis, warns a new report.

The Role of Retrofitting our Non-Domestic Buildings in the Race to Net Zero, by Ridge and Partners LLP, the multi-discipline property and construction consultancy, shows that fewer than one in four public or private sector organisations is attempting to make their non-domestic premises more environmentally sustainable and just one in ten is assigning any kind of budget to retrofitting buildings to reduce their environmental impact.

According to the 101 property and facilities heads from leading UK organisations questioned for the report, lack of government action is a key problem. 52% believe VAT on refurbishments should be removed. Almost half (49%) say business rates discourage retrofit while over half call for financial incentives to encourage retrofitting of buildings.

A further problem is the attitude of UK boards, both to their buildings and to those who manage them. For instance, despite 76% of organisations working towards net zero, 55% of facilities managers say their boards simply do not see retrofitting buildings as part of their net zero strategy.  Indeed, 23% of the heads of buildings in the largest companies haven’t been involved in any net zero planning at all. A further 47% say even when involved, they are too removed from environmental discussions to be able to make a meaningful contribution.

The vast majority (86%) of organisations also underestimate the need to retrofit buildings to make them more energy efficient. Over a third mistakenly believe less than 39% of the UK’s current building stock will still be in use by 2050. Whereas in reality, it will be nearer twice this level at 70%.

Matt Richards, Partner at Ridge and Partners, comments: “Too many organisations appear to assume that come 2050 our existing building stock will have been replaced with more efficient new buildings, but this simply isn’t the case. The bulk of buildings we see around us will still be in use.

“As a result, vast swathes of UK organisations are sleepwalking towards a building crisis. At this rate, when we reach 2050, we’ll have failed to reach the government’s net zero target due to the majority of businesses occupying old, inefficient buildings that haven’t been retrofitted. If this problem is to be avoided, a retrofit revolution needs to take place.”

Beyond government action, the report identifies four things which need to change to improve the situation:

• Facilities and property heads also need to be more involved by their boards in decisions. 19% are not even privy to the strategic plans of their organisations.
• How building estate’s budgets are set need to change. Over half (54%) of organisations set their building budgets based on the past year’s costs. This approach will never accommodate a major retrofit programme.
• Retrofit myths need exploding. For instance, 45% of those in charge of buildings believe if the grid is carbon neutral, they don’t need to worry about getting their buildings to net zero. 24% feel that retrofitting won’t make a big enough difference to their building’s carbon footprint.
• Organisations also need expert support. 31% fear retrofitting’s disruption, 29% lack the bandwidth for such a project and 25% don’t know how to make a business case for it.

Matt Richards concludes:

“Our research has shown that most organisations have ambitious net zero plans. Combine these with spiralling energy costs and concerns about energy security and there couldn’t be a better time for the government and the UK’s public and private sector organisations to revisit retrofitting our non-domestic assets. A retrofit revolution needs to take place – and with the right support it could start now.”

The Role of Retrofitting our Non-Domestic Buildings in the Race to Net Zero report is free to download.

Only one thing stood between Britain and a widely expected downturn over the winter: a strong performance by its construction industry which is unlikely to spark a broader revival of the economy.

Britain’s gross domestic product regained its pre-pandemic size in February, but the composition of growth by industry suggests fragility in its underlying health.

International Monetary Fund projections published last week showed Britain bottom of the world’s major economies in terms of expected economic growth in 2023, with a 0.3% contraction pencilled in, equivalent to a 0.7% fall on a per capita basis.

Britain’s vast services industry – about 80% of economic output – has yet to recover its pre-pandemic size.

While strikes by public workers hurt output in sectors like health, transport and education in February, the data point to more general problems within the sector.

Banking sector output remains 6% below its pre-pandemic level. The picture is worse still for retailers, with inflation running at over 10% hurting consumer demand.

Manufacturing, representing 10% of Britain’s economy, surged as the world emerged from COVID-19 lockdowns but it has since cooled, limiting its contribution to recent economic growth.

That leaves construction, with a weight of just 6% in the economy, as the only big driver of growth over the last six months – a rare occurrence.

Construction output now stands more than 7% above its 2019 average level – by far the strongest performing major sector of the last few years.

Construction is key to the economy and is responsible for one in every 20 jobs. But it is also a low-productivity sector that sucks in imports and labour, sometimes at the expense of higher-productivity and export-intensive industries.

Britain’s recent reliance on construction for economic momentum sits uneasily with finance minister Jeremy Hunt’s goal of creating an internationally successful, highly productive “next Silicon Valley” economy.

The recent data show surging British infrastructure construction – a development echoed by other European countries that are ramping up green energy projects, according to Marc Ostwald, chief economist at ADM Investor Services, a brokerage.

“But then you’re looking at the UK and saying: well, that’s basically an 80% services economy and it’s not really getting a lot of post-COVID traction,” Ostwald added.

“The underlying reason for that is the underlying weakness of the economy.”

Source: Reuters