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Construction industry forecasts good news for UK contractors and manufacturers

Construction Industry Forecasts for 2017 to 2019 estimate an overall rise of 7.4% for new-build infrastructure in the UK this year, with a continuation of 6.4% next year. It’s news that bodes equally well for leading suppliers of concrete repair and protection solutions such as Sika, as an increase in new buildings will inevitably lead to defects in newly-poured concrete requiring onsite attention.

So, what is this positive outlook for the country’s new building output based upon? Well, a number of factors across a number of key infrastructural sectors appear to be driving the optimism. Forecasts for the harbours and waterways sector are particularly encouraging, with year-on-year growth predicted thanks to huge waterside projects planned across the country in the coming years.

There’s the Aberdeen Harbour Expansion project for example. Commencing in September this year, the £350 million scheme – due to be completed in 2020 – will see the existing site expanded to include a facility for oil industry decommissioning work. Other upcoming UK harbour projects include a £135 million redevelopment of the port of Dover, and a £10 million project to build a new link-span bridge at the Port of Heysham in Lancashire.

Water spend

Upgrades in water treatment works are also continuing nationwide as part of Asset Management Period 6 which runs from 2015 to 2020. Water firms will have spent more than £44 billion in that time on improvement works agreed by water industry regulator, Ofwat, that include the Severn Trent Water’s Birmingham Resilience project, Wessex Water’s integrated supply grid, and the modernisation of United Utilities’ Davyhulme wastewater treatment plant. Work on London’s £4.2 billion Thames Tideway Tunnel project, which is being financed and delivered by an independent provider, is also boosting construction in this sector.

Spending on road maintenance is also expected to rise. Highways England has a maintenance budget of £1.3 billion over its first fixed five-year investment period, which began in 2015/16. In 2017/18, expenditure on maintenance is set to increase to £258 million, from the £254 million allocated for 2016/17.

Thereafter, it is expected to increase in 2018/19, before slowing in 2019/20. However, 97% of the roads network is governed by local authorities, which are financially-constrained due to cuts in central government funding since 2010. Whatever monetary restrictions councils face there is little doubt the condition of the country’s roads require urgent address, as an Annual Local Authority Road Maintenance Survey (ALARM) report revealed a 13-year backlog of local roads maintenance in England.

Energy drive

Infrastructure repair and maintenance is also expected to increase in order to maintain the country’s energy provision. With a delay in the building of nuclear power stations, National Grid announced it would be retaining the services of existing power plants initially earmarked for closure. Structural maintenance is likely to be required to extend the lifespan of the plants which will be held in reserve to boost electricity supplies if and when required.

Construction Industry Forecasts – headline figures for 2017 to 2019

  • Construction output to grow by 1.6% in 2017 and 0.7% in 2018
  • Private housing starts to rise by 3.0% in 2017 and 2.0% in 2018
  • Infrastructure construction to grow by 7.4% in 2017 and 6.4% in 2018

Construction Industry Forecasts for public housing repair, maintenance and improvement is a little less encouraging, with output in this sector expected to remain flat in 2017 and 2018, whilst commercial offices output is expected to fall by 1% and 12% during the same period. However, prospects for the builders of the nation’s infrastructure, and the contractors and manufacturing firms required to maintain it remain distinctly good. It would seem the UK is building towards a brighter future.

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By Charles Pierce, National Sales Manager – TM Refurbishment

Charles Pierce

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Grenfell fire increases demand for building works

A survey carried out by US recruitment firm Manpower has found that of more than 2,000 UK employers confidence among public sector firms had improved radically in the last three months, in the wake of the Grenfell Tower tragedy.

Participating British businesses were asked how they viewed the jobs market and whether they had plans in the pipeline their workforce over the next 12 months. Those in the UK construction trade reported a net employment outlook of +11% for the final quarter of 2017.

That represents the strongest outlook of any UK sector and a 6% increase on the third quarter.

The Grenfell Tower fire in June spread through cladding on the building which subsequently failed safety tests, claiming at least 80 lives.

Many other public housing projects — predominantly high-rise buildings — have since failed safety tests due to unsafe cladding.

James Hick, managing director for Manpower Group Solutions, said expansion in the UK construction trade was driven by those bids to improve public housing.

Hick commented “Construction hiring often slows in the winter months, but the UK is set to buck the trend this year — our data suggests this could be the strongest fourth quarter for hiring since 2005.

“Some of this work is the urgent testing and repair that is being carried out up and down the country on much of Britain’s public housing stock.

“The state of housing in the country is under the microscope like never before and the need for both building and remedial work have caused demand in the construction industry to shoot up.

“The tough reality lurking beneath all these positive indicators is that these hiring intentions may not come to fruition because of difficulties attracting and retaining skilled employees.”

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New clean energy projects set to power 3.6 million homes

Eleven new energy projects worth up to £176m per year have been successful in the latest competitive auction for renewable technologies, the government has announced this week.

The projects, which are set to generate over 3GW of electricity, enough to power 3.6 million homes, demonstrate that the UK continues to be an attractive place to invest in clean energy.

The government is committed to investing in clean technology and driving economic growth as set out in our ambitious Industrial Strategy and upcoming Clean Growth Plan.

The competitive approach is continuing to drive cost reductions in the renewable energy industry – the cost of new offshore wind projects starting to generate electricity from 2022-23 are now 50% lower than the first auction held in 2015. The other successful technologies, Advanced Conversion Technologies and Dedicated Biomass with Combined Heat and Power, also achieved significant savings.

Competition has also driven down the costs for consumers. The capacity delivered in this auction cost up to £528m per year less than it would have in the absence of competition.

Projects are to be delivered across Great Britain from Wales to the Scottish Highlands and the West Midlands from 2021.

Minister for Energy and Industry, Richard Harrington, said “We’ve placed clean growth at the heart of the Industrial Strategy to unlock opportunities across the country, while cutting carbon emissions.

“The offshore wind sector alone will invest £17.5bn in the UK up to 2021 and thousands of new jobs in British businesses will be created by the projects announced. This government will continue to seize these opportunities as the world moves towards a low carbon future, and will set out ambitious proposals in the upcoming Clean Growth Plan.”

This investment will help the UK meet its climate targets while supporting jobs in Britain’s growing renewable industry. The UK has the largest offshore wind capacity in the world and low carbon businesses have a combined turnover of £43 billion, employing 234,000 people.

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Hiring on the up as construction sector confidence grows

  • Construction sector confidence also up, boosted by social housing repairs
  • Skills shortage time-bomb lurks on the horizon
  • Hotels and restaurants sector slumps as consumer spending dips

Against the backdrop of record employment and ongoing Brexit negotiations, ManpowerGroup reveals that employers have recorded a one point uptick in optimism with a national Outlook of +6%. A surge in positivity among public sector employers is a key factor in the improved national picture, with hiring intentions in this sector up 4 points to +2%, the biggest rise since 2015.

The ManpowerGroup Employment Outlook Survey is based on responses from 2,100 UK employers. It asks whether employers intend to hire additional workers or reduce the size of their workforce in the coming quarter. It is the most comprehensive, forward-looking employment survey of its kind and is used as a key economic statistic by both the Bank of England and the UK Government.

James Hick, Managing Director for ManpowerGroup Solutions commented “This is the first time in over a year that public sector hiring plans have been in positive territory. June’s general election outcome was seen in part as a rejection of austerity, and it looks like the public sector is powering on, as hiring ramps up. At the beginning of the year there were 86,000 vacancies in the NHS; the government recently announced that it will train an additional 1500 doctors a year and create 20,000 new mental health posts. With the health service so heavily dependent on EU nationals, these hiring targets are going to be extremely difficult to meet. And that’s just the NHS – there are also tens of thousands of vacancies in other government departments.”

High demand for construction workers is also buoying national jobs optimism. Construction is the most upbeat sector this quarter, up six points to an Outlook of +11%. Hick continues: “Britain’s builders are as optimistic now as at any time since the financial crisis. Construction hiring often slows in the winter months, but the UK is set to buck the trend this year – our data suggests this could be the strongest fourth quarter for hiring since 2005. Some of this work is the urgent testing and repair that is being carried out up and down the country on much of Britain’s public housing stock. The state of housing in the country is under the microscope like never before and the need for both building and remedial work have caused demand in the construction industry to shoot up.”

However, there are also signs that the positive effects of these short to medium-term factors are hiding real pressure points in the labour market as chronic skills shortages and a squeeze on disposable incomes could prick the good news bubble.

Hick explains “The tough reality lurking beneath all these positive indicators is that these hiring intentions may not come to fruition because of difficulties attracting and retaining skilled employees. Take construction, where companies are reporting a stronger pipeline of work than they have for years. However, without a pool of skilled workers to actually do the work, buildings will go unbuilt and projects will flounder. There is lots of talk around what we need to do to fix the UK’s ailing housing market at present but politicians’ promises are just hot air without the essential skilled talent needed to deliver these programmes.”

“The housing market holds another potential pressure point once interest rates inevitably start to rise. Wage growth has also been lagging inflation in the past few months and this gap looks likely to increase. People are starting to feel the pinch, and possible rising interest rates will only exacerbate this. The early signs of this can be seen in the 6 point slump in the Hotels and Restaurants sector, which is heavily dependent on discretionary consumer spending. We have recently seen restaurant chains such as Jamie Oliver’s “Jamie’s Italian” brand closing sites and some restaurant brands are scrapping expansion plans as consumer spending looks set to dip and the competition in this crowded market gets tighter.”

Regionally, confidence in London, where housing and the broader cost of living is the highest, has halved to +4 since last quarter. The East of England forecast tops the charts at +11, while employers in the South East maintain their confident streak with an Outlook of +10. Another winner is Northern Ireland following the DUP-negotiated “supply and demand” deal resulting in a cash injection of at least £1 billion. This has already boosted hiring optimism in Northern Ireland, where employers report a surprise jump ahead of the UK national average to +7% this quarter.

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Mayor’s focus on small construction sites can help solve London’s housing crisis

The London Housing Strategy’s strong focus on bringing forward more small sites will help solve the housing crisis by opening up the market to SME house builders, according to the Federation of Master Builders (FMB).

Commenting on the draft London Housing Strategy, Barry Mortimer, Director of FMB London, said “If we’re to build the number of new homes Londoners need, we must urgently make much better use of the many existing small sites that are dotted all over London. In doing so, we will the strengthen the capacity of SME house builders to build more new homes and perhaps even attract some new SME firms into the market. FMB research has consistently shown that a lack of available and viable land is the main factor stunting the ability of small builders to deliver more homes. Indeed, over half of SME house builders believe that the number of small site opportunities is, if anything, decreasing.

“We therefore welcome strongly the Strategy’s proposal for a presumption in favour of appropriate residential development on small sites, which goes further than proposed changes to national policy as laid out in the Government’s Housing White Paper. The ‘Small Sites, Small Builders’ programme will also link up public land owners with small builders, which could make accessing public land easier for small firms. We also welcome moves which will mean that less of the Community Infrastructure Levy is payable upfront on small sites. This will really help with cash flow for smaller builders and make the economics of small scale development slightly easier.

“The London Housing Strategy therefore marks a step forward in empowering smaller house builders in London. In order to reach the 50,000 new homes London needs to build each year, this renewed emphasis on small sites is vital. However, all such progress could be undermined if the Mayor fails to protect small sites from onerous levels of developer contributions. National planning guidance states that planning obligations should not be sought from developments of ten units or fewer, but implementation of this policy in London is patchy at best. Unless the Mayor, and London Boroughs, recognise the need to minimise burdens on the very smallest developments, SME builders will continue to struggle to enter the market.”

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The interior design trends that devalue a house the most

  • Wood panelling, avocado bathrooms and built in bars named as fixtures most likely to put UK homebuyers off
  • On average UK homebuyers would reduce their offer by a massive £5,000 if a property still had an avocado bathroom
  • 324,000 UK homes still have outdated avocado bathroom suites

Research into the nation’s most hated retro décor trends by Bathrooms.com has revealed the 10 interior design trends most likely to devalue your home are:

  1. Wood panelling (46% of UK homebuyers wouldn’t buy a property if it still had old fashioned wood panelling)
  2. Avocado bathrooms (44%)
  3. Built-in bars (41%)
  4. Woodchip (41%)
  5. Artex ceilings (40%)
  6. Heavily patterned carpet (35%)
  7. Textured wallpaper (34%)
  8. Crazy paving (33%)
  9. Brick fireplaces (33%)
  10. Built in wardrobes over the bed (30%)

According to the study, UK homebuyers would look to knock £4,877.46 off the purchase price of a property if it still had an outdated avocado bathroom suite. One in six of us (16%) would expect to pay at least £5,000 less and 6% of 25-34 year olds would seek a price reduction of at least £10,000.

New year – new bathroom?

It would seem despite the nation’s love for all things interior design, just over one per cent of the British public (1.2%) still have one of the infamous avocado suites lurking in their bathroom – this equates to a staggering 324,000 of the notorious green eyesores still at large in the UK.

The Avocado Amnesty

Following the results from the research, Bathrooms.com has launched an ‘Avocado Amnesty’ to help the nation upgrade their bathrooms. The bathroom retailer has pledged to help every avocado bathroom owner get a stylish new bathroom they can be proud of – from a complete bathroom makeover, to free baths and more.

If you are, or you know someone who is still living like it’s the 70s, head to the Avocado Amnesty here.

Almost three quarters of the UK (75%) think avocado bathroom suites are ugly and three out of four people (71%) say if they bought a new home and it had an avocado bathroom suite, it would be the first thing they’d rip out. But despite this, a fifth of UK homeowners (20%) confess they’ve never updated their bathroom, and around a quarter of the UK (23%) admit to being embarrassed by their outdated bathroom when their friends come over to visit.

Commercial Director at Bathrooms.com, Harshad Gorasia commented “Once upon a time, avocado bathroom suites were the height of fashion and a statement feature for homes up and down the UK, but now they tend to look tired, outdated and in need of recycling. Given that so many of us have never updated our bathrooms, it’s not surprising to see there are still over 300,000 in the country. More than half of the nation says a relaxing bath is their favourite way to unwind and de-stress, so we think everyone should have a bathroom they’re proud of, where they can relax, switch off and have a good soak at the end of a long day.”

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Britain bids to build bigger Heathrow

  • Overwhelming response as 121 sites from across Britain bid to become a Heathrow logistics hub and help build Britain’s new runway
  • Heathrow’s logistics hubs set to revolutionise UK construction – pioneer off-site manufacturing to reduce overall cost of expansion, cut local emissions and create a new industry for the UK
  • Key plank of Heathrow’s plans to use £16bn expansion project to boost growth in every corner of Britain

Over 120 sites from across Britain have applied to help build an expanded Heathrow, an overwhelming show of support for the nation’s most critical infrastructure project.

In April, Heathrow invited communities across Britain to showcase how their area could help build expansion by hosting one of four UK logistics hubs. The hubs are a key part of Heathrow’s plans to promote SMEs and ensure every corner of Britain benefits from the building of an expanded Heathrow by decentralising the supply chain.

Heathrow

Expanding Heathrow will be Europe’s largest privately-funded infrastructure project. By promoting the up-take of off-site manufacturing on such a high-profile project, Heathrow is aiming to drive a step-change in Britain’s construction industry and give Britain a leading-edge in an untapped new sector that can then be leveraged to support other major projects around the world. Communities across Britain are keen to take up the challenge with such an overwhelming number of sites bidding for the chance to upskill their communities with a world-class construction legacy for decades to come.

Heathrow will be the first major infrastructure project in the UK to pioneer the large-scale use of logistics hubs – aiming to build as much of the project off-site as possible. The hubs will work by pre-assembling components off-site before transporting them in consolidated loads to Heathrow just as they are needed. This method will boost the project’s efficiency and cut emissions by transporting components to site in fewer lorries. Research by WPI Economics earlier this year revealed that integrating an offsite manufacturing supply chain into a major project has the potential to reduce the overall cost of the project by as much as 25% whilst speeding up delivery by up to 30%.

Heathrow CEO John Holland-Kaye said “Expanding Heathrow is a once-in-a-lifetime chance to really boost growth across Britain – and not just with more capacity at the nation’s hub airport, but from building it. Over 100 communities across Britain have put themselves forward to host one of our pioneering logistics hubs and we couldn’t be more impressed by the applicants. Together we’ll build an expanded Heathrow – boosting growth outside London, leaving a world-class construction legacy for the UK and delivering expansion faster, cheaper and with less impact on our local communities.”

All applications will be considered by Heathrow and a list of potential sites is expected to be announced later this year. Suitable locations will demonstrate the logistics hub will have a positive economic impact in their area as well as having good connectivity, access to a relevant supply chain, strong local skills, support in their region and adequate facilities. In a Memorandum of Understanding with the Scottish Government, Heathrow agreed that one logistics hub will be based in Scotland.

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Developer fined after failing to safely carry out demolition work

The owner of block of flats was prosecuted after a Health and Safety Executive (HSE) inspection identified serious safety breaches while it was being demolished.

Westminster Magistrates’ Court heard that a member of the public raised concerns about the conditions at the site at 60 Pitcairn Road, Mitcham. Selliah Sivaneswaran was the owner of the property, but had failed to make appropriate appointments for the development project. The site had been inspected by HSE in October 2016 and the work halted due to the workers being exposed to a range of risks including exposure to asbestos, falling from height, and fire.

HSE revisited the site on 4 January 2017 and found the work had restarted while the site was still unsafe, despite enforcement notices being served and advice being provided. The demolition continued to be carried out by hand with workers climbing onto the unguarded roof and throwing the debris down. Workers were at risk of falling up to four metres through holes in the floors and partly demolished staircase. No welfare facilities had been provided and there was a significant risk of fire with the workers not being able to escape. The Court heard that two days before the sentencing hearing, HSE had to return to the site and take further action.

The project involved the demolition of the old flats and the construction of four one-bedroom flats and two two-bedroom flats on a site bought for £115,000 in 2001. The Court heard that despite the foreseeably large financial return from the project, Mr. Sivaneswaran put profit before safety and paid cash in hand to untrained workers, did not engage a site manager, and provided none of the legally-required site documentation.

Selliah Sivguru Sivaneswaran of Harlyn Drive, Pinner pleaded guilty to breaching Regulation 13(1) and 4(1) of the Construction (Design and Management) Regulations 2015 (CDM) and was fined £200,000 and ordered to pay £1,421.20 in costs.

HSE inspector Andrew Verrall-Withers commented after the hearing: “Mr. Sivaneswaran was a commercial client as he was carrying out work as part of a business. When he failed to appoint a principal contractor, their duties fell on him.

“Thanks to a member of the public reporting the dangerous conditions HSE was able to take action. It was just good fortune that no one had been killed at the site”.

“Instead of taking the support and advice provided by HSE, Mr. Sivaneswaran continued to let the workers operate in appalling conditions where they were at risk of being killed. He did not even provide them with a WC or washing facilities”.

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Taxpayers forced to subsidise planning application costs by £1bn

Local taxpayers will be forced to spend £1 billion covering the cost of planning applications by 2022, the Local Government Association warns today.

Planning fees are set nationally, which means councils are prevented from recovering the full cost of processing the 486,500 planning applications they receive on average each year.

Since 2012 – the last time the national fees were increased – communities have footed the bill for as much as a third of all planning applications. This represents desperately-needed resources being diverted away from other vital local services.

Analysis by the LGA reveals the bill for local taxpayers to cover the cost of planning applications is growing at a rate of around £200 million a year and will reach £1 billion by 2022. This is the equivalent of:

  • Repairing 4.35 million potholes – potholes cost £46 to repair, on average.
  • Providing grant funding to help councils and housing associations provide 8,507 new affordable homes. The Homes and Communities Agency, on the last round of funding allocation through the Affordable Homes Programme, issued an average grant per home of £23,510.
  • Creating more than 828 miles of public pavements, almost 4 times the length of the M6 – footways are estimated to cost around £150 per meter.

The LGA is warning this ongoing fees shortfall is hampering planning departments’ ability to stimulate housing growth in communities.

With councils facing an overall £5.8 billion funding gap by 2020, the LGA is calling on government to urgently bring forward its Housing White Paper commitment, to allow councils to increase planning fees, and also commit to testing a fair and transparent scheme of local fee setting, to allow councils to recover actual costs.

Cllr Martin Tett, LGA Housing spokesman, said “It is wrong for communities to keep being forced to spend hundreds of millions each year to cover the cost of all planning applications.
“Councils are working flat-out to approve almost nine in ten planning applications, with the majority processed quickly.

“But the shortfall in the amount of fees councils can charge and the cost of processing applications is heaping further pressure on the stretched planning departments which are so crucial to building the homes and roads that local communities need.

“Councils need to be able to recover the actual cost of applications and end such a needless waste of taxpayers’ money.

“Locally-set fees would also allow councils to prevent increased costs being passed on to residents, while developers could contribute more to maintain high-quality planning decisions, and improve the ability of councils to speed up the planning process.”

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