Construction Skills Network Predicts Construction Recession To End In 2011

Government and public sector funders are being urged to provide a sustained approach to public sector construction investment, as new figures from the Construction Skills Network (CSN) forecast a slow return to growth for the construction sector for the 2010 to 2014 period. The CSN shows the prognosis for the UK construction industry in the short term is very severe with construction output expected to have contracted by around 13% in 2009. The fall in employment in the sector has also been severe with a drop by approximately 375,000 workers from 2008 to 2010 and recoup by less than 100,000 by 2014. A further, but marginal, decline is projected for 2010, but consistent recovery is not forecast until 2011, with a slow and steady return to moderate levels of growth as confidence returns to the market. Over the whole of the 2010 to 2014 period construction output is expected to average 1.7% growth each year. As with previous CSN forecasts, there are distinct regional and national variations with the North West down by 18%, North East down by 19% and West Midlands down by 22% in 2009. Conversely, for the 2010-14 period the East of England, East Midlands, Scotland and Wales perform the best across the UK in output terms. In large part, the variations reflect when different regions and devolved nations first entered into recession. In the construction industry so far, the private sector has borne the brunt of the recession, with the private housing sector suffering its second consecutive double digit decline in output in 2009. Public non-housing work such as the Olympics and the Building Schools for the Future programme saw good growth in 2009 and are likely to provide a significant stream of work in the short term through to 2011. Mark Farrar, chief executive of ConstructionSkills, said, ‘The recession has hit construction extremely hard and the forecast recovery is likely to be long and slow. This situation remains fragile and we are concerned that, given the scale of the public sector deficit, potential funding cuts in the period ahead will further exacerbate the loss of skills before private sector investment has fully recovered. ‘In a sector which supports some 8% of GDP and provides employment for large numbers of graduates and apprentices, stability in levels of long term investment plays a critical part in protecting employment and skills. As the public sector currently accounts for 30% (excluding PFI) of the industry’s business, decision makers will need to take account of the wider economic and employment impacts before acting. ‘Equally, the construction industry needs to ensure it avoids long term skills shortages when the industry returns to growth. Our evidence suggests that the industry has tried hard to retain skilled workers and engage in training to improve current skills. It is imperative that a level of recruitment is maintained in these difficult times if the industry is to respond in the right way when growth returns.’ Sandra Lilley, manager of the Construction Skills Network, said, ‘The forecast clearly shows what many in the industry already know; that construction has been through a severe recession. However, there have been some sectors of the construction industry which have weathered the recession better than most; particularly public non-housing projects. ‘Falls in employment tend to lag falls in output, so it is crucial for the industry to focus its efforts on retaining and reskilling workers currently in employment. These workers will be needed to keep businesses competitive as growth returns in 2011. The industry needs to act now to avoid the long term skills shortages which were faced after the 1990s recession.’