Alarm bells over construction output fall, says FMB
The Beast from the East, rising costs and Brexit are to blame for the sharp drop in construction output, the Federation of Master Builders (FMB) has said in response to the April 2018 construction output figures published by the Office for National Statistics (ONS).
Commenting on the construction output figures for April 2018, Brian Berry, chief executive of the FMB, said: “The UK construction sector declined by 3.4 per cent in the three months from February to April compared with the previous three months. This is the biggest fall since the latter stages of the recession in August 2012. The Beast from the East has certainly played its part as it forced many construction sites to close in March. Indeed, builders were reporting that it was too cold to lay bricks.”
Berry continued: “Alongside the cold snap, the drop in construction output can also be attributed to rising costs for construction firms large and small. While wages are continuing to rise because of the acute skills crisis in our sector, firms are also feeling the pinch thanks to increased material prices. The depreciation of sterling following the EU referendum has meant bricks and insulation in particular have become more expensive. We expect material prices to continue to squeeze the construction industry with recent research by the Federation of Master Builders showing that 84 per cent of builders believe that they will continue to rise in the next six months.”
Berry concluded: “In the medium to longer term, with nine months until Brexit-Day, the future is uncertain for the UK construction sector. The Government is still to confirm what the post-Brexit immigration system will look like. The construction sector is largely reliant on accessing EU workers with more than 8 per cent of construction workers coming from the EU. It is therefore imperative that the sector knows how, and to what extent, it can recruit these workers post-Brexit.”
“The decline in output reflects the recent gloomy news for the construction sector”, said: Allan Callaghan, managing director of Cruden Building. “However, given the challenges being experienced right across the industry, I suspect these figures will fall again if we don’t get on the front foot in fixing some fundamental issues – most recently the updated Scottish Planning Bill. The Stage One report of this crucial legislation shows that the Bill contains no proposals to reform the stumbling blocks of the system, nor make any recommendations, other than asking Ministers to consider the issues further.
“The country is in the grip of a housing shortage and the industry and Government needs to act now to ensure that the Planning Bill delivers all that we need it to and have planning system is collaborative, fully-resourced and able to deliver decisions quickly if we want construction output to flourish in the future.”