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Thu September 18th 2014

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Regional Construction Forecast Data 2010

Blueprint for UK Construction Skills 2010 to 2014

The Construction Index regional construction forecasts for the next five years, including projected changes in workload by sector and district, and projected changes in employment, plus expert analysis. The data is supplied by the Construction Skills Network, in conjunction with Experian.

“Equipping the UK with a well trained,
productive construction workforce has never
been more important as the skills lost to
the industry during this recession must be
replaced”

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Construction industry to emerge from recession 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%. Conversely, 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.”

“There can be no doubt that 2009 has proved to be one of the most difficult years for the construction industry since the 1940’s. Following a prolonged period of sustained growth our industry has been catapulted into recession following virtual meltdown in the financial sector which has impacted across all sections of the economy and in particular construction.

Projects cancelled or placed on hold, falling output in both new orders and repair and maintenance, job losses and a scarcity of financial stimuli has placed the entire supply chain under extreme pressure. Our industry’s response has largely been measured and considered with businesses restructuring and diversifying where possible; however, small and medium sized construction firms have increasingly borne the brunt of the recession with a lack of cash-flow and the ability to competitively re-invent themselves proving limited. Both public and privately funded projects will continue to face considerable challenges over our forecasting period as public investment decisions are reviewed and the risk of a double-dip recession looms unless financial markets gain suitable momentum and strength. Equipping the UK with a well trained, productive construction workforce has never been more important as the skills lost to the industry during this recession must be replaced. For that to happen we need to have a very clear understanding of the UK skills picture, including future skills needs, so that effective planning and investment can take place.

The Construction Skills Network (CSN) forecasts continue to provide a unique evidence-base for the industry. They allow organisations to examine demand - and its drivers - and utilise robust labour market intelligence to inform effective strategic and business planning. Forecasting remains extremely challenging in an external environment as fast moving and unpredictable as this. However, our CSN forecasts continue to be validated by stakeholders across the UK who represent the entire industry and are able to provide firsthand insight into market conditions.

The CSN Forecasts for 2010 to 2014 represent our fifth set of five year forecasts which were initially devised to predict skills shortages. The recession has served to enhance the need to be able to predict skills requirements and understand market drivers and in particular the changing strategic environment that construction will operate in. This will be my last message as Chairman of the CSN and I would like to express my sincere thanks to our much valued and supportive stakeholders who have enabled us to continue with this important work.

Sir Michael Latham
Chairman
Construction Skills Network

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ConstructionSkills is the Sector Skills Council for construction, tasked by Government to ensure the UK’s largest industry has the skilled workforce it requires. Working with Government, training providers and employers, it is responsible for ensuring that the industry has enough qualified new entrants and that the existing workforce is fully skilled and qualified, as well as for improving the performance of the industry and the companies within it. For more information about ConstructionSkills, please visit our website.