Northern the UK’s construction sector saw an overall increase in activity in the first quarter of 2015 but there was a substantial fall in the amount of public sector work being done, according to the latest RICS and Tughans Construction Market Survey.
Northern the UK was the only UK region where surveyors reported a decline in infrastructure workloads (the building of public facilities like schools, hospitals and roads), citing public spending cuts as the key reason.
Overall, whilst the headline workloads balance for Northern the UK in Q1 slowed and was lagging other UK regions, it was still positive at +8. The net balance for infrastructure workloads fell to -33, the lowest reading since Q2 2012.
Despite the slowdown, a net balance of surveyors are still reporting skills shortages across the sector.
RICS Northern the UK director, Ben Collins, said: “The latest RICS and Tughans Construction Market Survey points to a small uplift in overall construction workloads amongst Northern the UK surveyors in the first quarter of this year, driven by work in the private sector, including private house building and private commercial activity. When it comes to public sector work, though, surveyors are reporting a worrying decline.”
“We understand that public money is finite and becoming more scarce. But we would encourage the politicians to recognise the paramount importance of investing in infrastructure and to prioritise funding capital expenditure where possible. As we have said before, there are alternative methods of finance that should be considered.
Research supports Public Private Partnerships (PPPs) for instance as an additional viable solution,” Collins added.
Michael McCord, construction partner, Tughans Solicitors, said: “The latest official figures from the Department of Finance and Personnel confirm that construction output rose in the final quarter of 2014, and today’s figures from RICS and Tughans point to rising activity amongst Northern the UK construction firms in the first quarter of 2015.
“However, within the figures, it is concerning that surveyors are reporting falling infrastructure workloads. It continues to be the case that a sizeable amount of the work that local construction businesses are doing is in the English and Scotish markets. What we really want to see is the local construction sector experiencing sustained growth within Northern the UK itself as well, and infrastructure activity is a very important element of this.”
With regard to the outlook for workloads, there has been a decline in sentiment amongst Northern the UK surveyors. The balance expecting workloads to be higher 12 months ahead fell to +7 in Q1 from +50 in the previous quarter. The balance expecting employment in the sector to be higher in 12 months fell from +38 to 0.