‘Snakes And Ladders’ Sector As Construction Declines In January

Despite the positive end to 2019 and the optimistic start to 2020, the construction sector output decreased in January.

According to the Office for National Statistics’ (ONS) ‘Construction output in Great Britain: January 2020’, output fell by 0.8 per cent between December and January.

This fall was driven by the decline in repair and maintenance work which experienced a monthly fall of 2.4 per cent and overall flat growth (0.0%) in all new work.

This means the construction sector’s output was worth £110 million less than in December 2019.

The UK spent £112 million less on all housing repair and maintenance work with private commercial work decreasing by £98 million.

Private new housing work and public new housing work also fell by £11 million and £29 million respectively.

Private Industrial work, Public other new work and infrastructure projects enjoyed significant monthly increases.

Jan Biggins, National Sales Manager at Spicerhaart Part-Exchange and Assisted Move, said:

“The ONS construction data for January presents a very mixed picture of the housing market. It is not unusual for output to drop off in the New Year, so the 1% drop in new housing output from December shouldn’t cause undue alarm.

“Looking at a longer-term perspective, the three months to January saw an increase in output of 2.6% compared to the previous three months, and this was 5.2% higher than the same period a year ago. This picture of steady but unspectacular growth is broadly in line with our own experience on the ground, where we are seeing plenty of new developments coming onstream.

“The big question now is what impact the coronavirus will have. The housing market resembles a game of snakes-and-ladders at the moment: having just about negotiated the political and economic uncertainty around Brexit, we could find ourselves sliding down a big snake marked ‘Covid-19’ and ending up back at square one. But it’s important to remember that while the virus may set things back, it will not be here forever. We all need to work together to ensure any impact is only temporary and we can get back to climbing those ladders again.”

Brian Berry, Chief Executive of the Federation of Master Builders (FMB) said:

“Understandably, the Chancellor has delivered a ‘first aid Budget’ to overcome the short-term crisis caused by COVID-19. But he has missed an important opportunity to announce interventions that would support the sustainable, long-term recovery construction needs. The autumn Budget must include measures to cut VAT on repair and renovation, and a National Retrofit Strategy to promote decarbonisation and create jobs and growth.

“Builders are increasingly concerned about the impact COVID-19 will have on their businesses. Today’s package of measures to support SMEs through refunding Statutory Sick Pay, making temporary loans and grants available, and support for the self-employed will provide welcome relief to small building businesses and their workers alike.

“While we understand the need to move away from red diesel in the long-term, it is unfair that construction should no longer be exempt while agriculture remains so. Construction contributes 9% to GDP and employs 2.7 million people, which does not appear to be recognised by the Chancellor. He must prioritise the development of a low-cost, low-carbon alternative to support SMEs of all sectors to tackle the climate crisis. Otherwise, the Chancellor is giving with one hand to SMEs and taking with the other.”

“An investment of £13.7 billion in housing is welcome news, however, there was no mention of how the Government plan to support SME house builders. Master Builders are facing major barriers finding land, accessing finance and skilled workers – these will all need addressing if we are to build 300,000 homes a year.”

What impact will budget changes and the coronavirus outbreak have on the UK’s construction sector?