The Construction Industry in 2017 – A Review

The Construction Industry in 2017 – A Review

11th January 2018

As we enter 2018 we’re taking an overall look at the news and happenings in the construction industry over the past year so that we can keep our readers fully informed of the state of the sector.

In October, it became apparent that the decrease in output in construction during the three months to September which followed a decline in the second quarter of 2017 put the industry in a technical recession.  However, some contractors won’t see this type of decline because private housebuilders have still been increasing supply as 40% of sales are subsidised by the Help to Buy scheme. 

Contractors working on major infrastructure projects were still seeing an increase, though concerns were raised about delays and cost overruns.  With 85% of construction activity not on major projects, as schemes agreed before the Referendum are coming to an end (particularly in the commercial sector), there is not enough new work to fill the void at present.   

The November Budget delivered a mixed bag of new for the construction industry here in the UK, with no concrete promises from Chancellor Phillip Hammond who is keeping under review the flexibility that levy payers have to spend money which doesn’t bode well for the Apprenticeship Programme.  A recent increase in the jobs available in construction combined with fundamental changes in the industry is beginning to display the industry in a more positive light, especially when it comes to career choices.  The adoption in the use of cool new digital technology, training via immersive learning and the increase in offsite construction is combining to turn around traditional, negative perceptions of this sector. 

The Mayor of London, Sadiq Khan claims that London will not achieve its housebuilding targets or build the infrastructure it needs for the future unless there is an increase in government spending.  Khan set out a blueprint in his draft London Plan but says that proposals to build 65,000 new homes a year, with 50% of these required to be in the affordable housing bracket, cannot be done without more government help,.

As the year closed, Lord Adonis, the chairman of the National Infrastructure Commission (NIC) resigned from the body he helped to found with a scathing attack on Chris Grayling, the Transport Secretary.  Adonis said he resigned due to his work at the NIC becoming increasingly clouded by disagreements with the government, citing fundamental differences that could not be bridged.

To wrap up this article, right now forecasters at the trade body, the Construction Products Association (CPA), the UK based construction industry trade association, are warning that the sector will expand by a mere 0.7% in 2018, the slowest rate in six years and a downward revision from its previous estimate of 1.2%.  Despite the fact that contractors are currently reporting high activity, there are clear signs that the sector is slowing down according to the CPA which believes that construction has been negatively affected by a slowdown in UK economic growth and a fall in real wages, combined with a sharp rise in costs.