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Investment in construction can kick start the UK economy say experts

An £11.27bn investment in construction and a series of strategic decisions around new home building can kick start the UK’s economic recovery and deliver a £33bn return for the Government, according to experts at Birmingham City University.

The Build Back Better: Covid-19 Economy Recovery Plan features a blueprint for a safe return to construction, a set of recommendations to help stimulate demand for new homes and home improvement, and details on how to build essential infrastructure and train a new generation of skilled workers – acting as a catalyst for growth and delivering income for HMRC.

The plan also calls on the Government to stand by its commitment to “do everything it takes” to fight the virus and support the UK economy, by investing £11.27bn in a wide reaching programme, designed to create mass employment and produce a £33 billion return.

Written by Birmingham City University’s Dr Steve McCabe, Associate Professor at the Institute for Design and Economic Acceleration and Mike Leonard, Visiting Professor of Manufacturing and Construction and founder of the Get Britain Building campaign, the plan brings together all sectors of the construction industry for a solution-led approach.

Recommendations and observations in the plan include:

  • A phased return to work following specific guidelines can ensure the protection of construction sites during pandemic
  • Small house builders, often highly efficient and providers of local employment and procurement, must be given encouragement
  • Address fuel poverty through direct intervention by local authorities using local companies
  • Construction can offer long term skilled employment opportunities that can act as a catalyst in achieving inclusive economic growth
  • Provide incentives and highlight environmental benefits for consumers to replace inefficient and outdated gas boilers
  • 30,000 new social houses built per year for the next three years will address living standards, mobility and some shortfall
  • Proposed Building Regulation changes should be delayed in light of exceptional circumstances posed by pandemic
  • Construction must be made more attractive as a career choice to young people through regional marketing campaigns

Of particular focus in Build Back Better: Covid-19 Economy Recovery Plan are SMEs, who dominate the sector, with a suggestion that UK Plc fully engages such businesses in order to build the infrastructure and new homes the UK needs, alongside investments to deal with fuel poverty and the upgrading of existing housing stock to meet the net zero 2050 obligations.

Leonard, who is also CEO of Building Alliance, said: “History tells us that the construction industry is the tried and tested solution to drive economic recovery, not least due to the fact we manufacture the vast majority of building materials in the UK which provides resilience, skilled jobs and fast returns on investment. The upstream and downstream jobs in manufacturing, architecture, planning, engineering, distribution and construction, creates an unrivalled multiplier that can achieve inclusive growth, building back better and helping to rebalance our economy. Saving lives must remain our priority but we now have the signal to begin to safely unlock and begin the long path to economic recovery. Construction and the building materials manufacturers are now returning to work with the proper safeguards in place. We must now “Get Britain Building” and “Get Britain Working” delivering the scale of economic multiplier the county needs to bounce back stronger.”

Research carried out in 2018 by Birmingham City University and The Building Alliance calculated that building 300,000 homes a year using, as much as possible, British-made building materials and local builders, would generate an economic ‘uplift’ of more than £90 billion for the UK.

Dr McCabe added: “Covid-19 has resulted in the loss of over 30,000 lives. The Government, quite rightly, locked the nation down to reduce the spread of the virus. However, ONS data clearly demonstrates that effectively closing down the economy through ‘lockdown’ has caused profound economic shock. It’s estimated that at least £2bn a day is being lost during the pandemic. The overall cost to the UK economy will exceed £300 billion and, depending on the speed of recovery, could be significantly higher. As and when it is safe to do so, a return in construction activity as well as the building materials manufacturing supporting it will underpin a fast and effective way to begin to begin the process of recovery from what is the greatest shock to the UK’s economy in living memory.”

Source: BMJ

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New build starts fall in 2019

The number of new build starts fell by 7% to 157,550 in the year to September 2019, signalling that the government is failing to meet its housebuilding targets.

On a more positive note completions rose by 9% to 177,980 – however that is still well short of the government’s aim to deliver 300,000 homes a year.

Clive Docwra, managing director of leading construction consulting and design agency McBains, said: “The government has set a target of delivering a million homes in the next five years, yet today’s figures show that the construction industry is way off meeting those rates on current trends.

“Annual new build starts in the year to September 2019 saw a decrease of 7% on the previous year, and while completions totalled close to 178,000, we need to be building more than 200,000 homes each year to meet the government’s ambitions.

“Last month’s Queen’s Speech contained lots of detail on demand-side measures – such as first-time buyers being offered a discount on purchases – but nothing on the supply side.

“The government needs to set out how it intends to boost housebuilding and increase the supply of new homes needed to tackle the housing crisis, such as freeing up more land to build and cutting red tape on planning.”

New build dwelling starts in England were estimated at 39,510 in Q4 2019, a 2% increase compared to the previous three months and an 11% increase on a year earlier.

Completions were estimated at 46,000, a 2% increase from the previous quarter and 11% higher than a year ago.

BY RYAN BEMBRIDGE

Source: Property Wire

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Construction sector grows but uncertainty remains

Official figures released today have revealed that the UK construction industry has continued to grow over the last quarter despite uncertainty around Brexit. 

The IHS Markit/CIPS UK Construction Total Activity Index posted its second-highest level in 16 months at 53.2 in October, up from 52.1 in September.

However it was still some way below the long-run survey average of 54.3.

This was in part due to a slowdown in housebuilding across the UK which has put a drag on the construction industry.

Blane Perrotton, managing director of the national property consultancy and surveyors Naismiths, said: “The construction industry is enjoying an Indian Summer.

“True, the surge in output in the third quarter is flattered by comparison with the grim decline of the first quarter and the plodding indifference of the second. But this is real, and welcome, progress.

“Housebuilding retains its crown as both poster child and ‘get out of jail’ card for the industry as a whole. Housebuilders delivered a half billion boost to the industry in the third quarter, but elsewhere the growth was patchy at best. Infrastructure work remains in positive territory but output is down, with contractors focusing on finishing existing projects rather than starting new ones.

“Among developers there is a widening confidence gap between the overheated South East and other areas where demand is stronger and margins better.

“Despite a marked improvement in the Brexit mood music this week, months of deadlocked negotiations have choked investor appetite. Unless and until the political limbo is ended, the industry will continue its holding pattern of two steps forward and one step back.”

Source: Mortgage Introducer