Despite high expectations, the construction sector has not experienced the anticipated boost following the election.
- In July, contract awards dropped by 20% year-on-year, indicating a sluggish sector.
- Planning approvals in the housing sector fell by 36% compared to the previous July.
- The infrastructure sector saw a 9% decrease in planning applications compared to July last year.
- London dominated retail and commercial construction activities, securing three-quarters of the contracts awarded in July.
The construction industry anticipated a strong resurgence following the election, driven by a Labour Party victory. However, activity figures for July indicate otherwise. Despite initial optimism, the sector has yet to experience the anticipated post-election boom that many had hoped for.
A comprehensive analysis by Barbour ABI revealed a significant 20% decrease in contract awards in July when compared to the same period the previous year. This decline highlights a challenging landscape for the industry, compounded by a 36% drop in planning approvals within the housing sector compared to July of the previous year. Moreover, a comparison with June’s data indicates a persistent downward trend.
In the realm of infrastructure, the situation is similarly concerning. While planning applications saw some increase in June, they were still down 9% in July compared to the previous year. “Despite some promising energy projects, we have yet to see a significant increase in residential and infrastructure awards that we might expect with the new government in the coming year,” stated Ed Griffiths from Barbour ABI.
Meanwhile, London’s construction sector stands out as a hub of activity, particularly in retail and commercial projects. Barbour ABI reported that nearly three-quarters of the contracts awarded in July were concentrated in the capital. This regional focus underscores the disparity in construction activities across the UK.
Responding to these challenges, the new Labour government has placed planning reform at the forefront of its agenda. Housing Secretary Angela Rayner announced intentions to centralise planning decisions for digital infrastructure, laboratories, water infrastructure, onshore wind, and housing, removing them from local authorities. This approach aims to stimulate building projects by encouraging councils to release greenbelt land for development.
Notably, Ed Miliband’s endorsement of large-scale solar panel projects is expected to influence next month’s figures positively. As Ed Griffiths observed, the government’s direct involvement in planning approvals for the infrastructure sector will be of particular interest moving forward.
The expected post-election boom in the construction sector remains elusive, as recent figures illustrate ongoing challenges and regional disparities.
