The UK construction industry is rallying from the aftermath of the lockdown as builders report steady workflow and recovering revenues, according to a survey of 2,000 building companies by construction hire and skip specialist Skrap.
The survey is good news for UK aggregates suppliers with almost half of construction businesses (44%) reporting that workflow has reached pre-lockdown levels. Skrap says the bounce is such that 23% of businesses felt they would hit at least 2019 revenue levels and possibly see a 20% increase. This is despite nearly two-thirds (63%) of businesses still waiting to be paid an average of £47,784 for work they did pre-lock down. However, this is an improvement from June 2020 when they were waiting for £157,642.
Of the work that is being done, building contractors are seeing the greatest demand from residential projects (48%) and public sector work (30%) such as roadworks and in schools. However, of those businesses seeing a partial slowdown in work, they pointed to the uncertain state of the economy which is delaying investment decisions.
Construction industry business owner Jamie Herd, MD of Lords builders’ merchants, commented: “We’ve seen sales of supplies increase steadily over the past 3 months and orders to the end of 2020 look good especially in London and the home counties. The government’s favourable loan schemes have boosted the cash flow of construction businesses to enable them continue their work and overall, there is a bullish mood that work is returning to normal in the industry.”
Hussain Hilli, co-founder at Skrap commented: “Although building activity shrunk during the lockdown, this survey provides a cautious note of optimism for the construction industry. It’s not surprising this wave of optimism comes from residential work as people continue to work from home and consider their new needs. The decision to scrap stamp duty on homes below £500,000 has also got home owners active. Government policies are taking effect and builders are beneffing but a lot will rest on how investors see Brexit playing out on the UK economy”.
Skrap says that Prime Minister Boris Johnson’s ‘Build, Build, Build’ initiative is making a difference. Almost half of builders (46%) said they had benefited from the policy announcement and were expecting more contracts from this in the next few months.
However, they do feel that investment in house building developments is being held back. This is chiefly down to investors being vary of valuations given the impact Brexit could have on the economy coupled with the lack of urgency from the government to support this crucial infrastructure need.
Looking ahead to the end of the year, builders fear the biggest disruption to business will be a second wave of COVID19 cases leading to another mass lockdown impacting delivery and demand of projects.
The majority of construction businesses are confident that there will be little fallout from a no-deal Brexit. They felt the Government would negotiate a good trade deal in time and it will be business as usual. However, they do feel the greatest concern in the run up to Brexit centres on workforce availability. This is understandable as up to a quarter (25%) of their workforce are non-UK nationals.
The research findings are based on a survey of 2,000 UK construction companies (who are employers with a minimum turnover of £250,000) conducted in September 2020 by LM Research & Marketing Consultancy.
