Uneven growth in construction output

Mayor refuses Barnet project over reduction in social homes

With a reported net loss of 257 affordable homes, the Mayor of London Sadiq Khan has refused permission for an estate regeneration in Barnet.

The application to redevelop the Grahame Park estate in Colindale included plans to demolish 692 homes currently available at social rent, and replace them with 435 homes.

UK construction companies have indicated an uneven recovery in business activity at the end of 2017, according to the latest IHS Markit/CIPS Construction Purchasing Managers’ Index (PMI).

A robust rise in residential building was contrasted with falling work on commercial projects and stagnating civil engineering output.

There were positive signals for the

near-term business outlook, with new order growth reaching a seven-month high and job creation the strongest since June. However, intense supply chain pressures continued across the construction sector, while input cost inflation picked up from November’s 14-month low.

The seasonally adjusted PMI posted 52.2 in December, down from 53.1 in November, but above the 50.0 no-change threshold for the third month running. As a result, the latest reading signalled a moderate expansion of overall construction output at the end of 2017.

Survey respondents indicated that housebuilding remained a key engine of growth, with residential work expanding for the sixteenth consecutive month in December. In contrast, the latest data indicated a moderate fall in commercial construction, thereby continuing the downward trend seen since July. The prospect of greater workloads ahead

resulted in stronger rises in employment and purchasing activity during December. In fact, the latest upturn in input buying was the steepest for two years, which survey respondents widely linked to increased business requirements. Robust demand for construction products and materials contributed to another sharp lengthening of suppliers’ delivery times at


the end of 2017. Strong cost pressures persisted across the

construction sector, driven by rising prices for a range of inputs. In particular, survey respondents noted higher prices for blocks, bricks, insulation and roof tiles, alongside continued rises in the cost of imported products. Although the rate of input cost inflation picked up since November, it remained softer than February’s peak. Duncan Brock, group director at the Chartered Institute of Procurement & Supply, explained the data: “The sector offered little in terms of comfort at the end of 2017, though the pace of new business picked up to its strongest level since May and purchasing activity rose to its fastest rate in two years, supply chains were under increasing pressure from all sides. “The housing sector was the strongest performer again, and materials for residential building were in greater demand, fuelling longer delivery times, shortages of key materials and sharper input cost rises.

“It appears that the continued fall in commercial activity was testament to Brexit-related uncertainty on the horizon, and the sector’s fear about the direction of the UK economy as clients still hesitated to spend on bigger projects.

“Business optimism was subdued at levels not seen since 2013, but the improvement in new order growth in December contributed to the biggest surge in job creation since June. Construction firms still anticipated future new work, in spite of the climate of continued uncertainty, and wanted to ensure that skilled, talented people were in place should the New Year offer more success than expected.”

Khan withheld his support for the scheme and told Barnet Council, which had approved the application in November, they must continue working with City Hall planners and the developer to redesign the scheme to replace the lost affordable homes.

The application was also deemed unacceptable because it fails to provide a minimum of £840,000 to deliver additional bus capacity and suitable alternatives to private car use.

Mayor Khan called the scheme “a classic example of how not to do estate regeneration.” He said: “I fully support improving social housing on this estate and across the capital, but this scheme falls far short of what I expect of London boroughs. “As I have made clear in my new London

Plan, estate regeneration projects must replace homes which are based on social rent levels on a like-for-like basis. Londoners so urgently need more high-quality housing, not less, which makes this scheme completely unacceptable in its current form.

“I have asked Barnet Council to work constructively with the applicant on alternative plans with greater density, which do not result in the net loss of affordable homes. Given its recent record in this area, I hope the council recognises the need to replace what would be lost at Grahame Park.”

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