6 INDUSTRY NEWS
Construction sector loses patience with ‘indecision’ over Brexit
A ‘primary school’s worth of children’ face homelessness this summer
Around 320 children face becoming homeless during the school holidays this summer as a result of the housing crisis, according to the Local Government Association (LGA) – which it notes is the equivalent to “a primary school’s worth of children”.
The LGA told that this number of children in England could be placed into temporary accommodation over the next six weeks, based on trends for the last two years.
The market’s patience with Brexit related indecision appears to be wearing thin, as the results of the Q2 2019 RICS Construction and Infrastructure Market Survey shows output growth accelerating, and workload and employment expectations gathering pace for the year ahead. This quarter, 16 per cent more respondents reported an increase in construction workloads, up from a +9 per cent net balance in Q1. Relative to other sectors, workloads in public housing grew at the fastest pace, closely followed by private housing. The rise in workloads in social housing (+26 per cent – up from +6 per cent) suggests that the lifting of the HRA borrowing cap may have begun to influence sentiment in social housing construction. Following a dip in Q1, workloads in the infrastructure sector improved in Q2, and there was also modest growth in commercial and public non-housing activity. Looking to the year ahead, workloads are expected to be most resilient in the private housing and infrastructure sectors with 27 per cent and 25 per cent more surveyors, respectively, anticipating activity to rise rather than fall.
Business enquiries for new projects or contracts continued to grow this quarter as 12 per cent more respondents reported an increase rather than a decrease over the past three months – unchanged from Q1. However, capacity continues to constrain potential activity with 38 per cent more surveyors having to increase headcount in the past three months to support new work, despite the ongoing recruitment challenges.
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Other obstacles to growth cited by respon- dents include access to finance, which continues to be the biggest
impediment to building activity (69 per cent). Although 18 per cent more respondents reported a deterioration in credit conditions over the past three months, year-ahead expectations have become somewhat less restrictive. Despite an increase in hiring intentions, skill shortages continue to pose a significant challenge as well with half of respondents saying there is a shortage of quantity surveyors. This is underscored by rising labour costs with a net balance of 73 per cent of respondents foreseeing an increase in such expenditures over the coming twelve months. Within infrastructure, the energy, rail and communications subsectors are expected to see the strongest expansion in output over the coming twelve months. However, despite the potential of additional Government spending, nearly two-thirds of respondents were of the view that infrastructure projects will stall without access to funding from the European Investment Bank.
Despite the continued Brexit uncertainty, the RICS market confidence indicator – a composite measure of workload, employment and profit margin expectations over the coming twelve months – rebounded to 21 per cent (from 13 per cent in Q1). Investments related to equipment, software and worker training are expected to gather pace as well. However, for the fourth consecutive quarter, profit margin expectations remained flat and tender price expectations eased.
According to the latest Government figures, there are already more than 124,490 children living in temporary accommodation. The LGA states that the severe shortage of social rented homes available to house families means councils have no choice but to place households into temporary accommodation, including bed and breakfasts.
Not only is this financially unsustainable
for councils, it reports, but it is also “extremely disruptive to the families and children involved”. Placements in tempo- rary accommodation can present serious challenges for families – from parents’ employment and health to children’s ability to focus on school studies and form friendships.
As part of its Councils Can campaign, the LGA wants the new Prime Minister and his Government to introduce a range of measures to help councils tackle homeless- ness and to give them the tools and powers to resume their historic role as major housebuilders of good, quality affordable homes for social rent.
It says councils should be allowed to keep 100 per cent of receipts of council homes sold under Right to Buy – to reinvest in new replacement homes – and to also be able to set Right to Buy discounts locally. With councils facing a £421m funding gap by 2025 to tackle homelessness, the LGA is urging the Government to use the Spending Review to give councils long-term sustainable funding to prevent homelessness from happening in the first place.
It is also calling on the Government to adapt welfare reforms so local housing allowance rates go back to covering at least the lower 30 per cent of market rents.
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