It’s time to look back at a year full of changes
To paraphrase the late David Bowie, 2016 has certainly been a time for facing the strange. Since news of the Thin White Duke’s death broke in January, the year has been punctuated with alarming regularity by shock headlines: whether of untimely celebrity deaths (including the loss of architectural luminary Zaha Hadid), startling ballot results, or astonishing passages to and from political power.
For the construction industry, tied as it is to the fortunes of the UK economy, June’s vote for Brexit has been the year’s dominant tale. Back in January, the Construction Products Association (CPA) was forecasting a healthy 3.6% growth in output for the year, but ensuing uncertainty, blamed in no small part on the turmoil surrounding the run-up to the referendum and then its outcome, has led to just 0.6% growth in the first three quarters.
In terms of projects on the ground, the effect so far has been relatively low key – projects temporarily shelved have been brought back on stream as the lengthy timetable that will lead to the UK’s exit became clear.
But a 10% fall in new orders in the third quarter in the commercial sector – likely to be the worst hit by a drop in investor confidence – has already sent a chill wind racing over prospects for the coming months.
And the CPA’s predictions of marginal growth for 2017 and 2018 reflect the fact that caution, rather than cheer, will be the overriding business sentiment for some time to come.
However, although the sector may seem to be mired in uncertainty, there are still huge opportunities ahead in the new year.
The housing crisis, arguably the most pressing challenge facing the UK – even counting the process of Brexit – means there has never in the last half century been such a burning national need for the industry’s expertise. The government’s ambition to build 1 million homes between 2015 and 2020 is more a pipe dream than a target under current build rates.
Yet prime minister Theresa May and her chancellor Philip Hammond’s decision to relax restrictions on public borrowing to fund affordable homes has at least signalled recognition from Westminster that government can’t simply stand back and hope for some kind of bricks and mortar miracle to materialise.
So far, as Crest Nicholson chief executive Stephen Stone argued at Building Live last month, leadership from politicians on housing falls far short of the co-ordinated push that would make housebuilding the national priority it needs to be. But the direction of travel is the right one, and with a housing white paper due early in the new year, the sector has an opportunity to gauge momentum.
The country’s housing need, together with the prospect of three major infrastructure schemes – Hinkley, Heathrow expansion and HS2 – starting to come on stream, offer clear areas of demand for the sector, even against the backdrop of wider economic and political uncertainty.
This pipeline will be even more assured if the government can be persuaded of the logic in investing in development that addresses national need as a way of countering wider economic uncertainty; an argument which is still very much there for the making.
However, with industry skills shortages set to worsen with restrictions on movement of labour under Brexit, meeting these challenges will also need the industry to up its game on embracing the opportunities offered by digital and off-site construction; as Mark Farmer put it more bluntly in his government-commissioned skills review, it could be time to “modernise or die”.
So next year, like this one, promises to be anything but dull. But before it’s time to face more changes, and on behalf of all of us at Building, I wish you a happy and relaxing Christmas break. And, whatever the twists and turns of 2017, a very successful new year.
Sarah Richardson, editor