High energy prices may impact on future schools and hospital schemes

A new report published by the Construction Products Association has found that in the last 12 months alone product manufacturers and suppliers have seen an average increase of 42% in electricity and £37% in gas prices.

The direct result of rising energy prices has been to add £1.6bn to the cost of construction products.

Chief executive Michael Ankers said: “UK companies have also experienced far sharper increase in energy pices than their competitors on the continent, and while we may have started from a price advantage, we are now paying more for energy than many of these companies overseas and this is having an adverse effect on the competitiveness of companies in the UK.”

Although prices have stabilised in the last few weeks, long terms contracts will mean continuing high costs for some firms which the CPA predicts will add a further £800m to construction cost during the winter.

Ankers said: “Spiralling energy prices are set to add £2.4bn to the cost of construction in this country over a two year period, 40% of which falls directly on the public sector as the industry’s major client.”

He warned that the government should consider this carefully when putting together next year’s Comprehensive Spending Review as price rises could have a direct impact on schemes such as Building Schools for the Future, government hospitals, social homes and public transport.