Report forecasts that decline in public sector projects will hit regional output
The decline in output in the education sector will have a significant impact on regional construction workloads over the next two years, according to a report by the consultants Hewes & Associates.
The Construction Regions: May 2011 report forecasts that as public sector projects - in particular education-related schemes - decline between now and 2013, regional construction output will be hit, with all UK regions bar London experiencing a reduction in output this year.
As education-related schemes decline regional construction output will be seriously hit
The decline will continue in 2012, with up to 11% falls in Yorkshire and Humberside and the West Midlands, the report argues. While most regions will experience a levelling off, if not an upturn the following year, Yorkshire, where education has accounted for 60% of all new public sector non-housing orders over the past two years, is the only economy not forecast to grow in 2013. The whole public non-housing sector has accounted for a quarter of orders in Yorkshire in the same period.
Major infrastructure and commercial work in London will help the capital offset the impact of a fall-off in areas like education and public sector housing. However, Martin Hewes, founder of Hewes & Associates, argues that London will also face considerable challenges. He said: “In London the education market is as large as the office market. If it were to fall by 50%, that’s a lot of offices to be built.”
The data, however, is not quite as bleak as the consultancy’s previous report, published in November 2010. That study forecast 2011 output for Yorkshire and Humberside as £5,040m, £5,495m for the West Midlands and £12,800m for London. In contrast the latest figures for this year have all been revised upward to £5,360m, £5,745m and £13,740m respectively.