RICS survey casts doubt on plan to boost institutional investment in infrastructure

Plans by chancellor George Osborne to boost private funding of infrastructure projects will fail, surveyors have predicted.

The RICS Construction Market Survey for the last quarter of 2011 revealed that only 14% of surveyors believe the chancellor will be successful in his Autumn Statement pledge to generate sufficient institutional funding for planned infrastructure projects.

There was also scepticism about the coalition’s Get Britain Building Fund aimed at boosting housing supply, with only a quarter of surveyors believing this will impact positively on the sector.

Overall, the survey found the construction industry continuing to stall during the final three months of last year, with the number of respondents reporting falling workloads up seven percentage points.

Private sector construction remained relatively flat, the survey indicated, whereas overall public projects continued to fall, with 17% of surveyors reporting falls rather than rises in levels of public housing construction.

Simon Rubinsohn, RICS chief economist, said: “Predictably, with workloads continuing to fall and costs slowly increasing towards the end of the year, the outlook for the construction industry remains rather downbeat with no prospect of improvement in sight.

“Particularly worrying are the questions being raised over the government’s plan to secure institutional funding for infrastructure projects. We would hope that this scepticism proves to be overly pessimistic, but the responses highlight the sizable job the government still has to do in convincing industry professionals that this approach is going to deliver.”

Across the UK, the survey pointed to a continuing North-South divide with only London and the South-east reporting positive net balance readings. There are also no sign that the pressure being felt by the SME sector is lessening with a majority of respondents seeing recent government initiatives as being unhelpful for SMEs.

Looking forward, surveyors expect overall workloads to stagnate over the next twelve months and employment in the construction sector to fall further.

Materials costs continue to rise with a net balance of 19% of surveyors reporting increasing costs. As result, expectations for future profits are downbeat with 44% surveyors predicting future margins to decrease rather than increase over the coming year.