How the UK's construction sector and its foundations are crumbling

In September this year, infrastructure put itself back on the map with six huge HS2 contracts awarded, worth a total of £7.2bn.

The latest edition of the Economic & Construction Market Review, from industry analysts Barbour ABI, has highlighted the levels of construction contract values awarded in September throughout all regions in Britain.

But although last month boomed, the same can’t be said for the remaining sectors in construction, which includes housing - this saw new orders decrease for the first time in half a year.

Michael Dall, lead economist at Barbour ABI, commented on the figures: “It was an unusual month for construction in September due to the £7.2bn HS2 contracts, drastically boosting construction figures and depicting a strong, healthy industry.

“Whereas, without the six major contracts it was a poor month for contract values, highlighted by the housing sectors uncharacteristic decrease.”

The overall contract value for September was £6.9bn based on a three-month rolling average, the highest monthly figure for almost two years.

The strong total was largely based on the commissioning of the large HS2 contracts, which made up six of the top ten biggest projects in the month, whilst also masking the pitfalls across other sectors of construction.

Across the industry, project numbers were down in September by 28.5 per cent when compared to August, which was spread right across the various sectors of construction.

Housing saw the biggest drop in contract values, decreasing to £1.8bn, a 33 per cent drop on the month after consistently high growth since May and has, up to now, been construction’s most reliable source of high contract values over the course of this year.

Outside of Infrastructure, the only two other sectors that saw growth were Hotel, Leisure and Sport with minimal growth of 0.9 per cent compared to August.

Outside of the six HS2 projects, the £300m Old War Office Building residential development in Westminster, London was the highest value project for September. This is followed by a new Amazon distribution centre in Bristol with a construction cost of more than £200m - four times higher than the value of any other industrial project on the month.

Regionally, the West Midlands was the leader for construction contract value with 35 per cent of the total, followed by London and the East Midlands with 28 and 15 per cent respectively, the three regions with HS2 contracts.

Dall concluded: “Nevertheless, the HS2 projects will be a major boost to the workforces in the three located regions, providing thousands of jobs and subcontracting opportunities.”

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