Lack of confidence in government hampering growth in construction

Fewer than one in five of those surveyed for Gleed’s UK Construction Market Report 3Q 2023 said they have “confidence” that the current government can improve market conditions and ultimately increase output from the sector. Almost two thirds of contractors reportedly feel that the industry has “little” or “no influence” on government regarding decision making which impacts the built environment, in a damning indictment of the relationship between construction and the incumbent leadership.

The report revealed that 95 per cent of contractors or members of their supply chains had declined a tender in the last quarter, up from 78 per cent in the consultancy’s spring survey. At least 40 per cent attributed this move to a lack of capacity, while 52 per cent said that the proposed tendering/contract conditions were too onerous or there was an unacceptable risk profile.

Interest rates and inflation were ranked the greatest threat by half of those quizzed, with investor confidence and materials and labour cost escalation remaining a concern for many. Over 90 per cent of respondents reported that inflation is now heavily impacting the viability of schemes and 96 per cent shared concerns that rising mortgage rates and rental activity will continue to negatively impact housebuilding.

In light of this and with the prospect of a general election looming, respondents told Gleeds that they would like to see an incoming government focus its efforts on addressing labour shortages and shrinking the skills gap; incentivising land purchases and development; and improving payment practices.

Commenting on the report’s findings, Gleeds CEO Graham Harle said: “The market report reflects the fact that the wider economic conditions remain challenging. Clearly, the construction industry does not have faith that the current government is listening, so it seems that we must act to strengthen the sector from within. Embracing digital technologies will help us to boost productivity and may enable us to attract a more diverse workforce, while increasing collaboration and forging knowledge transfer partnerships will allow us to deliver even greater efficiencies despite depleted resource.”

The summer survey also revealed continued optimism around digitalisation of the sector, with 74 per cent of non-contractor respondents and 60 per cent of contractors saying they were “excited” or “curious” about the further integration of AI into the construction industry.