Following the post-election negotiations, the UK is now in unfamiliar political territory with a formal coalition between the Conservatives and the Liberal Democrats. The full implications for the construction industry, along with the rest of the country, will take time to emerge with the planned emergency Budget and the subsequent Comprehensive Spending Review.

However key messages are already clear, with the tackling the Budget deficit the most pressing priority.

The new Government is committed to implementing the £6 billion of additional cuts this year promised in the Conservatives manifesto. Whilst this may in part be delivered by the axing of cherished Labour programmes such as ID cards, public sector capital expenditure programmes are likely to be regarded as a relatively easy target. Construction related areas, from the schools building programme to Crossrail, will be vulnerable to both explicit spending cuts and to cuts by stealth as protracted ‘policy reviews’ push back planned spending into future years.

Longer term the squeeze on the public sector investment is likely to be less severe than would have been the case under a simple Conservative majority government. Nevertheless given the pressure on Government finances, the new Government is likely to be keen to develop private sector funding models to secure deliver planned projects.

In addition, changes in Government policy are set to block specific areas of private sector investment. Given both Conservative and Liberal Democrat opposition, BAA’s plans for a third runway at Heathrow and the expansion of airport capacity in south east England appear especially doubtful. In other areas, such as the need for new nuclear generation capacity, the Liberal Democrats are at odds with the Conservatives and progress is likely to be slow at best.

The Conservative party has argued for effective action to cut public spending and tackle the budget deficit in order to reassure financial markets and nurture a private sector lead recovery. The new Government will have to demonstrate to financial markets that it will have the strength and longevity to deliver the promised overall reduction in the budget deficit. Furthermore there is a risk that continued political uncertainty could undermine consumer and business confidence and hamper the pace of economic recovery. There have already been tentative signs that the upturn in the housing market faltered ahead of the general election, with the number of mortgage approvals for house purchase sluggish during first four months of 2010. Any apparent political indecision could be replicated in the housing market, dampening the anticipated recovery in new housing activity over next twelve months.

Source: Glennigans

Plans for the first 286 dwellings of a 4,000 homes expansion to the south of Cambridge have been approved.

Three quarters of Glebe Farm near Trumpington will be houses and the rest flats in eight apartment blocks.

Social housing will account for 30% while a further 10% will be affordable homes for key workers

http://news.bbc.co.uk/1/hi/england/cambridgeshire/8638622.stm

The Recruitment Employment Confederation’s REC JobsOutlook shows surge in employer confidence – published on 20th April 2010

http://www.rec.uk.com/press/news/1040

Ahead of the publication of the latest official unemployment figures, the REC’s April JobsOutlook survey shows the highest employer confidence recorded so far this year.

A total of 96 per cent of employers surveyed stated they now expect their permanent workforces to remain static or grow within the next three months – a rise of two per cent on the previous month.

A total of 86 per cent expect their use of agency workers to grow or stay the same within the same period.

The longer term outlook is also encouraging with 94 per cent of employers expecting to maintain or grow their permanent workforce over the next 12 months. On top of this, one in three employers- compared to one in four last month – expect to either increase or keep static their use of temporary workers in the next 12 months.

This underlines the importance of agency work as a source of flexibility for businesses and as an important route back into work for job-seekers.

Commenting on the JobsOutlook findings, Roger Tweedy, the REC’s Director of Research, said:

“This is the most encouraging sign we have had so far that the jobs market is now gathering momentum led by a higher demand for temporary workers. Following last month’s slight dip in employer confidence businesses are forging ahead with plans to stabilise or expand their workforces. This fits with the feedback from professional recruiters on the ground, who are reporting increased hiring activity in most sectors.

“Looking ahead, public sector cuts could act as a counterweight to the improving jobs outlook in the private sector. Post-election, the debate will need to focus on new ways of delivering public services rather than on short-term cuts, and this is one of the main thrusts of our current public sector resourcing campaign.

The value of residential construction projects starting on site during the three months to March 2010 was 37 per cent higher than the same period a year ago according to the latest Glenigan Index. Project starts increased in the private and social housing sectors. “Many projects stalled by the bad weather in January and February have now started. Housebuilder confidence has been boosted by rising house prices and property transactions seen since last summer. This recent improvement is encouraging and gradual strengthening in private residential construction is forecast for the coming months” according to Allan Wilen, economics director, Glenigan.

The value of non-residential construction project starts in the three months to March 2010 was only two per cent lower than the same period a year ago. “An increase in retail, hotel and Olympic related projects has helped offset the continued weakness of the private industrial and commercial sectors and a recent slowing in public sector projects” said Mr Wilen.

Civil engineering project starts were down 44 per cent on a year ago. “The decline is the result of fewer road and rail projects and delays to planned energy projects. A surge in project starts during the same period a year ago when civil engineering was by far the strongest construction sector exaggerates the recent decline” commented Mr Wilen.

Regionally the Midlands and Yorkshire & the Humber have seen a rise in overall construction project starts, while the North West, South West and South East of England continued to record double digit falls compared to the first three months of 2009.

The rise in public sector project starts since April 2009 has begun to lose momentum and the impending general election will exacerbate the fall. Mr Wilen added “While private sector projects are forecast to improve over the course of 2010, Government cuts will further restrict the flow of public sector schemes over the medium term. Conditions in the industrial and commercial property markets have moved off the low point reached in the first half of 2009 and project starts in these sectors are forecast to gradually improve in the second half of the year.”

[tag Recruitment]

According to Building Design today the Home Office recent rethink could lead to a ‘virtual ban’ on non-EU architects.

Overseas architects will need to earn at least £75,000 in order to qualify for working visas after new Home Office rules resulted in a “virtual ban” on architects from outside the European Union.

Until now under a points-based system non-EU workers who earned at least £40,000 could get a crucial 45 points towards a work visa. That threshold has now been increased by £35,000.

The change to “tier one” visas has been introduced amid growing public concerns over immigration rates and rising unemployment. But critics believe the system is too restrictive and will drive firms out of the UK.

George Ferguson, a former RIBA president, said he was horrified by the “massive hike”, adding: “This is virtually a ban on overseas architects.

“This is a very high salary for most architects, and really will restrict visas to the associate or director level in London.”

The new system affects skilled migrant workers in general, but Ferguson pointed out that architects tend to earn less than other professions like doctors or lawyers.

This is a major change to the current threshold for Architects looking to work in the UK and could have a significant impact on the market, for more comment and reaction visit BD here.

http://www.bdonline.co.uk/story.asp?storycode=3161898&origin=BDweeklydigest

An action plan has been put in place that will guide construction work designed to regenerate Norwich’s northern city centre.

Norwich City Council has announced that its members formally adopted the plan at a meeting last week; it will inform planning decisions on the regeneration of this vicinity up till 2016.

The construction jobs it entails include the redevelopment of major sites such as Anglia Square and St Mary’s Works, the building of a new shopping centre and improvements to transport access.

The council’s executive member for sustainable city development, Brian Morrey, remarked: “This part of the city has a rich heritage and cultural interest, as well as a distinctive identity.

“The plan will enhance these as well as providing a safe and attractive public environment.”

The Recruitment and Employment Confederation (REC) and KPMG Report on Jobs – published this week – provides the most comprehensive guide to the UK labour market, drawing on original survey data provided by recruitment consultancies of which Technical Moves have contributed.

The latest survey findings signalled stronger increases in both permanent and temporary/contract staff appointments during March. In Summary the report found that:-

Permanent placements rose at fastest pace for over twelve years…
The number of permanent staff appointments made by UK recruitment consultancies increased again in March, with growth picking up to the strongest since October 1997. Higher placements were underpinned by a further expansion of permanent staff vacancies, albeit the slowest in three months.

…while temp billings also increased at sharper rate
Growth of short-term staff appointments quickened to the strongest for thirty-four months in March. Billings were driven higher by the fastest increase in demand for temp staff since January 2008.

Candidate availability rose further
Recruitment consultants signalled another improvement in the availability of staff during March. The supply of both permanent and temporary/contract candidates increased at slightly faster rates compared with one month previously.

Increase in pay reported
Permanent staff salaries rose again in March. The rate of inflation was solid, despite easing slightly from February’s twenty-month high. Temp pay increased at a pace that, although modest, was the sharpest since June 2008.

Technical Moves Comment:-

The findings of this report are another solid indication that the market is over the worst of the recession. Technical Moves have also continued to see an increase in the number of permanent positions being registered during March within its core East Anglian areas. However, the Architectural and Construction Management sectors remain very difficult. The increase in temporary requirements is typically seen at this time of year as particularly public sector organisations look to utilise budgets before year end.

We still anticipate that growth in the market will remain limited until we are the other side of the election and companies feel clearer on the direction of any new government, particularly with national insurance contributions and jobs playing such an important issue. We have seem some promising signs in some markets and we remain positive for growth during the second half of 2010.

[tag Jobs, Recruitment,
Employment]

The BBC have just published this article which puts an interesting twist on the subject of clients controlling staff sickness.

Employers always have a balancing act when looking to cut the number of days lost to sick leave while respecting workers’ rights to take time off when ill? Many are naturally suspicious that absentees may be "pulling a sickie" – taking a day off when they are not unwell. However, one employer taking a lead is Merseyside Fire and Rescue, which rewards 100% attendance.

Rather than concentrating on the negatives, here are some interesting ideas to look at the issue in a positive light, rewarding good attendance and ultimately staff retention.

http://news.bbc.co.uk/1/hi/magazine/8594866.stm

Technology firm GE has announced plans for a major investment in UK offshore wind generation that will create a large number of civil engineering jobs over the next decade.

Chancellor Alistair Darling announced in last week’s budget that the government was creating a £60 million fund that would finance the development of sites near ports to support manufacturing related to offshore wind generation.

GE has responded by revealing plans to invest €110 million in this sector by 2020, which will have a marked impact on civil engineering recruitment, creating an anticipated 1,900 new green energy jobs in the UK.

Business secretary Lord Mandelson commented: “This is great news from GE, a vote of confidence in UK low carbon manufacturing which should create a huge number of jobs.

“The industry has enormous potential for further growth, with significant knock-on benefits for jobs throughout the supply chain.”

Wind generation is likely to be a major provider of civil engineering jobs over the next decade, with the government revealing plans back in January to facilitate construction work on up to 6,400 new offshore turbines by 2020, creating 70,000 jobs in total.

This was a budget low in detail, focussing more on political differences between the government and the opposition than economic policy. Although all parties agree that there have to be spending cuts in order to deal with public sector debt, exactly what would be cut was always unlikely to be announced before an election.

On a positive note for the private housing market, stamp duty for first time buyers was abolished for house purchases under £250,000 until April 2012. The move follows a marked slowing in property transactions following the end of the previous stamp duty ‘holiday’ and should provide additional support for the anticipated rise in private housing starts during 2010. The cost of the measure is to be paid for by a new 5% stamp duty rate for house purchases over the value of £1 million from April 2011.

From a construction point of view, there were some promised funds for “meeting the UK’s Infrastructure and Energy Challenges”. These included £84 million to fund the repair of local roads hit by this winter’s bad weather, and a £250 million fund for increasing national road capacity (although the latter is to be found in part from the Highways Agency’s existing budget). However, transport spending is likely to be squeezed post-election (whoever is in power). Indeed the Chancellor has tasked Infrastructure UK to investigate cost of civil engineering works for major infrastructure projects in the UK.

Overall, figures for gross investment remained similar to those set out in the previous pre-budget report, up slightly to £69.9 billion. Net borrowing for 2010/11 was lower than previous predictions, at £167bn. The Institute of Fiscal Studies (IFS) have said that in order to meet its borrowing forecasts, the government would have to lower spending £46 billion by 2015. Indeed, this figure will be higher if UK economy does not match the government’s strong growth projections The Conservatives plan quicker, deeper spending cuts than Labour’s, whose own cuts would be equivalent to an 11.9% fall in central government spending, according to the IFS.  (Source: Glennigans)