Construction sector rebound and government’s building agenda bode well for firms like Townsend and Renaudon

Published by Rhys Taylor-Brown on October 15th 2020, 2:02pm

On demand construction hire specialist Skrap has found that the UK construction industry is beginning to rally as builders claim workflows are steady and revenues are starting to recover.

In a survey of 2,000 construction companies across the UK, Skrap uncovered that 44 per cent reported that workflow has now reached pre-lockdown levels. The recovery is such that around 23 per cent of businesses polled felt they would at least match their 2019 revenue levels and potentially see a 20 per cent increase. This comes in spite of the fact that 63 per cent of the 2,000 are still waiting to be paid for work they did pre-lockdown. The value of the pending payments averaged out at £47,784 per company.

Nevertheless, this is an improvement on June 2020 levels, when Skrap uncovered that businesses were waiting to receive around £157,642 each on average.

The Financial Times reports that the sector’s rebound is being buoyed by a strong housing market, which aligns with Skrap’s findings. Of the work that is being carried out, building contractors are seeing the highest demand from residential projects [48 per cent] and public sector work [30 per cent].

Where businesses were seeing a partial slowdown in the amount of work, the economic landscape delaying decisions on investment was identified as a factor of blame.

Jamie Herd, managing director of Lord’s builders merchants said: “We’ve seen sales of supplies increase steadily over the past three months and orders to the end of 2020 look good especially in London and the home counties. The government’s favourable loan schemes have boosted the cash flow of construction businesses to enable them continue their work and overall, there is a bullish mood that work is returning to normal in the industry”.

It is certainly a different sector landscape than the one industry operators found themselves in back in March when the lockdown was called, when the site-based, labour-intensive sector was suffering as a result of enforced social distancing measures and initial site closures.

The social distancing conundrum has since been alleviated somewhat by the government’ reduction of the previous two-metre social distancing rule, in favour of one-metre plus to help certain sectors ease back into working routines.

The sector’s progress certainly provides room for optimism for Ryszard Kawak, partner at Stoke-on-Trent-based chartered surveyors and building cost consultants, Townsend and Renaudon Chartered Surveyors.

Back in March, Kawak was critical of social distancing measures and closures hampering the industry.

He said: "The construction industry is unique. The men on the ground who undertake all the work on building sites have been told they cannot work.

"If there is no work on sites -- the key driver of our industry -- there will ultimately be a backbite on the rest of the country."

The government has clearly recognised Kawak’s point over the last few months, and its shake-up of social distancing and its agenda to build as it seeks to mount an economic recovery looks set to make sure that firms like Townsend and Renaudon are left with plenty to do in the coming months and years, with sweeping reforms to the planning system rendering it easier to build better and more environmentally friendly homes where people want to live, and offering greater freedoms for existing builds in towns and cities to change use without planning permission.

Within these plans is The Home Building Fund, which will help smaller developers access finance for new housing developments with an additional £450 million boost which is expected to support the delivery of around 7,200 new homes.

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