Author Archives: Intersect

Latest official construction output figures for July point to a continuing construction rebound.

July output figures show industry continues on recovery path despite some concerns about orders

Monthly construction output increased by nearly 18% in July keeping the recovery on track, despite buyers raising concerns about an orders wobble in August in the Chartered Institute of Procurement & Supply sentiment survey.

The rise in July output is the third consecutive month of growth since the record 40% plunge in April.

Infrastructure work made big gains and returned to higher than pre-pandemic levels.

It ranked as the only sector to see growth, increasing by 6% in the three months to July, compared with the previous three months.

Over the same trend period, all new work is still down by around 10%, the largest single contributor to which was private new housing, which fell 17%.

Clive Docwra, managing director of construction consultant McBains, said: “Construction is still a long way from being out of the woods and the upturn is extremely fragile.

“The big concern for the industry is if there’s a second spike and a further lockdown. The government needs to do all it can to ensure the sector maintains its recovery.

“On top of this, of course, a potential no deal at the end of the Brexit transition period is making investors nervous about committing to new projects.

“The Prime Minister may want the industry to ‘build, build, build’ but that’s difficult when many investors are saying ‘wait, wait, wait’ and holding off embarking on new developments until there’s greater clarity.”

Fraser Johns, finance director at Beard, said: “In a sense there was really only one way these figures could go starting from such a low base back at the start of Q2.

“But continued growth at this rate for the third consecutive month has to be a good thing.

“However it is interesting to note that across the sectors, and therefore the economy as a whole, the rate of recovery is not as strong as it was in June with construction growing at 17.6% compared to 23.6% previously.

“This is likely to be down to a number of factors but would reflect what we’re seeing on the ground.

“We face a challenging 12 months ahead based on continued uncertainty in the economy, and the affect this is having on getting project decisions over the line.

“So while it’s welcome to see overall GDP grow by 6.6%, a return back to pre-pandemic levels simply cannot come quickly enough.”

Allan Callaghan, managing director of Cruden Building, part of the Cruden Group said: “Encouragingly, at Cruden, we are seeing a surge in demand for new homes and have secured a robust forward order book to help address the country’s chronic under supply of housing across all tenures.”

Article Courtesy of ‘Construction Enquirer’

Highways England has set out its plans for the next five years, including starting 12 new major roadbuilding projects.

As part of his budget statement, the chancellor announced a £27.4bn budget for investment in England’s strategic road network between 2020 and 2025. The publication of the government’s second road investment strategy (RIS2) set out more detail.

Highways England has now published its own strategic business plan for RIS2, setting out how it plans to spend that £27.4bn.

The marquee construction elements are the £2bn Stonehenge tunnel to upgrade the A303 (Amesbury to Berwick Down) and the £7bn Lower Thames Crossing. Work on the Stonehenge tunnel is earmarked to start in summer 2022; construction of the Lower Thames Crossing is down to start in early 2023.

Over the next five years, £14.2bn is planned to be spent building improvements to the network (enhancement schemes); £10.8bn will be spent on running the existing network (operations, maintenance and renewal); £1.1bn will go on Highways England’s own internal running costs; and a further £936m has been allocated for ‘designated funds’ (‘delivering projects… beyond the traditional focus of road investment).

Highways England chief executive Jim O’Sullivan said: “Having the certainty of long-term investment, and a schedule of committed schemes and targets, has helped us move away from managing the SRN as individual pieces of asset, such as tarmac, concrete, bridges and signs. We’ve reached a place where government considers our roads as a fully integrated system, and a part of the broader UK transport network. As a result, we can work better with our stakeholders and with our supply chain as partners. We offer much improved customer service, and we are starting to clear the back log of decades of under investment in the country’s most important transport network.”

As previously announced, Highways England commits to fixing many of the hazards that it previously built into its ‘smart’ motorways. It promises to end the use of dynamic hard shoulder motorways by March 2025, upgrading them to all lane running by converting the hard shoulder into a permanent traffic lane.

The stopped vehicle detection technology that was meant to be a key feature of ‘smart’ motorways but quietly forgotten about will now be introduced to existing all lane running sections by the end of March 2023, the business plan says.

And ‘smart’ motorways are getting more refuge areas for stranded motorists – an additional 10 are to be installed on the M25 before the end of 2020. Highways England will then consider the impact of these for a couple of years and consider adding more elsewhere.

Existing refuge areas that are narrower than the current 15 foot standard will be widened ‘if feasible and appropriate’.

Article courtesy of ‘Construction Index’ August 2020

Former Clancy chief commercial officer Jon Loveday has been appointed new Director of Infrastructure, Enterprise and Growth at the Infrastructure and Projects Authority (IPA).
He will oversee project delivery on major projects like HS2 and Northern Powerhouse Rail.

Loveday’s previous role was at Clancy where he led a tw0-year turnaround project to create a new strategy and operating model.

He will start his new government job next month leading the team that supports the delivery of government’s major projects by “helping to set them up for success and building delivery capability in departments”.

Nick Smallwood, IPA Chief Executive and Head of the Project Delivery Function, said: “We must consistently deliver our major projects successfully to help rebuild our economy and transform our infrastructure.

“I’m pleased to welcome Jon to the IPA, who brings with him a wealth of experience from the infrastructure sector. I’m sure Jon will play a major role as we move forward supporting the government’s ambitious agenda.”

Loveday said: “I am delighted to be joining the IPA at such an important time. Our ability to deliver world leading infrastructure is at the heart of the UK government’s planned infrastructure revolution and we have a lead role to play in kick starting the economy.”

Chancellor Rishi Sunak continued to put construction at the heart of the coronavirus recovery with a £3bn green investment package to support around 140,000 jobs.

A £1 billion programme will improve the energy efficiency of public sector buildings while £2bn will go towards Green Homes Grants for homeowners and landlords to insulate properties.

Sunak also raised the Stamp Duty threshold on house sales to £500,000 from £125,000 until next March to boost the housing market.

He said: “One of the most important sectors for job creation is housing.

“The construction sector adds £39 billion a year to the UK economy.

“House building alone supports nearly three quarter of a million jobs, with millions more relying on the availability of housing to find work.

“But property transactions fell by 50% in May. House prices have fallen for the first time in eight years.

“And uncertainty abounds in the market – a market we need to be thriving.

“We need people feeling confident – confident to buy, sell, renovate, move and improve.

“That will drive growth. That will create jobs.

“So to catalyse the housing market and boost confidence, I have decided today to cut stamp duty.”

Construction Products Association’s Economics Director, Professor Noble Francis said: “The £2 billion funding towards energy-efficient retrofit of the existing housing stock is potentially very promising; but the devil is in the detail, as government has previously demonstrated on energy-efficient retrofit programmes, in particular given the very poor experience of the Green Deal policy.

“In addition, £1 billion for insulating public buildings sounds very good but given this is only for one year, it raises the key question of whether government departments and local authorities have the time or resource to spend this effectively.

“The main risks are that the majority of this money ends up not getting used or that it gets wasted in a rush to spend it. ”

Matthew Pratt, Chief Executive at Redrow, said: “We welcome today’s stamp duty holiday as a positive step to stimulate the housing market and wider economy.

“The measures will have a much-needed domino effect, also supporting suppliers, subcontractors and consultants to the house building industry.”

The government has postponed the introduction of the planned changes to the controversial IR35 legislation, which implements heavier tax burdens on freelancers and the self-employed. The new rules will now come into force on 6 April 2021, as opposed to the same date in 2020.

Speaking to the House of Commons on the evening of 17 March, chief secretary to the Treasury Steve Barclay (pictured) said: “The government is postponing the reforms to the off-payroll working rules, IR35, from 6 April 2020 to 6 April 2021.”

Addressing the Commons, Barclay said the suspension is in response to the ongoing spread of Covid19 to help businesses and individuals. He said: “This is a deferral, not a cancellation, and the government remains committed to reintroducing this policy to ensure people working like employees but through their own limited company, pay broadly the same tax as those employed directly,” he added.

Andy Chamberlain, director of policy at the Association of Independent Professionals and the Self-Employed (IPSE) said the government has done “the sensible thing” by delaying the changes to IR35 in the private sector.

In a statement released late Tuesday evening, Chamberlain said: “These changes have already undermined the incomes of many self-employed businesses across the UK. However, they would have done even more serious damage if they had gone ahead as planned.

“It is right and responsible to delay the changes to IR35 for at least a year during the coronavirus [Covid19] crisis, to reduce the strain and income loss for self-employed businesses.

However, Chamberlain has reaffirmed that more needs to be done to support self-employed businesses and has called for an emergency Income Protection Fund. He said: “This is a sensible step to limit the damage to self-employed businesses in this grave and unprecedented situation, but we also urge the government to do more. It must create an emergency Income Protection Fund to keep the UK’s crucial self-employed businesses afloat.”

Looming changes to IR35 rules are causing widespread concern in construction.

HMRC rules are due to change from April 6 making contractors liable for determining the tax status of off-payroll professionals.

Major contractors have been auditing freelancers employed via personal service companies as thousands of professionals are braced for a move back to PAYE.

The government is now calling for evidence from affected individuals and businesses to ensure “smooth implementation of the reforms.”

Financial Secretary to the Treasury Jesse Norman said: “We recognise that concerns have been raised about the forthcoming reforms to the off-payroll working rules.

“The purpose of this consultation is to make sure that the implementation of these changes in April is as smooth as possible.”

Current rules allow workers to be employed via a personal service company (PSC) which determines whether IR35 tax rules should apply.

That responsibility is due to shift from April to contractors who will determine employment status.

Freelance workers fear they will lose out through higher tax payments while contractors will also face bigger bills from direct employment.

The government is also reviewing its Check Employment Status for Tax (CEST) online tool which has attracted widespread criticism.