Scottish construction sector facing 'ominous' year ahead

The construction sector faces an “ominous” year ahead with workloads, jobs and profits expected to fall sharply, a survey has found.

The Royal Institute of Chartered Surveyors (RICS) said its headline statistic for workloads in Scotland fell into negative territory for the first time in nearly four years.

Its quarterly survey of members found confidence fell sharply when the coronavirus lockdown measures were introduced, while the difficult times for the industry are expected to last into 2021.

In Scotland, workloads dropped by 4% in the first three months of 2020.

Across the UK, a net balance of -39% of respondents expected profits to be lower in a year’s time, with employment and workloads also expected to fall.

John Pascoe, a chartered surveyor in Aberdeen, said: “The impact is impossible to gauge.

“We have seen projects put on hold, sites closed and there is real uncertainty in the short term and longer term.”

RICS said there are gaps in government support schemes that will need to be filled.

Its chief economist, Simon Rubinsohn, said of the UK picture: “It is hardly a surprise that sentiment in the construction sector fell particularly sharply following the imposition of the lockdown.

“More ominously, the forward looking metrics have also softened materially, suggesting that it will not simply be a case of returning to where the industry was prior to the onset of Covid-19 as the Government begins to ease the lockdown.

“Partly this reflects uncertainty about the likely state of the economy at this point and how this will impact on development but it is also indicative of the challenge the sector is currently under as it attempts to access Government funding to keep heads above water.”

At the start of the lockdown, the Scottish Government said all construction projects which were not essential should close.

First Minister Nicola Sturgeon’s advice to the construction industry went further than that of the UK Government.

Sites south of the border were initially told work could continue as long as staff stayed two metres apart.

RICS head of Government relations Hew Edgar said: “The supporting measures that the Government introduced in the immediacy for the built environment – covering pay, rent, and business operating costs to name a few – were welcome but it has become apparent that there are gaps that need addressing, not least parity in approach across the UK.

“The UK Government must start exploring how the sector could taper the reopening of non-essential construction sites within stringent parameters of health and safety adherence; introduce grants, and review how repair and maintenance work could proceed whilst public buildings are not fully occupied.

“A combination of these will support professionals, the workforce, manufacturers and supply chains by providing a pipeline of work and vital cash flow in the short term.”