South East: Labour shortages intensify on back of firm workloads, reports RICS

The latest RICS Construction Market Survey for Q1 2015 shows labour shortages in the sector intensifying alongside feedback that workloads are continuing to rise. Across the UK some 63% cited labour shortages as an issue followed by 55% highlighting finance.

In the South East, 70% of respondents cited a lack of quantity surveyors, 72% cited a lack of other construction professionals, and 52% cited a lack of blue collar workers.

While workloads continue apace across all sectors in the South East, with 35% more chartered surveyors seeing a rise, the private sector remains the principal driver of growth, with 45% more respondents reporting a rise in private housing workload activity and 41% more seeing a rise in private commercial in Q1.

In particular, public house building in the north of England appears to be stronger than elsewhere in the UK, while private house building activity is greater in the southern parts of the country, despite overall feedback from contractors that profit margins are tightening.

Across the infrastructure sector in the UK as a whole, respondents reported the fastest growth since RICS began recording UK construction market data (Q4 1998) – in particular, the rail and road sub-sectors are where workload momentum is forecast to be highest. In the South East, 30% of respondents are seeing a rise rather than fall in infrastructure workload.

Across all sectors in the region input costs are slightly outpacing prices, with 64% more respondents reporting increases in cost prices and 56% more respondents’ reporting higher output prices.

Despite all the anecdotal evidence that a degree of uncertainty is entering the market in the countdown to the General Election, outward confidence for growth is strong, with 84% of respondents in South East expecting their workloads to rise over the next 12 months and this to translate into 3.8% growth in 2015.

RICS director of the built environment Alan Muse said: “Despite the outward optimism, there are some very real unknowns which are impacting on industry, including the General Election, the UK’s relationship with Europe and skills shortages.

"The upturn in workloads has led to more competitive tendering, particularly across public sector projects, but a lack of accessible finance is now affecting a net balance of 55% of our members, and this will be felt most keenly among the small-medium sized SMEs.

"Now that material shortages are becoming less of an issue, the practical challenges are in providing the skilled labour the industry needs and in alleviating the financial constraints, which saw nine months of decreased lending in 2014.”