With a recession underway, new orders for the sector are already down by more than one-third from their recent high and likely to fall further over the coming months as confidence continues to erode.
Advancing already planned construction and infrastructure projects will help to counter the sharp drop in activity in the construction sector. Government statistics show that the number of people working in the construction industry fell by 17,000, or almost 1%, between June 2007 and June 2008. However, RICS estimates that construction employment could fall by around 14% peak to trough -around 300,000 job losses - unless some action is taken on Monday. That would be a repeat of the problems faced in the early nineties when, between Q1 1991 and Q2 1993, the number of people employed in the industry fell by 342,000 from 2,236,000 to 1,894,000.
With the threat of redundancies looming there is a serious risk that vital skills will be lost to the industry in the long term. In a worst case scenario, construction workers will re-train in other fields and their skills will be permanently lost to the industry, with long term ramifications for output. After the 1990s downturn, it took until 2001 for construction output to return to pre-recession levels.
To address this issue the Chancellor must use the Pre-Budget Report to announce additional funding for major projects to help retain skilled workers in the construction industry. Priorities for funding must be:
Building Schools for the Future. The Government should bring forward future phases of this scheme to renovate schools in England.
Network Rail upgrades. Additional funding to bring forward station upgrade schemes, civil engineering projects and track work proposed for the railways.
New housing schemes. Housing Associations should be encouraged and funded to act as lead developers on housebuilding projects.
Rebuilding the NHS. Additional funding should be made available for the construction of new hospitals and the refurbishment and replacement of other health facilities.
Light rail and tram schemes. The Government should reconsider shelved transport schemes in cities including Leeds and Liverpool.
Commenting RICS chief economist, Simon Rubinsohn said: "The economic downturn will hit construction professionals, including Quantity Surveyors and Project Managers, plasterers, bricklayers and carpenters. Bringing forward capital funding for vital projects will have the advantage of delivering much needed housing and infrastructure but will also go someway to preventing an employment crisis in the industry. As the UK enters a recession it is essential that skills are not lost to the construction sector as people leave and retrain to take up other jobs."
