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Private spending offsets third year of public investment decline

Private spending in construction has grown at its fastest rate since 2010 but public spending continues to decline.

Construction output figures from the Office for National Statistics, which separately covered both the final quarter of 2013 and the entire year, showed that private spending hit £56.4bn last year, up 3.4 per cent compared with 2012.

Public spending on construction fell by 4 per cent to £21.1bn – its third consecutive year of decline – though the fall was a marked improvement on the double-digit decline (14.3 per cent) recorded in 2012.

The calculations exclude infrastructure spending, which in 2013 grew by 2.9 per cent year on year but was still 8.9 per cent below the record high recorded in 2011.

ONS head of construction statistics Kate Davies told Construction News that despite the drops in public spending, it has held relatively steady compared with the early years of the recession.

“If it wasn’t for public spending being relatively steady [the picture] could have been much worse,” she said.

Total construction output grew by 1.3 per cent in 2013 compared with 2012, in line with forecasters’ updated expectations for growth.

New housing was confirmed as the core growth sector with a 10.4 per cent rise to £22.1bn – the sector’s highest rate of output since 2007.

Private housing was the strongest contributor to this with growth of 10.8 per cent, but public housing held strong with an 8.8 per cent rise.

Forecasters had predicted stronger growth in 2013 for the commercial and private housing repair and maintenance sectors, but commercial grew by 1.2 per cent last year while private housing repair and maintenance barely moved, with growth of just 0.5 per cent.

On a quarterly basis, construction output remained steady. The final quarter of 2013 was flat compared with Q3, with a rise of just 0.2 per cent, owing to a weak performance in November. Overall Q4 2013 was 4.4 per cent up on the last three months of 2012.

Ms Davies said: “When you look at how construction is now compared with the start of the recession, there is still a way to go, but compared with 2012 the industry is much healthier.”

Industry says:

Jack Kelly, head of contractors group, Deloitte

“All growth is going in the right direction. It’s not surprising that the growth is in housing; the rest of the construction sector still has a backlog.

“Gradually confidence is coming back. The industry needs continued confidence from the private sector, but also infrastructure under the National Infrastructure Plan. The public sector is still quite slow but you can understand that with fiscal tightness.”

Dave Sheridan, chief executive, Keepmoat

“Double-digit growth in new housing construction demonstrates how confidence in the economic recovery is improving.

“People talk about how important infrastructure projects such as High Speed 2 are but these statistics prove housebuilding can also be a huge driver of economic growth in the UK.

“These figures should become a spur to make new housing a key national infrastructure priority over the next 10 years.”

Martin Hewes, founder, Hewes & Associates

“The trend was more or less what I was expecting but the figures weren’t as strong. Housing and commercial are the most interesting sectors if they can sustain some upward movement, but commercial was weaker than I expected.

“It is still only a [period’s] data, and there is more work [recorded] in there but I’m less certain about the long term.”

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