Exclusive: More than half of leaders at the UK’s biggest contractors have said Scottish independence would have a negative impact on their businesses, just two weeks before Scotland goes to the polls.
Results from the Construction News Barometer for Q3 2014 revealed that 36 per cent of respondents thought independence would cause some disadvantage for their business, while 15 per cent thought a ‘yes’ vote would be a significant disadvantage for their business.
Overall, 51 per cent of business leaders thought Scottish independence would have a negative impact on them, up from 36 per cent in Q2 2014 and 34 per cent in Q1 2014.
One respondent commented that if the ‘yes’ campaign triumphs on 18 September, “Scottish infrastructure activity will be targeted towards those contractors based in Scotland”.
In the latest barometer, 46 per cent said independence would have little or no impact on their business. None of the respondents thought it would significantly benefit them, while just one said it would be of some benefit.
Asked what their greatest concerns would be over the next 12 months, 51 per cent said they were concerned about the 2015 general election stalling construction activity.
“Scottish infrastructure activity will be targeted towards those contractors based in Scotland [in the event of independence]”
CN Barometer respondent
Confidence in the Labour Party’s infrastructure ambition dropped significantly in Q3 with just 38 per cent agreeing that a Labour government would spend more on infrastructure than a Conservative-led government, compared with 62 per cent of respondents who agreed with the statement in Q2.
“Things are improving, work is starting to pick up and the outlook is more positive. The doubts lie in if a change in government puts the [country] back into recession, the interest rates rise too quickly and people then get scared,” one respondent said.
Almost three-quarters (74 per cent) agreed that the coalition government’s plans for infrastructure investment after 2015 would be a significant boost to the industry.
Opinion on the appointment of Nick Boles to the construction minister role was lukewarm.
None of the respondents agreed that Mr Boles was a good appointment, but 58 per cent said they ‘somewhat’ agreed, whiles the rest disagreed.
A majority of respondents thought London mayor Boris Johnson’s decision to run as a candidate in next year’s election in the Uxbridge constituency would have a negative impact on construction plans in the capital.
Three-quarters said Boris Johnson’s exit as London’s mayor could damage prospects for Crossrail 2 and 64 per cent thought his departure would be bad for London’s infrastructure plans.
“Doubts lie in if change in government puts the [country] back into recession, the interest rates rise too quickly and people then get scared”
CN Barometer respondent
Mr Johnson was dealt a blow by the Airports Commission this week which ruled out building a new airport in the Thames Estuary due to high costs, economic disruption and environmental hurdles.
But the main concerns of industry leaders continue to be skills shortages and material and labour cost inflation.
Asked about their concerns for the next 12 months, 97 per cent of respondents said they would be worried about a lack of skills and staff, followed rising labour costs (78 per cent) and rising materials prices (59 per cent).
One respondent commented: “It will be mixed blessings, on the upside workload will continue to increase; on the downside the major concerns are capacity and inflation.”
Another said that improving prospects would lead to “concerns over availability of key resources and strategic materials”.
In the short term, concerns were similar with the top three challenges facing the UK’s biggest contractors today revealed to be skills shortages (87.5 per cent), low tender prices (72.5 per cent) and materials costs (40 per cent).
“Tier ones will continue to struggle, squeezed by low tender expectations of clients and rising supplier prices. Onerous contract terms will also continue to be punishing for tier ones,” one respondent commented.
Despite continued caution in the industry, there were also growing signs of improvement.
“It will be mixed blessings, on the upside workload will continue to increase; on the downside the major concerns are capacity and inflation”
CN Barometer respondent
All but one of the respondents said that private sector clients were showing a little more or much more interest in developing than they were a year ago. The results also revealed that those clients were focusing less on cost than they were three months ago.
In the latest barometer, 56 per cent said a low bid cost was of significant importance to clients, compared with 82 per cent in Q2. Meanwhile 36 per cent said it was of some importance in Q3, compared with 14 per cent in Q2.
A greater proportion of respondents also said turnover had recovered to pre-recession levels. In Q3, 32.5 per cent said their turnover had already recovered to pre-recession levels, compared with 15 per cent in Q2.
The percentage of those who did not expect their turnover to recover until 2016-2020 fell to 25 per cent in Q3, from 35 per cent in Q2.
The Construction News Barometer is a survey sent to chief executives, chairmen and senior directors of the top 100 contractors in the UK, ranked according to turnover.
The survey contained a total of 24 questions and was open from 13 August until 28 August. It was completed by 42 industry leaders.