Lack of confidence in government hampering construction growth, says Gleeds

Lack of confidence in government is hampering growth, says Gleeds’ latest construction market report.

Figures in the report - UK Construction Market Report 3Q 2023 - revealed 95% of contractors or members of their supply chains had declined a tender in the last quarter, up from 78% in the consultancy’s spring survey. 

At least 40% attributed this move to a lack of capacity, while 52% said that the proposed tendering/contract conditions were too onerous or there was an unacceptable risk profile. 

Fewer than one in five of those quizzed said they have confidence that the current government can improve market conditions and ultimately increase output from the sector. 

With the prospect of a general election looming, respondents told Gleeds they would like to see an incoming government focus its efforts on addressing labour shortages and shrinking the skills gap; incentivising land purchases and development; and improving payment practices.  

In terms of the state of the sector today, interest rates and inflation were ranked the greatest threat by half of those quizzed, with investor confidence and materials and labour cost escalation remaining a concern for many. 

More than 90% of respondents reported that inflation is now heavily impacting the viability of schemes and 96% shared concerns that rising mortgage rates and rental activity will continue to negatively impact housebuilding.

Gleeds CEO Graham Harle said: “The market report reflects the fact that the wider economic conditions remain challenging. 

“Clearly, the construction industry does not have faith that the current government is listening, so it seems that we must act to strengthen the sector from within. 

“Embracing digital technologies will help us to boost productivity and may enable us to attract a more diverse workforce, while increasing collaboration and forging knowledge transfer partnerships will allow us to deliver even greater efficiencies despite depleted resource.”

The summer survey also revealed continued optimism around digitalisation of the sector, with 74% of non-contractor respondents and 60% of contractors saying they were ‘excited’ or ‘curious’ about the further integration of AI into the construction industry. 

Click here to read the full report.