Political impasse starts to bite at construction sector

Impact of latest decline felt most keenly in infrastructure and commercial works
Impact of latest decline felt most keenly in infrastructure and commercial works

Northern Ireland construction workloads have fallen for the first time in four years, an industry body has claimed as Northern Ireland’s political parties fail to find a way back into a functioning Executive.

The bleak news comes in the latest Northern Ireland Construction and Infrastructure survey from the Royal Institution of Chartered Surveyors (RICS) and Tughans which blames a lack of public sector spending and a further retrenchment in infrastructure investment.

The report says that while the overall fall in construction workloads was marginal, with a net balance of -2% of surveyors reporting reduced activity, significant falls were reported in infrastructure workloads (a net balance of -33%) and public-non-housing workloads (a net balance of -33%).

Workloads were also falling in the public housing sub-sector, according to a net balance of -13% of surveyors.

The survey points to a broad-based deceleration in the construction sector across the UK, but Northern Ireland was the only region where workloads fell in the quarter, albeit marginally so.

The province was also the only region where infrastructure and public-non-housing workloads were in negative territory.

Private housing was the only construction sub-sector where activity was rising during the quarter, with private commercial and private industrial workloads reported to be flat.

“The marginal fall in workloads in Q2 follows a softening in the data during Q1,” said PICS NI chair Andy Tough.

“This is being driven by weakness in public sector activity, with infrastructure and public-non-housing activity falling back relatively sharply. A lack of investment in infrastructure in Northern Ireland is a long-standing issue, but anecdotal evidence from chartered surveyors suggests that the current political situation in Northern Ireland is a factor.”

He said there were a number of other factors also impacting on the local construction sector, including the slowdown in other parts of the UK where local firms are active, uncertainty over Brexit and challenges in the planning process.

“In relation to infrastructure, the recently announced additional money for Northern Ireland from Westminster looks set to provide a welcome boost for investment, but we also want to see a local Executive in place to ensure the delivery of long-term policies and decision-making that are vital to the development and growth of the economy,” he said.

Tim Kinney, construction partner at Tughans Solicitors, said it was encouraging to see that private house-building activity had continued to rise, contributing to housing supply as well as delivering important economic benefits.

“But we also need to see increasing activity in the commercial and infrastructure sectors too, for instance to increase the supply of Grade A office space and to create a more attractive offering to foreign direct investors.

“The construction sector remains crucial to the local economy in terms of employment, its supply chain, and the benefits it delivers to society, and government must play its role in creating an enabling environment so that essential investment, including in infrastructure, can happen.”