The Federation of Master Builders

Alarm bells for construction sector in London

Published date: 23 January 2018

Confidence and workloads for small builders in London took a downward turn towards the end of 2017, according to the Federation of Master Builders (FMB).

Key results from the FMB’s latest State of Trade Survey, which is the only quarterly assessment of the UK-wide SME construction sector, include:

• In terms of workloads, expected workloads and enquiries, the overall indicator for the performance of London’s smaller building firms dropped by four percentage points in Q4 2017 compared with the previous quarter;

• Fewer construction SMEs predict rising workloads in the coming three months, down from 41% in the previous quarter to 38% in Q4 2017;

• 87% of builders believe that material prices will rise in the next six months, up from 82% in the previous quarter;

• More than two-thirds (68%) of construction SMEs are struggling to hire bricklayers and 63% are struggling to hire carpenters and joiners – the highest since records began;

• Nearly two thirds (61%) of construction SMEs expect salaries and wages to increase in the next six months.

Barry Mortimer, Director of FMB London, said: “London’s SME builders start 2018 in choppy waters with uncertainty in the air. Growth is slowing, material prices are rising and it’s becoming increasingly difficult for builders to find the skilled workers vital to their everyday existence. More than two thirds of construction SMEs are struggling to hire bricklayers and this has increased by nearly 10% compared with the previous quarter of the year. What’s more, nearly as many are facing difficulties hiring carpenters and joiners. Indeed, these shortages are reflected in soaring wages for core trades. Anecdotally, some employers have reported paying carpenters in the capital more than £70,000 a year, up from £45,000 just 18 months ago.”

Mortimer concluded: “In order to meet the Mayor of London’s ambitious housing targets we need a vibrant and growing SME house-building sector. Houses do not build themselves and London’s building firms are particularly concerned about the growing difficulties in finding skilled workers. London is especially reliant on EU migrant workers with 70% of firms in London and the South East employing them and so as we approach Brexit, the capital’s builders are right to be concerned about skill shortages. Construction is without any shadow of a doubt an industry of clear strategic importance to the economy. Without a fully charged-up construction sector, it will be impossible to meet our housing targets in London. Addressing the sector’s acute skills crisis, as raised by the latest FMB State of Trade Survey, must be a priority. The Government must take note of the worsening construction skills shortage with Brexit looming large on the horizon. London’s construction sector could well grind to a halt post-Brexit unless Ministers implement a sensible, flexible immigration system.”

Stay up to date with consumer news

For regular consumer updates from FMB, sign-up here with your email address.