Angela Rayner’s plan to build 1.5 million new homes is in crisis following a slump in housebuilding. The Deputy Prime Minister has vowed to speed up housebuilding but the construction sector is doing less work, new data shows.
The reversal “should set alarm bells ringing in Numer 10” said Sir Simon Clarke, Director of think tank Onward. He said: “Housebuilding is falling off a cliff, construction is shedding jobs, and the Government is still stuck in neutral. We don’t need more delays – we need bold planning reform now, or Britain’s recovery will be dead on arrival.”
The latest S&P Global UK construction purchasing managers’ index (PMI) showed a reading of 44.3 last month, down from 48.8 in June.
Any reading above the 50.0 threshold indicates that activity in the industry is increasing while anything below means it is contracting.
The drop in overall activity in July was the fastest since May 2020, when the industry was impacted by the Covid pandemic.
The volume of work decreased for all three sub-sectors in July, with civil engineering, commercial and residential construction firms grappling with weaker demand, according to the survey.
This was most pronounced for civil engineering, which saw the steepest drop, with some firms surveyed citing less work on public-sector projects.
Housebuilding activity also declined sharply again after tipping into growth in June for the first time in nine months.
Firms reporting a reduction in activity said they faced delays on sites, lower volumes of new work coming in and weaker consumer confidence.
Joe Hayes, principal economist at S&P Global Market Intelligence, said the latest data indicated a “fresh setback” for the UK construction sector, with firms “preparing for challenging times ahead”.
“They’re buying less materials and reducing the number of workers on the payroll,” he said.
“Anecdotally, companies reported a lack of tender opportunities and a hesitancy from customers to commit to projects.
“Broader themes of uncertainty, both domestically but also internationally, will do little to reignite investment appetites.”
Employment within the construction sector fell for the seventh month in a row in July, according to the PMI survey, with firms reporting lay-offs, freezing recruitment and not replacing people who leave.
However, experts said activity should improve over the coming months as borrowing costs come down and building firms benefit from Government investment.
Sam Richards, Chief Executive of think tank Britain Remade, said: “AFor too long, outdated rules and political caution have held back the homes and infrastructure Britain desperately needs – that’s why the Government rightly introduced the Planning and Infrastructure Bill to make it easier to build. Unfortunately, recent amendments by the government have watered down key parts of the bills – widening the cracks in the central pillar of the Government’s growth strategy.
“If Britain is serious about boosting growth, restoring productivity, and giving young people a fair shot at home ownership, then they need to accelerate concrete measures to boost supply.”