The next twelve months in construction: Hudson Contract’s Ian Anfield looks into the future
9th January 2018 | Ian Anfield
This time last year, I was asked to predict what I thought would dominate the construction agenda for 2017.
Some of the observations I made, such as Brexit being linked to skills shortages, were fairly safe bets, while others, like one of the major contractors failing due to lack of investor confidence, were arguably less obvious.
So now – looking over my shoulder while also focusing on the year ahead – here are my Top 10 predictions for 2018:
1. BREXIT: Unfortunately, Brexit will continue to be blamed for every ill running through 2018.
2. CARILLION: It turns out I was just a few days late with my prediction that the UK’s second largest contractor would not survive beyond 2017. The writing had been on the wall for many months, with the now-worthless shares losing over 90% of their value in just five years. Carillion is now history, and my hope for the months ahead is that damage limitation measures will help keep public sector projects on course, that job losses will be minimised and that creditor building firms will be able to weather the storm.
3. MATERIALS: No change here. I continue to believe the cost of materials will continue to rise throughout 2018, with demand, oil prices and the convenient scapegoat of Brexit all being blamed as the main drivers.
4. EARNINGS: This time last year I predicted freelance builder earnings would climb by 3% and in the event, they rose by 3.8%, which is above the rate of inflation. So unlike the rest of the UK workforce (if you believe government figures), the average subbie is better off now than he was twelve months ago. I’m crossing my fingers that the trend continues, and predicting a 2018 increase of 4%, taking average weekly earnings to £870.
5. HOUSE BUILDING: As expected the government has made lots of noise about penalties for land banking and relaxing planning laws, but ultimately the house builders will continue to build at a pace that minimises their risks and maximises profits. Reaching the government target of building 300,000 new homes this year depends on how many schemes are designed to lend money to those who can’t afford to borrow it, rather than government policy on affordable homes, or the new City Mayors building a few council houses here and there. It looks like the crash of 2008 is long forgotten and we are building our debt pile ready for the next one . . .
6. LONDON: The capital’s property bubble continues to float, notwithstanding January reports that prices are ‘stabilising’ and I expect this to continue provided the Conservatives manage to cling on to power this year. I’ve heard from a very good source that the foreign investors who buy overpriced London property for their retirement pot, like we might open a £5,000 ISA, are far more concerned about the damage Jezza and his chums could wreak on the economy than they are about Brexit. And the banks are setting up satellite offices in the EU rather than moving lock, stock and barrel, so no shortage of overpaid suits to buy up the flats around the fringes.
7. OFFSITE CONSTRUCTION: Here comes a new buzzword for policymakers and commentators who seem to think we have never tried it before – or this time it will work much better and be more efficient. Maybe they’ll turn out to be correct, but I doubt 2018 will see a huge shift to offsite, mostly because the cashflow system does not work for heavy factory-based outlay, and consumers are sceptical.
8. PAYMENT TERMS: I believe this should be top of the agenda. But with the government’s Construction Leadership Council dominated by major contractors and the consulting engineers who work with them, I’m sorry to predict that nothing significant will change in 2018.
9. CITB: Reading back through last year’s predictions, the most disappointing bit is seeing the hopeful words around ending the CITB levy. Despite my continuing belief that the CITB is the most toxic brand in construction – hated by so many of those who are forced to pay a levy under threat of legal action while getting no help with training in return – the government seem to like them and looks set to give them yet another three years to ‘reform’.
10. HUDSON CONTRACT: Our 2,000+ clients will continue to create their own success stories this year, despite government policy rather than because of it. And the freelance builders who sell their services under Hudson Contract will crack on and continue to outperform the rest of the economy in terms of income. As always, we will deliver an exemplary, market-leading level of service and certainty. I’m happy to say some things really don’t change, from one year to the next . . .
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