Fears for construction outlook

Concerns have been raised about the future of the Scottish construction industry amid plummeting output and employment.

Trade body the Scottish Building Federation (SBF) has called for an overhaul of public procurement practices after the latest figures from the Office for National Statistics showed that the value of output fell from more than £15.5 billion over the 12 months to September 2017 to less than £14 billion a year later. Employment fell by 5,000 in the third quarter of this year.

In the year to September, a £300 million rise in output from housing failed to offset a 32 per cent fall in certain public sector works and a 23 per cent drop in the private commercial sector.

The completion of major projects such as the Queensferry Crossing and the Aberdeen Western Peripheral Route also led to a decline in infrastructure output.

The latest figures follow the news that major contractor Interserve has accrued £500m debts and has seen its share price collapse, mirroring difficulties experienced by Carillion at the beginning of the year.

This prompted the SBF to demand additional support for small and medium-sized enterprises (SMES) in the construction industry.

MD Vaughan Hart said: “Whilst it’s encouraging to see an increase in output from the housing sector over the past 12 months, other sectors of the industry are faring less well.

“As we argued at the time of the collapse of Carillion, public procurement practices are in need of reform to ensure construction SMES get further and fairer access to public sector opportunities.

“As well as being good for those smaller businesses, this approach spreads the risk for contracting authorities, making them less reliant on a few large contractors and reducing the negative impact when major contractors like Interserve get into difficulties.”