The civil engineering sector will have lost up to 40,000 jobs between autumn 2007 and the end of 2010, according to new research from the Civil Engineering Contractors Association (CECA).
The UK contracting workforce hit a peak of 151,000 in the autumn of 2007, but it is anticipated that this will plummet to around 111,000 by the autumn 2010.
This workforce figure is 9,000 fewer than in 2001, showing that the recession is hitting contractors hard.
In the run-up to the Pre-Budget Report, which is expected on 9 December, CECA has urged the government to to address contractors’ workload, cash flow and procurement problems.
“The sector is not special pleading. There is a workload crisis in our industry but we accept the situation with public finances will mean that extra money available for investment in infrastructure is going to be in short supply,” said CECA director Rosemary Beales.
“However, there is more the government could do to boost the sector and head off the run of redundancies that will have reduced the workforce by 40,000 jobs in the three years since 2007.”
CECA said action is needed in three areas:
CECA research says 85% of contractors have seen no evidence of an increase in work as a result of from the £3bn fiscal stimulus package released a year ago.
CECA’s recent Workload Trends Survey revealed the worst figures for contractors in 13 years. It says long term budgets need to be secured and published within the next 12 months to secure spending in areas such as transport, energy and flood and sea defences should be devised and published in the next 12 months.
Particular help should be directed to small and medium-sized enterprises (SMEs)
“Workload confidence could be restored by creating long term plans for investment, based on the 5-50 year horizon of need we hope will come forward from Infrastructure UK when it is established,” said Beales.
Money used to bail-out the banking sector should be used to actively help businesses through the recession CECA says.
75% of respondents said that there had seen an increase in the number of payments being disputed in the last 12 months. 21% said that payment periods have increased by more than 5 days, 26% said they have increased by more than 10 days, and 18% said they have increased by up to 20 days.
“Steps to relieve cash flow problems could include ensuring public money put into banks is used to support business lending, stressing prompt payment and a promise to keep VAT at 15% for another 12 months,” she said.
CECA says £1bn is wasted each year through the costs incurred by contractors in pre-qualifying for contracts, money ultimately met by the taxpayer.
The research suggests that contractors have more competition - tender lists rising from 5 firms before the downturn to 8 firms since the downturn, with some reporting tender lists growing by several multiples of this.
CECA say the new Chief Construction Adviser should look at ways the public sector can adopt and spread best practice procurement, cutting out the waste in pre-quals and reducing tender lists.
“Procurement currently creates much avoidable waste, ultimately paid for by the taxpayer. A review of procurement, particularly of the Pre-Qual system and the tendency to include more contractors on tender lists, is long overdue and should be an early priority of the new Chief Construction Adviser.
“The forecast fall in workforce, from a peak of 151,000 in 2007 to a 10-year low of 111,000 has got to focus minds on the plight of the UK civils sector. The Chancellor must act,” said Beales.