How Will The Construction Industry Look in 2022 & Beyond

How Will The Construction Industry Look in 2022 & Beyond

Jan 17, 2022

As we say goodbye to the highs and lows of 2021 and look to a new year, no one is certain what the future may bring. However, one thing is for certain, the outlook for the UK construction industry has been permanently reshaped by the pandemic. Here’s how we believe the next year may look for the sector.

2021 has been a turbulent year for the construction sector. The year began on a positive note with new orders spiking by £2 billion between Q1 and Q2, a rise that was facilitated by growing confidence following the vaccine rollout and the unlocking of the economy that enabled contractors to start both new and pandemic-delayed projects. However, as we progressed further into the year, it was clear this spike could not be accommodated by the resources available – both in terms of labour and materials. A struggle ensued that was only heightened by Brexit, global lockdowns, production strain.

Although times were tough for the industry as a whole, this past year was also a time of opportunity for construction workers and recruiters alike, allowing workers to increase their earnings and giving recruiters the platform to support the demand for construction workers by offering compliant payroll models like the Construction Industry Scheme to facilitate this labour influx.

As we look to the future, we believe that 2022-23 will still hold some challenges for the sector as it continues to play a vital role in the UK’s path out of the pandemic.

 

Growth Overview

According to recent statistics released by Glenigan, although down 8% on pre-pandemic levels, construction has begun to recover this year, with the total value of underlying starts during 2021 (projects with a construction value of less than £100 million) expected to be up 11% on last year at £54.2 billion.

This growth is predicted to persist over the next two years, rising to £61 billion by 2023 (3% above 2019 levels) with private housing, social housing, and industrial projects leading the charge. A belated recovery is also predicted in the hotel and leisure sector as people return to social practices and “staycations” post-pandemic.

Interestingly, a lot of this growth is expected to be focused in the North of England and across the Midlands, as the Government’s “levelling-up” agenda provides a catalyst for new development activity in social housing, health, schools, and civil engineering. Similarly, Wales, Scotland, and Northern Ireland are forecast to experience high levels of growth over the coming years.

Of course, projects such as the nuclear power station Hinkley Point C, the Thames Tideway Tunnel, and the High Speed 2 (HS2) rail project will be central to growth in the infrastructure sector, with the Construction Products Association predicting 9.7% growth for 2022.

 

Housing & Domestic Renovations

Thanks to shifts in working patterns and an increase in home working practices, the outlook for housing appears positive, with a particularly strong growth predicted for houses outside major cities. These shifts have also positively impacted private housing repairs, maintenance, and improvements, which proved to be one of the fastest-recovering sectors this year. According to CPA, output in this sector was 19.3% higher in March 2021 than pre-covid levels.

Although we witnessed high levels of growth in this sector throughout the past year, it is estimated that growth will begin to curb as a result of various economic factors including rising tax rates, high-interest rates, and low real earnings growth.

 

Protecting the Environment

Creating a built environment that supports net-zero carbon emissions is high on the agenda and predicted to drive future growth over the coming years. Although it may be a slow burn, proposed investments nationwide are sure to provide opportunities for construction workers.

Strategic Sales Director at Crest Plus, Tim Hunt, states: “As the UK Government push forward with our net-zero goals, we expect to see a large increase in infrastructure with huge investments proposed for the transport sector in particular, including grants for electric vehicle infrastructure, the transformation of public transport systems like zero-emission busses, and significant investment into rail electrification. This is likely to have a very positive impact on the construction sector as a whole, creating plenty of new work opportunities and skill requirements.”

 

2022 and Beyond – the Recruitment Picture

According to a report published by the Construction Industry Training Board (CITB), which evaluates the economic forecast for the construction sector between 2021-2025, various scenarios are expected to occur from 2023-2025:

  • Recruitment of new entrants from training and career changes will become important.
  • Apprenticeships will increase as confidence in post-pandemic recovery grows.
  • As we adapt to post-pandemic working routines and adopt new technologies, employers’ demand for training will increase.

All of these expected changes provide great opportunities for recruiters and employers to support workers with training and apprenticeships, ensuring you remain ahead of the curve and are securing the most talented workers.

 

Here to Help

No matter how the years progress, at Crest Plus we aim to facilitate the construction sector’s steady growth and recovery in any way we can.

For recruiters, we are increasingly being chosen as the payroll/payments partner of choice, taking care of your compliance obligations and payroll functions on the back of our unique extensive experience in CIS and umbrella employment, so you can then help your workers access the best roles for them and contribute to the continued growth throughout the sector.

While for workers, we’ll do everything we can to ensure you have the highest standards of customer service at all times, including bringing you a range of discounts and exclusive benefits, so you can continue to develop your skills and grasp new opportunities as times change – without worrying about tax and payments while benefitting from the many additional savings uniquely available to Crest Plus workers.

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