According to the Greater London Authority, a combination of low confidence and a fall in public investment in construction projects has limited the strength of the construction industry in the capital in recent years. In a paper that was published in 2013, the London Assembly Economy Committee said that the slowdown in London’s construction limited the output of the sector and arrested employment growth in it. They went on to state that it was small and medium-sized construction companies which had been the hardest hit and the authority was looking at ways of improving the situation.
Given the economic climate in the UK as a whole, it should be said that London has not fared badly in terms of construction since the recession that followed the global economic crisis took hold. The construction of the Olympic Games site in the lead up to 2012 was a big help to London’s building contractors and this large project undoubtedly helped many firms to see off the bad times. In addition the large project to construct a new terminal at Heathrow airport came to an end at a similar time, meaning large-scale contractors had few big jobs to get their teeth into. Nevertheless, now the UK’s economy has returned to growth, it is hoped that the capital’s building industry will once again return to a situation where sustained growth is possible.
Londoner’s Who Work In Construction
With so many people employed in construction in the capital, it is of vital importance to London’s economy to have those people working on current projects. According to the Greater London Authority, well over a quarter of a million of London’s inhabitants are employed in the construction industry. However the skills in the sector are not uniform and there has been a problem identified in certain trades. This is particularly marked with glaziers, dry-liners, building envelope experts and plasterers, many of whom need to be attracted to the capital from outside when needed. The authority also points out, however, that more could be done to help with this skills shortage and that there remains inadequate training in the capital for these particular construction trades.
The Mayor’s Role
The Mayor of London has said that both construction firms and other partners in the construction sector need to take coordinated action in order to increase the opportunities for new projects in the capital. The mayor has called for the removal of red tape to encourage more widespread building of new homes, for example. He has also pushed for more planning consent on retrofitting existing housing as well as boosting the number of apprenticeships available to youngsters in the capital.
The City of London
Despite the noted problems with construction in the capital, it is the City of London which has kept the industry going during times when few large-scale projects were being started. Indeed, if you were to look at the skyline of the City on its own, without factoring in the rest of the capital, then – with all the cranes on show – you could be forgiven for thinking that there had been any downturn in the sector whatsoever. In recent years, it is the City of London which has dominated the construction centre with large building projects such as 122 Leadenhall Street, also known as the Cheese Grater, and 20 Fenchurch Street, commonly referred to as the Walkie Talkie. According to JLT, a city underwriting firm, between 2009 and 2012 it has been pretty grim for the London construction sector, but there is now a much greater sense of optimism. Big contracting firms, like Beazly, agree with this renewed confidence in the sector – particularly around the city of London. The increase in the capital’s office towers looks set to continue in the wake of those recently constructed in the financial district. Google’s new London headquarters and others are being pointed out as leading the resurgence.
Brakes on Recovery
Like all sectors of the economy, the construction industry is susceptible to forces outside of its control. This affects many construction firms in the UK, particularly house builders who are reliant on government schemes, such as such as Help to Buy and Funding for Lending. In London, with so much land already tied up in use, residential construction tends not to be so important as other areas of the country. Nevertheless conversion projects, where former industrial sites or old houses are turned into flats, for example, are an important part of the capital’s construction sector.
Having said that, so far as London is concerned at least, it remains the big projects that are the key to the construction sector’s ongoing good health. Therefore, impediments to its recovery would include the cancellation of large-scale infrastructure projects like Crossrail, which aims to connect the capital to the Midlands with a new and improved railway link. More widely, it seems that the ongoing strength of the City, and the financial services companies that work there, is essential to the recovery of the London-based building industry. So long as that sector continues to prosper, the outlook for the construction industry looks bright, too.