The latest the Royal Institution of Chartered Surveyors (Rics) construction surveys shows a more positive outlook for 2022, despite these major challenges. This industry is anticipating that the government’s ‘levelling up’ agenda — detailed in a recent white paper — could further support construction in many parts of  the country.

This survey, conducted in the last quarter of 2021, found more respondents saw an increased demand for work over this period, than those seeing falling demand. Overall the net positive balance was 33%, the same level reported in Q3.

Respondents said this increase in workloads was largely due to new infrastructure projects, with an increase in energy developments leading this drive.

Elsewhere the private housing sector also continued to show solid momentum with an overall positive net balance of 37% of respondents reporting new work in this area.

Looking ahead, expectations of upcoming workloads edged up to a net balance of plus 45%. Infrastructure continues to be viewed as likely to lead the sector, but both private residential and non-residential works are expected to deliver strong growth in output.  The government’s ‘Levelling Up’ white paper, which sets out how billions in funding will be allocated toward regenerating towns and cities across the UK, could also support construction workloads through new infrastructure, housing and non-residential works.

Business enquiries were still firm in the final quarter (+37% in Q4 2021) which is also consistent with a more upbeat outlook for activity looking out over the next twelve months. Additionally, a net positive 10% of respondents said profit margins are now anticipated to increase over the course of 2022 compared with just a positive 2% in the last survey. Rics says this change reflects the more upbeat picture of the year ahead.

However, despite this more positive outlook, concerns around the availability of materials (84%) and labour (77%) suggests these problems continue to dominate the UK construction sector – with factors like Brexit and the ongoing Covid pandemic still giving building firms a headache.

In terms of skilled labourers, 65% of respondents said they had difficulties finding bricklayers and carpenters to deliver projects, while the estimate for material costs is expected to jump by a further 9% over the period in question, with skilled labour costs rising by more than 7% and unskilled costs  by between 5 and 6%.

Rics chief economist Simon Rubinsohn says: “There is clearly an upbeat tone to the feedback received from across the construction industry. However, the concerns around labour and in particular, skilled labour are just not going away.

“The long-term fix is to attract more younger people to the sector but that may be insufficient to address the immediate problem which significantly, is being reflected in expectations for a sharp uplift in wage costs over the next year.

“The presumption from professionals working in the industry is that this rise in pay will help provide a short-term fix as the strong projections for activity through the course in 2022 are premised on a further rise in headcount.”

Rics senior public affairs officer Bradley Tully adds: “The levelling-up agenda offers important opportunities for the construction sector to play a vital role in transforming areas that are in need of regeneration, and to demonstrate the power of the built environment in tackling inequalities.

“In order to create thriving places where people can live and work, we are clear that the levelling-up agenda must be underpinned by a reformed planning system that offers greater certainty, provides for sufficient local accountability and allows for the timely delivery of vital social infrastructure.”