Public sector construction projects may be one inevitable victim of the cuts in government spending that are likely whichever party is in government come next May, but two recently published reports confirm that expenditure on public facilities, infrastructure and housing are still at full throttle.
And the reports reveal how public sector building is helping to bridge the gap in the construction industry's order book left by diminishing private sector work.
According to the Royal Institution of Chartered Surveyors' (RICS) construction market survey, construction workloads fell in the third quarter of 2009 with the exception of "other public works" – that is, non-housing public works.
The Office for National Statistics (ONS) has published its statistical bulletin for the same period which states that the overall level of orders received by the construction industry remained static in the quarter to September, but public and housing association orders rose by 66% on the previous quarter and by 36% compared to the same period in 2008.
Although public non-housing work was down 8% on the preceding quarter of this year it was up 13% on the same period in 2008.
The two surveys diverge slightly on their view of the overall construction workload and RICS chief economist Simon Rubinsohn says that this is because the RICS survey based on surveyors' view of the market and the ONS report is based on statistics that are subject to revision.
However, he says that they tell a similar story: "Order books are pretty flat; the long term trend is that orders are bouncing along the bottom."
And the contrast between the private and public sectors is stark. According to the ONS, private commercial orders in the third quarter fell by 16% on the preceding three months, they were down 53% on a year previously.
Taking a longer-term view, spending in the 12 months to September 2009 was 49% down on the previous 12 months. Private housing orders were down 14% on the preceding 12 month period.
Rubinsohn said that any recovery is tentative and added that history indicates that major public capital projects will be the target of cuts.
While it seems inevitable that the public sector will cut its demand for construction, Rubinsohn expects a time lag of 18 months to two years before this becomes noticeable. "Government plans envisage a graduated decline in spending – but in 12 months' time I would be surprised if public sector workloads are increasing."
He said that the education, housing and health sectors are particularly vulnerable.
