Between 2002 and 2007, new-build public sector construction accounted for about a quarter of the industry’s output. In 2009, with private sector activity sharply down, this proportion increased to over 40% of new-build output, with public sector funding boosting the performances of sectors such as health and education, driven by the Government’s continuing programmes such as Building Schools for the Future and the Academies Programme, the Primary Capital Programme, NHS LIFT and Procure21.

In terms of future workload, public sector markets continue to hold up well, particularly in education where framework agreements remain solid. However, the picture for the second half of 2010 is less certain, as capital expenditure is expected to fall in the medium term, influenced by huge public sector debt.

The report presents an overall review of the UK construction industry with estimated forecasts to 2014 and gives a detailed assessment of the major sectors such as education, healthcare, defence and law and order. We also review current progress of government programmes within these sectors and discuss the future of capital funding in these areas beyond 2011.

The Government’s commitment to construction programmes within healthcare and education has helped to underpin growth in the market over the past few years; however, it now seems certain that public spending will be cut after the general election in 2010 as a result of the massive escalation in public sector debt. Whilst frontline services such as hospitals, schools and police services have all been safeguarded from cuts by the main political parties, the construction industry remains concerned that any significant cut-backs in capital spending will prolong the economic downturn in the face of continued decline in private sector commercial output. 

The main emphasis of this report therefore is the future impact of a slowdown in public sector investment in 2011 as a result of the budget deficit and how this will affect construction output. In addition, the impending general election in 2010 will also have significant implications for the public sector construction market and we review in detail the outlook for the sector under a conservative government, should they be elected.
Analysis of market developments has been based upon both quantitative and qualitative assessments of both primary and secondary source data.  Interpretation of relevant data has been undertaken to explore and support trends within the public sector construction market and to provide a basis for forecasts of future prospects.

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