Builders' fears grow over spending cuts

Public works continue to prop up the construction industry, but concerns are growing that government spending cuts could delay the recovery for building firms, according to new research.

The Royal Institute of Chartered Surveyors (RICS) said that the construction industry's workload fell in the last three months, although at a slower pace of decline than earlier in the year.

RICS said that work on non-housing public sector projects were at their "most positive level since the first quarter of 2008", with new projects in education and the NHS providing welcome new income for the industry.

But in East Anglia, "construction workloads… remained depressed for the sixth consecutive quarter", according to RICS.

But fewer surveyors were reporting a fall in work than in the second quarter of the year.

David Potter, RICS East operations director said: "With development finance currently still in short supply it is hardly surprising that workloads in the construction industry remain under pressure. "The good news is that the picture does not appear to be getting very much worse and there is even a little bit more optimism about the prospects.

"However the continuing squeeze on profit margins in the sector is a concern alongside the likely scaling back in government projects over the coming years.

"Sadly there is little evidence as yet that residential home starts are picking up which is a particular worry given that a shortage of stock is contributing to the recent rebound in house prices."

Martin Carr of Mansell Construction Services in Swaffham said that "unrealistic" tender pricing was driving down the market, while output costs were rising, leading to "delays and disputes".

But Robert Dale of Daniel Connal Partnership in Norwich, added: "We have seen a definite rise in activity with enquiries for new commercial projects and previously stalled projects restarting."