There are troubling signals for contractors in the construction industry as Carillion is forced into liquidation and sector output dips dramatically. Contributing £90 billion to the economy each year, the construction sector is one of the largest in the UK. It is highly reliant on self-employed workers, with 800,000 of the 2.9 million people working in construction self-employed. Carillion, the second largest construction company in the UK, went into liquidation on Monday after the company’s banks refused

Carillion crash: Worrying signs for construction sector

16 January 2018

There are troubling signals for contractors in the construction industry as Carillion is forced into liquidation and sector output dips dramatically.

Contributing £90 billion to the economy each year, the construction sector is one of the largest in the UK. It is highly reliant on self-employed workers, with 800,000 of the 2.9 million people working in construction self-employed.

Carillion, the second largest construction company in the UK, went into liquidation on Monday after the company’s banks refused to lend it more money.

Many smaller sub-contractors working on projects with the company will feel shockwaves from Carillion’s collapse and some of these firms may also have to cease trading.

Contractors and other smaller construction firms were already frustrated with Carillion because the company increased their payment period from the standard 30 days to 120 days. 

Sector output dips dramatically

The latest Office for National Statistics (ONS) figures show that construction output between September and November dipped by £779 million compared to the previous three months.

This is the fastest output has fallen in five years.

More concerning still, if predictions made in the Autumn Budget are correct, then the UK construction industry may slow down even more in 2018.

Market analysts believe that economic, political and Brexit uncertainties are contributing to a downturn in construction activity.

Companies seem cautious, for example, about committing to major commercial construction projects. Steep declines in private commercial, infrastructure and repairs to housing all contributed to the drop-off.

A slice of good news came in the private housing output figures – which grew by £100 million as the Government tries to tackle the housing shortage.

There was also cause for optimism in November, when construction output increased slightly month-on-month by 0.4%.

Dexter Dyer, Sales Director of Umbrella.co.uk said: “This is the sharpest slowdown in five years and should be a worry for contractors in the construction industry.

“Construction is full of opportunities for self-employed workers of all trades and abilities – from school leavers looking for a vocation to well-paid consultants. By supporting new homes and new infrastructure projects, the Government wouldn’t just build a better country, they would also help support an army of hard working contractors.”

Boom in the creative community

While there are worrying signs in the construction industries, other self-employed sectors have fared much better.

There are positive figures in the manufacturing sector and the creative industries – which are well known for high levels of self-employment – have grown rapidly over the last two years.

ONS data shows that the combined creative industries grew by 7.6% since 2015 and 44.8% since 2010.

Tom Purvis from the Association of Independent Professionals and the Self Employed (IPSE) said: “It is fantastic to see the creative industries – a sector powered in no small part by its many self-employed professionals – growing at this pace.

“The creative industries are growing very quickly across the board, but there is particular growth in certain areas. Since 2008, for example, freelancers within artistic, literary and media occupations have grown by 103 per cent – meaning the growth of the creative industries is leading even more people to join the ranks of the UK’s self-employed.”

For more information visit www.umbrella.co.uk or email team@umbrella.co.uk