Strong growth continues in the UK education construction sector

Following exceptional growth in 2014, which brought output back to the same level as 2010 prior to the scrapping of the BSF programme, education output is thought to have grown by another 5% in 2015. Increased output rates are being driven by ongoing investment in key building programmes including the PSBP and programmes to deliver new and refurbished facilities for the primary and secondary schools estate such as the Academies Programme.

Overall current, or day-to-day, school spending in England has been relatively protected over the past 5 years, compared with other areas of public service spending and other areas of education spending, and current spending on schools increased by 3% in real terms 2010-15. However, across the education sector, capital spending has been cut by over one third in real terms which has had a negative impact on construction output in the sector.

The pupil population is expanding rapidly and overall pupil numbers are expected to grow by 7% 2016-20. This growth in pupil numbers will place additional pressures on both resource and capital budgets, which is expected to be more keenly felt in London and the South East. In addition, recently announced cuts of £900m to the DfE and BIS budgets announced in the 2015 Budget are likely to impact higher education and further education spending and the administration of arms lengths bodies in the DfE.

University construction work decreased steadily 2008-12, primarily as a result of budget cuts taking effect. However, in 2014, the value of public sector university work to contractors saw a 45% increase on 2013 and reached its highest ever level. In addition, further education has also benefited from improvements and new facilities for FE colleges whilst the University Technical Colleges programme is likely to boost output growth into the medium-term. However, universities are expected to remain a small market in terms of construction.

“The key to the future of education output remains the rate of procurement and funding of key national building programmes and the continued use of PF2 to fund the programme” said Jane Tarver of AMA Research. “In the new build sector, the Government’s Priority Schools Building Programme (PSBP) is expected to generate increased workloads in 2016 along with other major programmes in the schools sector, while investment is also increasing among UK universities as competition to attract overseas students intensifies.”

Going into 2016 and beyond, the outlook for the student accommodation sector also remains positive, with student numbers expected to increase with the removal of the cap on student numbers, and the acute undersupply in many of the major university towns across the UK. As such, the student accommodation sector will continue to be characterised by acute undersupply in many of the major university towns across the UK ensuring that the pipeline of new developments will remain buoyant over the coming years.

The ‘Education Construction Market Report – UK 2015-2019 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services with over 25 years’ experience within the construction and home improvement markets. The report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.