Construction output
in the education sector has seen 4 years of consistent growth, and reached a peak
in 2016 at around £11.2bn, driven by investment in both the school and higher
education estate. From 2017 however, forecasts indicate that output will decline
slightly over the next 3 years before returning to growth in 2020 and 2021. In
the schools and colleges sector, demand continues to be strong and the pupil
population is expanding rapidly. The need for additional school places is expected
to exceed 420,000 by 2021.
While capital budgets remain constrained, the need for
investment is recognised by the current Government, which announced £23bn of
capital investment in the 2015 Spending Review to cover the opening of 500 Free
Schools, and provision of over 600,000 additional school places. In the 2017
Spring Budget, it also pledged an additional £320m to help fund up to 140 new
free schools as part of plans to increase investment in local infrastructure
and relieve pressure on local authorities for increased school places.
Building programmes in England’s education sector are
being led by the Priority School Building Programme (PSBP), the first phase of
which is currently underway and will help rebuild 260 schools. For the second
phase, the Government has allocated a further £2bn.
In Scotland, the Schools for the Future Programme, worth
£1.8bn, is expected to deliver around 112 schools up to 2019, while in Wales,
the main investment programme for the education sector is the 21st Century
Schools Building Programme, which aims to upgrade and extend the entire stock
of schools in Wales.
University construction work remains a much smaller
market than the schools & colleges sector. Total construction output in the
HE sector, including both private and public work, is forecast to rise to
around £4bn by 2021, as UK universities continue to increase investment in new
buildings. Refurbishment work is a strong sector for universities due to a
backlog of repairs and upgrades to often large and ageing estates and also due
to the pressures on institutions to cut the operating cost of their buildings.
Rising student numbers have placed additional strain on
university infrastructure in recent years, including teaching and residential
accommodation. However, in the most recent academic year, student numbers
declined driven by the uncertainty for EU students surrounding Brexit and higher tuition fees. Going
forward, the impact of potential immigration targets on EU student numbers
coming to the UK and fee levels remain key issues of concern.
In terms of funding, English universities have seen a 4%
decline overall between 2016-17 and 2017-18, with capital funding having declined
by over 25% over the period. The environment for university funding has changed
dramatically, and as a result, universities are turning to capital markets to
fund infrastructure investments.
Education capital spending is set to fluctuate until
2021, having declined by around 12% between 2016-17 and 2017-18, before rising
to £6.1bn in 2018-19, then falling again in 2019-20. Restricted budgets and
limitations placed on the size of classrooms and overall space in new schools
is expected to constrain value growth for construction output into the
medium-term. Rising cost pressures for contractors have also delayed the timing
for the second phase of the PSBP.
Going forward, higher education sector workloads are
expected to be boosted by key long-term capital building programmes as
universities seek to invest in research, to address past under-investment and
provide additional space for teaching, research and accommodation facilities
and to attract higher fee-paying overseas students.
The ‘EducationConstruction Market Report – UK 2017-2021 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.
No comments:
Post a Comment