Product testing | Paul Morrell, former Chief Construction Advisor, has been appointed to chair an independent review of the system for testing construction products as part of improving building safety.
SME pay | Construction workers under the BATJIC agreement have been given a 1.5% pay rise. The one-year deal will come into effect in June and covers those working for small and medium companies.
Commercial property defaults rose to 4.6% last year, from 3.2% in 2019 according to a survey by the Business School, part of the University of London. Landlords have been temporarily banned from evicting companies failing to pay rent.
Net zero rail | Industry bodies and contractors have warned the government that unless it fully commits to plans to electrify the rail network, it could risk missing the legally binding targets for carbon emissions in 2050. To de-carbonise the whole network, 450km of track will need to be electrified every year. Just 215km of track was electrified last year.
Materials and commodities
Bricks | Brick demand is now greater than domestic capacity which has encouraged Isbtock to revive plans for a new factory. Plans to replace the mothballed Atlas facility with a new wire-cut brick factory were previously put on hold in 2020.
Steel | Severfield has signed up to SteelZero, an initiative to encourage responsible sourcing and production of net zero carbon steel.
Oxygen| Shortages of oxygen for Covid patients in India and Bangladesh could see the use of oxygen in steel and ship-breaking industries banned.
Oil | It is worth noting that this week marks a year since WTI oil prices became negative for the first time in its history, hence Brent oil’s large annual increase in the table to the right.
Kent Permit | Lorries will no longer need a permit to enter Kent. The emergency rule was introduced to reduce the risk of delays caused by traffic at Kent ports if drivers did not have the correct documents to travel.
Logistics | Brexit has been successful for UK logistics companies who have seen a jump in demand for warehouse space and customs clearance services.
Carbon cuts | The UK government is preparing to announce further cuts to carbon emissions. A new target of 78% reduction against 1990 levels by 2030 is expected.
Distressed companies | Companies in significant distress increased by nearly 100,000 between Q4 2020 and Q1 2021. Begbies Traynor expects business insolvencies to increase as Covid-19 support is relaxed, with the first cliff-edge at the end of June when landlords can demand repayment of missed rent.
Retail sales | Sales volumes increased 5.4% between February and March just before Covid restrictions were eased. Garden centres, clothing, and non-food stores were key growth areas.
UK businesses grew at the fastest rate since 2013 according to the latest IHS Markit’s PMI survey. For the first time since the pandemic began, service activity growth was greater than manufacturing growth. However, the survey also showed that rapid cost inflation persisted in the month.
Investment council | A new body will be formed of 40 business chiefs who will advise on how to attract international investment into key national projects.
Consumer inflation | Fuel and clothing price increases pushed inflation up to 0.7% in March, whilst food costs fell with some products cheaper than at the beginning of the pandemic. Economists expect inflation to increase as consumers are able to spend savings accrued whilst the economy was closed. Andy Haldane, Chief Economist at the Bank of England, likened inflation to a sleeping tiger that would be easily roused and expects inflation to breach the 2% target this year before falling back to 1.9% at the end of 2021.
Chip shortage | The current shortage of computer chips caused by Covid-19 and exacerbated by other issues, is likely to continue for most of this year, according to Cisco. Several electronics and car manufacturers have been hit by long delays.
Published every six months, our Tender Price Index is an analysis of inflation price deviation in construction prices. Click on the link above to view our most recent Index.
Friday to Friday
Price / Index
Week % change
Annual % change
$ per £
€ per £
Brent Oil $/barrel
Shortages of materials are still a key issue and are likely to be impacted by demands from other, more urgent sectors. The last year has shown how deeply dependant UK construction is on global supply chains.
Despite ongoing supply-side issues, it is encouraging to see that confidence seems to be returning as the UK economy emerges out of Covid-19 restrictions. We will be carefully watching for impacts of the withdrawal of current support packages.
Despite current pressures, it is reassuring to see that the UK remains focussed on its long-term sustainability targets. Over the past twelve months the construction industry has had a strong voice to ensure progress and safety for the sector. Over the next year, this voice needs to feed into the UK’s green growth agenda to ensure that increased carbon-reduction targets can be achieved.
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