Hit to economy grows as construction sites shut down

Construction accounts for about a tenth of the economy

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The hit to the UK economy from coronavirus is intensifying as a growing number of construction firms order sites to be shut down to protect workers - putting £30bn of output at risk.

House-builder Persimmon on Wednesday joined rivals Bellway and Taylor Wimpey in closing down building sites. Others including Lendlease, which is working on Google’s new London headquarters in King’s Cross, have paused operations for 48 hours to determine which activities can safely continue. 

Construction work is allowed to continue under Boris Johnson's nationwide lockdown, but there is growing concern that it is difficult for staff to follow the social distancing rules needed to minimise the risk of infection by the coronavirus.

Workers must remain at least two metres apart from each other at all times  on the job, while travelling to and from work via public transport also poses a risk.

Trade body Build UK said the sector is being “caught between the government’s advice and the overwhelming need to protect its workforce” and is calling for greater clarity on what companies should do. 

Overall, only about one fifth of UK construction sites are thought to have shut down altogether.

However, the government is under growing pressure to force companies to close completely due to concerns among workers. Many bosses are thought to be  hesitant to shut without a government order, to make sure they can justify any delays to their clients. 

The construction industry accounts for 10pc of Britain's economic output, so a complete shutdown for three months could cost around £30bn. 

The impact is likely to be greater if workers are made redundant, and depending on what further help the government announces for the self-employed, who account for a large proportion of construction workers. 

A government spokesperson said:  “Construction sites have not been asked to close, so work can continue if it is done safely. Employers should ensure their workers on-site are able to follow the public health guidance, and they should consider responsible arrangements for ensuring their workers can travel in line with this advice, such as through staggering site hours to reduce public transport use during peak periods. We will keep these arrangements under constant review and take any steps required.”

Luke Murphy, associate director at the Institute for Public Policy Research, said: “It’s not just the contribution to GDP but also the number of jobs that could be affected. 

"And if there are greater levels of unemployment, that will also lead to fewer transactions and falling prices.

“But public health should of course come first, and there is a lot of skepticism about the ability of many building sites to be able to follow public health guidance.”

A report by KPMG on Monday found that the UK economy will contract by about 2.6pc this year  if the pandemic can be contained by summer. A longer delay would trigger an even larger hit.

The Construction Leadership Council says sites should only stay open if they can stick to strict procedures designed to protect workers. 

The Federation of Master Builders, which represents small and medium sized builders, said about 60pc of surveyed members have already paused work. It is recommending that members only continue to work on site in emergency situations. 

Brian Berry, FMB chief executive, said: "While we accept the Government’s advice to keep sites open, we have concerns about how this would be applied in practice. 

"It is therefore now critical that the UK Government and the administrations in Scotland, Wales and Northern Ireland, provide immediate financial support in order for these firms to stay afloat.

"The £25,000 grant scheme for retail, hospitality and leisure must be extended to the SME construction sector and that the self-employed should receive the equivalent support to those on payroll."

As well as shutting its sites, Persimmon is also the latest company to cancel its dividend to preserve cash as it seems to cope with the crisis.