Spending by the
leading local authority clients on construction has more than doubled over the
past year.
The government
claims an “end to austerity’ and pledged greater state spending, but local
authorities appear to have pre-empted this according to Glenigan’s construction
market analysis.
There are 38
councils in Glenigan’s latest ranking of the construction industry’s top 100
clients for the 12 months to August 2019. These public authorities are behind
£6.8 billion-worth of construction projects, which represent 30% of the
spending by the industry’s top 100 clients.
In August 2018,
there were only 22 councils amongst the industries top 100 clients. Their
aggregate spend was just under £3.3 billion and this only represented 13% of
spending by the industry’s top 100 clients. Part of the reason
for this rise is a shift to larger flagship projects moving to site.
In the most recent
period, the average construction project awarded by a council in the top 100
clients was valued at £15.1 million according to Glenigan’s research. A year
ago, that measure was £12 million.
The biggest spending
client in the last year is Birmingham City Council, which is behind a swathe of
projects for the 2022 Commonwealth Games, including the £350 million athletes’
village (Glenigan Project ID: 18129238)
The next biggest
local authority client is Manchester City Council with nearly £400
million-worth of construction contracts let in the last year. These include the
£330 million refurbishment of the Grade I-listed Manchester City Hall (Glenigan
Project ID: 16254526). The UK arm of
Australian group Lendlease is building both these projects.
Another reason
behind the recent upturn is an increase in spending by local authorities in
London. A year ago, spending
at the capital’s 32 boroughs and the City of London was down 11% and the
biggest spending council in the Top 100 was the Greater London Authority (GLA).
In the most recent
period, GLA is the fourth biggest council spender after awarding 8% less
construction work by value compared to a year ago. In contrast, spending by
London boroughs is rising.
Including the GLA,
the number of London councils amongst the industry’s top 100 clients has
tripled over the past 12 months. Over this period and
including the GLA, the 22 London councils in the top 100 awarded £2.3
billion-worth of construction work.
There has also been
an increase in spending outside London, where the remaining 24 of the 38
councils in the top 100 located. Outside of Birmingham and the North West,
flagship projects are also driving the rise in spending.
Leeds City Council
is the fifth biggest spending local authority on construction according to
Glenigan’s market data. Major council funded projects in Leeds include the
city’s £90 million public transport investment programme.
The City of
Edinburgh is also amongst the top 10 council clients after giving the green
light to a £90 million tram extension from York Place to Bellhaven (Glenigan
Project ID: 17228056).
Big projects have
helped inflate the latest headline spending figures but with austerity
officially over – according to the government – local authority spending may be
on the way up again.
