Greater devolution in England will create short-term risks and uncertainty for the construction industry, consultancy Arcadis warns.
In its latest construction Market View, the firm said reforms such as introducing social value procurement will “create a host of challenges for the supply chain working to create safe and sustainable opportunities, particularly if local labour availability is limited”.
Social value weighting is set to be implemented in January 2027 and will increase to 20% for contracts over £5m in value.
The report also said procurement reform could delay or disrupt decision-making on upcoming projects, “delaying investment just as businesses are looking to the new government to encourage growth”.
Upsides for genuine regional supply chains
Arcadis said regional initiatives such as the Homes England Affordable Homes Programme would need to be kept on track even as the delivery model may change, but that the procurement changes offered significant upsides, “not least in encouraging the promotion of genuinely regional supply chains supported by regional frameworks”.
The report said the sector needed to prepare for change and to contribute to the reform process, working with bodies such as the Combined Authorities Infrastructure Partnership “to build the necessary capability and expertise at a regional level”.
The report added: “Construction businesses also need to recognise that the landscape is changing and that this will bring uncertainty. Being prepared for reform should help mitigate the risks associated with changing plans.”
Construction faces double dip
In its overall findings on the economic conditions for construction, the report said there was a growing performance gap between the overall economy and construction, with activity and pipeline for the sector being either flat or deteriorating.
Arcadis head of strategic research and insight, Simon Rawlinson, said: “The UK economy has held up better than many expected, but construction is telling a very different story. Output is barely moving, orders have fallen sharply for two quarters in a row, and that points to a clear risk of a double dip in workload.”
