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Education

UK Construction Intelligence Report

Overview

Education remains a key sector not only to the UK construction industry, but to the future prosperity of the UK. It is essential to nurture our young people to become an educated and diverse resource to build our future prosperity and competitiveness. Furthermore, our universities continue to be leading institutions with world renowned research and academic leadership. In financial terms construction accounts for approximately 10% ~(c£90bn) of the UK GDP. Education construction spend represents approximately 17% (£12bn) of this with Schools and Colleges representing 65% (£8bn) and Universities 35% (£4bn) with the impacts of Covid-19 hitting the sector in 2nd quarter of 2020 the impacts on the numbers are unknown, but the importance of the sector will remain high.

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Schools

The Department of Education remain the sectors biggest client and is set to grow further. The schools’ sector has shown a resilience to the current Covid-19 crisis and DfE have announced a £1bn new building programme to commence the first 50 project in 2020 – 21. This is the first wave of a multi wave 10 year programme, which will be outlined in the next Government Spending Review.

In addition to the new buildings programme an additional £560m has been allocated to fund additional schools’ maintenance and upgrades. This is in addition to the already allocated £1.4bn a rolling annual sum for schools’ condition and maintenance funding.

In summary, the school sector remains strong in supporting the UK Construction sector, even despite the impacts of covid-19.

Further Education Colleges

The Augar report sets out a vision for an increasingly diverse post 16 education landscape with a greater stepped academic attainment through the education levels, Level 3 ‘A’ level / Btec – Level 4 HNC, Level 5 Foundation degree and Level 6 degree. Currently traditional routes of Level 3 attainment through ‘A’ level, is followed with a jump to university to attain a level 6 full degree. Augar is advocating a ‘lifelong’ approach to learning which is increasingly flexible and adaptable to a changing employment horizon. To aid this transition the reports recommends £1bn investment in further education colleges over the next spending review round. This investment has been accepted by Government and increased to £1.5bn over the next five years. £200m has been brought forward from the spending review, for maintenance and alteration work to be undertaken in 2020 – 21.

Higher Education

The HE sector plays an important part in the UK economy. Providing revenue not only through teaching and research, but also through their contribution to the local areas / economies where they are sited. UK Universities occupy more than 27 million square metres and spend approximately c£3 billion per year on managing and maintaining their estate. The impacts of covid-19 are not clear on the HE sector currently. Many key capital investments have been stalled to allow a reconsideration of the future shape of teaching as we move into a post covid-19 world. Backlog maintenance and obsolescence are challenges that will continue to face the sector and whilst the average age of the estate is reducing, more than 30% is nearing the end of its design life. Therefore, with many of the stresses stated below a revised focus on improving rather than straight replacement might be an emerging key strategy for some universities. However, each university will have an approach based around their curriculum offer and what share of the student market they feel they can attract. Currently the student demographic is dipping with a circa 5% decline in the UK population of 18 year old’s, however, the sector is expecting a 10 per cent growth in student numbers by 2022. With c300,000 additional students expected by 2030, as stated at the recent AUDE conference.

Despite the impacts of Covid-19 recent UCAS figures show an increase in university applicants and offers over this point last year:

Tend Price Inflation

This is also true with numbers of confirmed Autumn 2020 starts:

Tend Price Inflation

The future landscape for the sector is therefore uncertain, the impacts of the Augar report is unknown in regard to reduced students fees along with covid-19 is making planning for sector challenging. However, over the coming academic year with new teaching regimes in place and students becoming more use to a social aware environment, investment may well pick up once again.

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    Terry Stocks

    Director - Head of Public Sector and Education - UK & Europe

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    Ceri Jones

    Regional Director - UK & Europe