Education, Health & Defence

Health

The prevention, treatment, and management of illness and the preservation of mental and physical well-being through the services offered by the medical and allied health professions are a key area of political debate. The NHS and associated ventures such as new hospitals, mental health institutions and general healthcare schemes are always on the political agenda and when elections are looming it is a hot topic for politicians and the voting public alike. It is therefore not surprising with the exorbitant amounts of money needed to sustain our healthcare system that this makes for a buoyant and consistent area of growth within the construction industry, with billions being invested into it on an annual basis and more and more organisations aligning themselves as healthcare, construction specialists and tendering for these major schemes.

The most common schemes within the healthcare sector are PFI, PPP, Procure 21+ and LIFT schemes. Listed below are statistics which show the growth within this sector and the amount of money forecast to be invested into it over the next few years:

Companies are competitively tendering for a place on the Procure 21+ framework which will give firms the chance to work on community hospitals, primary care centres and outpatient units with projects worth up to £15 million. The exact monetary value of these frameworks is yet to be confirmed, as individual NHS organisations will decide for themselves the extent of construction works needed. However, statistics show that more than £3 billion worth of projects were delivered under ProCure21.

More than 100 hospitals have been built under the NHS's funding strategy published in 2000. In 2008 it spent £5.5 billion, using a mixture of PFI and public money.

Although the scheme will end in 2010, substantial funding increases for the sector by the government are planned for the next three years. Glenigan's latest health report suggests that the fall in planning approvals meant that there was a 32 per cent drop in project starts between November 2008 and February 2009, a drop which was not surprising when considered within the context of the global recession. However, statistics and political impetus show that these projects are still very much at the forefront of government planning and the resolution is certainly to pursue them within a timely framework. According to Glenigan, investment could go up to £7.5 billion by 2010/2011,

Education

Education as always remains one of the Governments top priorities. In Gorgon Brown's 2006 budget he stated that there would be 50% uplift over the next five years on funding on school's infrastructure which would be spread across Building Infrastructure and IT. The amount he pledged was £34bn, of which a significant amount was to be spent on Building new schools and education facilities.

The 2009 budget emphasised the importance of education spending. The total education spending in England was £29bn in 1997 and is £60bn for 2009 showing a consistent rise and focus on this area. Of the £74.4bn total promised for 2010, £10.2bn is capital spending.

Education spending is always going to be a significant issue on the election manifesto. Whichever party comes to power, it is unlikely that education expenditure will be slashed regardless of the need to reduce the nations dept.

The UK Treasury has said it would underwrite funding for PFI projects impacted by the current downturn, including £2.4bn directly for education. This also means that the Building Schools for the Future programme (BSF), launched in 2004, should continue.

Both U.K and global governments are providing targeted funding for school modernisation, special education needs and technology. Across the rest of the world, we continue to see enthusiasm for products and services that help teachers to teach and learners to learn.

The good news is that the public sector, chiefly health and education work, appears to be performing strongly, and even better than in the previous recession. This time around, public construction has seen double-digit increases in output for every quarter of the recession apart from the first quarter of 2009, which was still a healthy 7.5 per cent up on the same period a year prior.

This was boosted by a significant government investment programme; Building Schools for the Future, which aims to rebuild or refurbish every English secondary school over a 10 to 15-year period.

Investment in the sector stands as a government priority for the next 3 years to 2011. Investment in English school buildings alone has almost doubled to £3.9 billion over the last five years; at the same time, there have also been sharp increases in other parts of the UK and by universities. Education is not just a priority in the UK but globally as well, In the US, the Obama administration, through the American Recovery and Reinvestment Act, allocated $100bn (£61bn) for education spending, reversing previous budget reductions, In 2008, education was one of the highest performing construction sectors and despite the growing concerns about the impact of the credit crunch, education has remained a bright spot.

Defence

The UK defence Market remains comparatively insulated from global recession in comparison to many other industries. In recent months it has had to brace itself for some cutbacks as Britain's budget deficit nears £200bn. The reason that the UK defence sector has not been hit as hard as other areas is because government defence spending is fixed into long term programmes and strategies. The UK will sustain spending long term whereas internationally the low-spending countries will be severely impacted.

The defence market is an area that offers great opportunity for growth, particularly in the current economic conditions. This is because acquisition of tier 2 / tier 3 defence companies offer high margins and gross profit and access to long-term projects providing sustainable revenue.

However it is not just the UK Defence market which is predicted to see favourable growth. India is expected to spend US100bn on defence procurement alone over the next ten years. 2009 saw India's defence budget exceed that of the UK for the first time, putting it amongst the top three behind the United States and China. At the beginning of 2009 China reported that 2009 would see an increase of 14.9%, meaning an overall increase in spend to approximately £50bn. Public spending in the UK amounts to approximately £150bn, with £32bn of this being spent on Defence.

The Defence Market is a buoyant sector which on the whole has survived the economic downturn and has seen global governments increase expenditure. With multi-billion defence projects being commissioned globally including that of the St Athan Training College in South Wales, this is certainly a sector that requires superior leadership from an engineering and construction perspective, a sector that is certainly affected by the global "war for talent".