Health

Health

Health – Overview

Project-starts experienced a decline on both the previous three months and the preceding year. However, growth in main contract awards and detailed planning approvals provides a boost to the development pipeline. 

Adding up to £651 million, underlying health work starting on-site (less than £100 million in value) during the first quarter of 2023 decreased 36% against the preceding three months on a seasonally adjusted (SA) basis to stand 42% down against the previous year. Unlike the preceding three months, but same as last year, there were no major projects (£100 million or more) starting on-site. Overall, health project-starts decreased 24% against the previous quarter and 42% on a year ago.

Totalling £1,339 million, main contract awards were up 81% against the preceding quarter and 34% against a year ago. This growth was exclusively due to major projects, which at £614 million experienced a triple-digit increase (+387%) against the previous quarter and experienced an improvement from the same period last year when there were no major contract awards. Underlying contract awards remained flat (SA) against the preceding quarter but stood 27% down against the previous year to total £725 million.

Detailed planning approvals, totalling £1,962 million, increased 77% against the preceding quarter, and grew 59% on the previous year. Major project approvals, totalling £961 million, quadrupled against both the previous quarter and the 2022 levels. Underlying approvals at £1,001 million experienced a 37% (SA) growth compared with the preceding three months but were 2% down on a year ago.

Health – Types of Projects Started

Unsurprisingly, hospitals accounted for the greatest proportion (63%) of health work starting on-site during the three months to March, despite the value falling 32% against the previous year’s levels to total £411 million.

Nursing Home project-starts also performed poorly during the period, falling 65% against the previous year to total £89 million, which accounted for 14% of starts.

Dental, health and veterinary centre project-starts, accounting for 4% of the sector, declined 64% compared with the previous year to total £29 million.

Day centre project-starts totalled £4 million, which is a 48% decrease on last year’s levels, to account for just 1%.

Regional Analysis – Project-Starts

Almost all regions in the UK experienced a decrease in health work starting on-site. The South East was one of the regions that bucked the trend, having increased 17% against the previous year, to total £127 million, making it the most active region with a 20% share. Projects in the region include the £46 million Queen Alexandria Hospital emergency department (Project ID: 21265027). Northern Ireland was the only other region that experienced a slight increase of 1% in the value of project-starts, accounting for just 2% of all project-starts in the UK and totalling £12 million.

In contrast, project-starts in the South West performed poorly, with the value falling 26% against the previous year to total £113 million, accounting for a 17% share of sector starts. Projects in the region included the £47 million Musgrove Park Hospital surgical centre development in Somerset (Project ID: 18046309). In the East of England the value fell 71% against the previous year to total £79 million. The region was the third most active for sector starts, accounting for 12% of the total value. Health starts in the East Midlands and the North East each totalled £59 million, having decreased 12% and 3% respectively compared with the previous year’s levels, accounting for a 9% share each. At £53 million London also experienced a weak period, having slipped back 34% to account for 8% of health project-starts. Further decline in the capital was prevented by the £30 million Queen Elizabeth Hospital refurbishment project in Greenwich (Project ID: 20427813).

Health Project-Starts during the three months to March 2023

Regional Analysis – Detailed Planning Approvals

Unlike project-starts, most regions experienced growth in Health approvals. Wales increased more than 30 times against the previous year to total £568 million, accounting for 29% of the total value. This growth was exclusively thanks to the £562 million Velindre Cancer Centre’s approval in Cardiff (Project ID: 16228645). With a total value of £542 million, the South East was the second most active region, having jumped 76% on a year ago to account for 28% of the health sector. Consents in the region included the £150 million TOSP development consisting of three laboratory and office buildings in Oxford (Project ID: 22351947).

Project approvals in London also performed well, increasing three times against the previous year to total £206 million, accounting for a 10% share. The growth was boosted by the £149 million phase four of the Great Ormond Street Hospital development (Project ID: 16262388). In Yorkshire & the Humber approvals almost quadrupled, bringing the total value up to £143 million, a 7% share of the sector. In contrast, the East Midlands slipped back 77%, which brought the value down to £36 million.

Health Detailed Planning Approvals during the three months to March 2023

Forecast Construction-Starts for Health

Note: Underlying projects are schemes with a construction value of £250,000 to £100 million.  Forecast updated in March 2023 p – provisional, f – forecast.
Source: Glenigan