Budget cuts are believed to be behind the decision to halt work on new hospital developments in Scotland

The construction pipeline for the healthcare sector is picking up, with project starts on site increasing in the three months to July.

According to the latest Glenigan Construction Review, published earlier this month, while main contract awards and detailed planning approvals in the health sector decreased year on year, more positively, project starts increased compared to both the previous quarter and the previous year, strengthening the development pipeline.

Adding up to £554m, underlying health work starting on site – less than £100m in value – during the three months to July fell 30% against the preceding three months on a seasonally-adjusted (SA) basis to stand 39% down against the previous year.

At £1.1bn, major projects – £100m or more – starting on site jumped 218% against the previous quarter and almost quadrupled on last year.

Overall, health starts grew 23% against the previous quarter and increased 37% on a year ago, totalling £1.6bn.

Totalling £870m, main contract awards for the health sector were down 17% against the preceding three months and 40% down against a year ago.

Major projects totalled £334m, up 32% on the preceding three months, but a 49% decrease on the previous year.

Underlying contract awards experienced a poor performance, decreasing 30% against the preceding three months (SA) to stand 32% down against the previous year.

A bright outlook

But detailed planning approvals – often an indication of the future pipeline – totalling £1.7bn, grew 39% against the preceding quarter, but fell 41% on the previous year.

Major project approvals, totalling £843m, jumped 78% against the previous quarter to stand 58% down against last year.

And underlying approvals, at £876m, experienced a 14% increase (SA) compared with the preceding three months to stand 5% lower than a year ago.

Projects by type

Hospitals accounted for 32% of health work starting on site during the three months to July, with the value having decreased 14% against the previous year’s levels to total £527m.

Accounting for 9%, nursing home project starts totaled £147m during the period, having slipped back 38% on a year ago.

And, accounting for 6% of health projects starting on site, dental, health, and veterinary centres decreased 33% on a year ago to total £109m.

No day centre projects commenced, a figure unchanged from last year.

Regional performance

Regionally, totalling £567m, London was the most-active region for health project starts during the three months to July, having grown 61% against the previous year to account for 34% of sector starts, mainly thanks to the £500m Canary Wharf North Quay Life Science Building.

At £388m, the South East accounted for a 23% share, with the value of projects starting on site in the region jumping by 72% compared with last year’s levels.

Health starts in Wales accounted for 21% and jumped 12 times compared with the previous year’s levels, totalling £350m. Accounting for 5%, the South West also experienced a strong period, having grown 14% on a year ago to total £77m.

In contrast, accounting for a 4% share, starts in the East of England slipped back 47% against the previous year to total £60m.

With a total value of £728m, Scotland was the most-active region for detailed planning approvals, having jumped more than 13 times on a year ago to account for 42% of the health sector, driven by the £700m Monklands Replacement Project (MRP) in Airdrie.

Approvals in the South West grew 176% compared with the previous year to total £176m, a 10% share of health consents.

Accounting for a 9% share, approvals in Northern Ireland doubled in value to total £148m.

And, accounting for an 8% share, health approvals in the West Midlands were more than seven times higher than a year ago to total £137m.

But, accounting for a 12% share, consents in London slipped back 72% to total £202m.

Leading players

In the league tables, the top contractors for the period were Laing O’Rourke, with two projects worth £490m, and McLaughlin & Harvey, with two projects worth £161m.

The top clients were the Department of Health (209 projects valued at over £1.5bn, and Ellison Oxford, with one project worth £300m.