Education Construction Market Report – UK 2019-2023

The 8th edition of the ‘Education Construction Market Report – UK 2019-2023‘ reviews construction activity and leading capital building programmes in the primary, secondary and higher education sectors against a backdrop of constrained Government funding.

Key issues covered:

• Construction output in the public and private education sector plus forecasts to 2023.
• Assessment of the structure and size of the primary, secondary and higher education sectors.
• Assessment of public sector funding for primary, secondary and higher education sectors, with analysis of resource/ capital budgets for England, Wales, Scotland and Northern Ireland.
• Key market trends and the impact of government spending cuts on education projects and capital programmes.

Key areas of insight include:

•  Detailed review of leading contractors and developers and their experience in the schools and universities sector.
  In-depth regional analysis of the forward education construction pipeline, with analysis of the value and type of schemes in the pipeline and when the majority of work is expected to complete.
•  In-depth analysis of key capital building programmes and frameworks in the schools sector including: Priority Schools Building Programme (PSBP 1&2); Academies, Free Schools and UTCs; Scotland’s Schools for the Future Programme; and the Welsh 21st Century Schools Programme.
• Analysis of alternative funding sources in the HE sector including income from bank credit, tuition fees, research grants, capital endowments, PFI, charitable trusts, bonds and private investors.
• An in-depth analysis of the higher education construction market, with focus on the impact of rising student numbers, higher tuition fees, cuts to capital budgets and an analysis of development activity and long-term capital programmes across UK universities.
• Detailed analysis of developer and contractor activity within the purpose built student accommodation (PBSA) market including current supply of accommodation, factors affecting the market, key commercial operators and their portfolios and pipelines and an assessment and forecast of the future UK PBSA development pipeline, both in London and the regions.

Some of the companies included:

Balfour Beatty, Forth Valley College, Leeds Beckett University, Carnegie School of Sport, Galliford Try, Multiplex, Laing O’Rourke, Bowmer & Kirkland, Morgan Sindall, BAM Construction, Willmott Dixon, Styles & Wood, Galliford Try, Interserve.

Education Construction in the UK

• Total Construction Output – value of output construction new work and forecasts to 2023 and construction output by sector.
• Contractors’ output in the school sector and output in the higher education sector including forecasts to 2023.

Primary & Secondary Education Sector

• Structure of UK School system – mainstream and other state schools, independent schools.
• Education Capital Funding – England, Scotland, Wales & Northern Ireland. Analysis of spending announcements.
• Education capital building programmes – PSBP 1&2, Academies Programme, Free Schools, UTCs, Scotland’s Schools for the Future Programme, Wales’ 21^st Century Schools.

Higher Education Sector

• Overview and structure of the UK HE sector.
• University estates – size, Capital spending & infrastructure backlog.
• Impact of the Higher Education & Research Act on the number/role of private providers in the HE sector.
• Key trends in the HE sector – student growth, applications, tuition fees, Brexit, and their impact on student numbers.
• Capital expenditure in the higher education sector – England, Scotland, Wales.
• Alternative funding sources – capital markets, endowment funds, bond markets etc.
• University capital building programmes – university and regional enterprise zones.

Construction Supply in the Education Sector

• Leading Contractors and major project awards – Schools sector.
• Leading Contractors and major project awards – higher education sector.
• Leading Contractors and Developers – Student Accommodation.

CONTENTS

1. INTRODUCTION 8
1.1 BACKGROUND 8
1.2 SOURCES OF INFORMATION 8
2. SUMMARY AND MARKET PROSPECTS 10
2.1 OVERALL EDUCATION & SCHOOLS’ SECTOR 10
2.2 HIGHER EDUCATION/STUDENT ACCOMMODATION SECTOR 11
3. ECONOMIC ENVIRONMENT 13
3.1 OVERVIEW AND OUTLOOK 13
3.2 KEY DATA 13
3.2.1 GDP 13
3.2.2 Inflation & Interest Rates 14
3.2.3 Employment & Wages 15
3.2.4 Household Consumption 16
3.2.5 Sterling 17
4. OVERALL EDUCATION CONSTRUCTION MARKET 18
4.1 TOTAL CONSTRUCTION MARKET 18
4.1.1 Total Construction Output to 2023 18
4.1.2 Non-Residential Construction Output by Sector 19
4.2 EDUCATION CONSTRUCTION MARKET 20
4.2.1 State/Public Sector Outlook 20
4.2.2 Private Schools/PFI & University Sector Outlook 21
4.3 UK EDUCATION CONSTRUCTION PIPELINE 23
4.3.1 Education Construction Contracts 23
4.3.2 Education Planning Pipeline 24
5. REGIONAL EDUCATION CONSTRUCTION MARKET 26
5.1 REGIONAL EDUCATION CONTRACTS AWARDED IN 2018-19 26
5.2 REGIONAL EDUCATION DEVELOPMENT PIPELINE 26
5.2.1 South East 28
5.2.2 London 29
5.2.3 Scotland 30
5.2.4 North West 31
5.2.5 East Midlands 33
5.2.6 South West 34
5.2.7 West Midlands 35
5.2.8 Yorkshire & Humber 36
5.2.9 East England 37
5.2.10 North East 38
5.2.11 Wales 39
6. PRIMARY AND SECONDARY SCHOOLS 41
6.1 MARKET SIZE & TRENDS 41
6.2 STATE SCHOOLS 41
6.2.1 Overview 41
6.2.2 Resource & Capital Funding 43
6.2.3 Education Capital Building Programmes 47
6.3 INDEPENDENT SCHOOLS 55
7. THE HIGHER EDUCATION SECTOR 58
7.1 OVERVIEW AND STRUCTURE 58
7.2 HIGHER EDUCATION CONSTRUCTION OUTPUT MARKET SIZE & TRENDS 58
7.3 HIGHER EDUCATION FUNDING 60
7.3.1 Capital Expenditure 60
7.3.2 Student Growth 63
7.3.3 Tuition Fees 64
7.4 FUNDING 65
7.4.1 Sources of Funding 65
7.4.2 Regional Funding 65
7.4.3 Endowment Funds & Debt Capital 67
7.5 CAPITAL BUILDING PROGRAMMES 68
7.5.1 Contracts Awarded 68
7.5.2 Development Pipeline 69
7.6 STUDENT ACCOMMODATION 70
7.6.1 Student Accommodation Provision 70
7.6.2 Student Accommodation Development Pipeline 74
7.6.3 Student Accommodation Development by Region 76
7.6.4 Commercial Operator Pipeline 78
8. CONSTRUCTION SUPPLY IN THE EDUCATION SECTOR 80
8.1 LEADING CLIENTS IN THE EDUCATION SECTOR 80
8.2 LEADING CONTRACTORS IN THE SCHOOLS SECTOR 81
8.2.1 Contractors’ Market Share in the Schools Sector – By Contract Awards 81
8.3 LEADING CONTRACTORS IN THE HIGHER EDUCATION SECTOR 82
8.3.1 Contractors’ Market Share in the Higher Education Sector – By Contract Awards 82
8.4 LEADING CONTRACTORS IN THE HE STUDENT ACCOMMODATION SECTOR 84

TABLES & CHARTS

CHART 1: CONTRACTORS OUTPUT FOR EDUCATION NEW WORK 2014 TO 2023– BY VALUE (£BN) AT CURRENT PRICES 10
CHART 2: GDP DATA – 2015-2020 – KEY CONSTITUENT ELEMENTS 14
CHART 3: CPI INFLATION AND BANK OF ENGLAND BASE RATE 2008-2023 15
CHART 4: AVERAGE WEEKLY EARNINGS DATA – GB – TOTAL PAY – 2014-2020 (SEASONALLY ADJUSTED) 16
CHART 5: PDI & SAVINGS RATIO AT CURRENT PRICES 2008-2023 16
CHART 6: EXCHANGE RATE FLUCTUATIONS 2015-2021 – STERLING TO THE DOLLAR, AND THE EURO, SPOT RATES 17
CHART 7: VALUE OF TOTAL CONSTRUCTION OUTPUT 2014-2023 BY VALUE (£BN AT CURRENT PRICES) 18
CHART 8: NON-RESIDENTIAL CONSTRUCTION OUTPUT NEW WORK ANALYSIS BY SECTOR 2018 AND 2023 – % BY VALUE GB 19
TABLE 9: CONTRACTORS OUTPUT FOR EDUCATION NEW WORK 2014 TO 2023– BY VALUE (£BN) AT CURRENT PRICES 20
CHART 10: EDUCATION CONTRACT AWARDS 2016-2019 BY VALUE (£M) AND NUMBER OF CONTRACTS 23
CHART 11: UK EDUCATION CONSTRUCTION CONTRACT AWARDS BY SUB-SECTOR: YEAR TO JUNE 2019 (%) 24
CHART 12: EDUCATION CONTRACTS DUE TO COMPLETE 2019-2022 (AS AT JUNE 2019) BY VALUE (£M) AND NUMBER OF CONTRACTS 24
CHART 13: UK EDUCATION CONSTRUCTION CONTRACTS IN THE PIPELINE (AS AT JUNE 2019) (%) BY SUB-SECTOR 25
CHART 14: UK EDUCATION CONSTRUCTION CONTRACT AWARDS BY REGION – % SHARE BY VALUE (YEAR TO JUNE 2019) 26
TABLE 15: REGIONAL EDUCATION CONSTRUCTION MARKET – EDUCATION PIPELINE ANALYSIS 2019-2023 27
CHART 16: SOUTH EAST: EDUCATION CONSTRUCTION CONTRACTS IN THE PIPELINE (AS AT JUNE 2019) (%) BY SUB-SECTOR 28
TABLE 17: SOUTH EAST EDUCATION CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE, CLIENT AND PLANNING STAGE (AT JUNE 2019) 29
CHART 18: LONDON: EDUCATION CONSTRUCTION CONTRACTS IN THE PIPELINE (AS AT JUNE 2019) (%) BY TYPE OF FACILITY 29
TABLE 19: LONDON EDUCATION CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE, CLIENT AND PLANNING STAGE (AT JUNE 2019) 30
CHART 20: SCOTLAND: EDUCATION CONSTRUCTION CONTRACTS IN THE PIPELINE (AS AT JUNE 2019) (%) BY SUB-SECTOR 31
TABLE 21: SCOTLAND EDUCATION CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE, CLIENT AND PLANNING STAGE (AT JUNE 2019) 31
CHART 22: NORTH WEST: EDUCATION CONSTRUCTION CONTRACTS IN THE PIPELINE (AS AT JUNE 2019) (%) BY SUB-SECTOR 32
TABLE 23: NORTH WEST EDUCATION CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE, CLIENT AND PLANNING STAGE (AT JUNE 2019) 32
CHART 24: EAST MIDLANDS: EDUCATION CONSTRUCTION CONTRACTS IN THE PIPELINE (AS AT JUNE 2019) (%) BY SUB-SECTOR 33
TABLE 25: EAST MIDLANDS EDUCATION CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE, CLIENT AND STAGE OF PLANNING (AT JUNE 2019) 34
CHART 26: SOUTH WEST: EDUCATION CONSTRUCTION CONTRACTS IN THE PIPELINE (AS AT JUNE 2019) (%) BY SUB-SECTOR 34
TABLE 27: SOUTH WEST EDUCATION CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE, CLIENT AND SUB-SECTOR (AT JUNE 2019) 35
CHART 28: WEST MIDLANDS: EDUCATION CONSTRUCTION CONTRACTS IN THE PIPELINE (AS AT JUNE 2019) (%) BY SUB-SECTOR 35
TABLE 29: WEST MIDLANDS EDUCATION CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE, CLIENT AND STAGE OF PLANNING (AT JUNE 2019) 36
CHART 30: YORKSHIRE & HUMBER: EDUCATION CONSTRUCTION CONTRACTS IN THE PIPELINE (AS AT JUNE 2019) (%) BY SUB-SECTOR 36
TABLE 31: YORKSHIRE & HUMBER EDUCATION CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE, CLIENT AND STAGE OF PLANNING (AT JUNE 2019) 37
CHART 32: EAST OF ENGLAND: EDUCATION CONSTRUCTION CONTRACTS IN THE PIPELINE (AS AT JUNE 2019) (%) BY SUB-SECTOR 37
TABLE 33: EAST OF ENGLAND EDUCATION CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE, CLIENT AND SUB-SECTOR (AT JUNE 2019) 38
CHART 34: NORTH EAST: EDUCATION CONSTRUCTION CONTRACTS IN THE PIPELINE (AS AT JUNE 2019) (%) BY SUB-SECTOR 38
TABLE 35: NORTH EAST EDUCATION CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE, CLIENT AND STAGE OF PLANNING (AT JUNE 2019) 39
CHART 36: WALES: EDUCATION CONSTRUCTION CONTRACTS IN THE PIPELINE (AS AT JUNE 2019) (%) BY SUB-SECTOR 39
TABLE 37: WALES EDUCATION CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE, CLIENT AND STAGE OF PLANNING (AT JUNE 2019) 40
TABLE 38: EDUCATION ESTABLISHMENTS BY TYPE AND NUMBER 2019 41
TABLE 39: CONTRACTORS OUTPUT FOR PUBLIC SCHOOLS SECTOR NEW WORK 2014 TO 2023 – BY VALUE (£BN) AT CURRENT PRICES 43
CHART 40: DFE CAPITAL EXPENDITURE IN SCHOOLS 2012-2021 BY VALUE (£BN) 44
TABLE 41: DFE: CAPITAL DEL SUMMARY 2018-20 BY BUDGET (£) 44
TABLE 42: EDUCATION CAPITAL SPENDING SCOTLAND 2015–2020: (£M) 46
TABLE 43: EDUCATION CAPITAL SPENDING WALES 2016–2021 (£M) 46
TABLE 44: EDUCATION SPENDING NORTHERN IRELAND 2016-20: MIX BY RESOURCES & CAPITAL (£BN) 47
TABLE 45: PRIORITY SCHOOLS BUILDING PROGRAMME PHASE TWO – ACTUAL & PLANNED INVESTMENT TOTALS 2017-21 (£M) 48
TABLE 46: ESFA SCHOOL BUILDING FRAMEWORK – KEY CONTRACTORS 50
TABLE 47: ACADEMIES & FREE SCHOOLS OPEN BY PHASE OF EDUCATION AND TYPE OF SCHOOL (AS AT JULY 2019) 51
TABLE 48: ACADEMIES IN THE PIPELINE BY PHASE OF EDUCATION AND TYPE OF ACADEMY (AS AT JULY 2019) 51
TABLE 49: SCOTTISH SCHOOLS FOR THE FUTURE PROGRAMME – KEY CAPITAL AND REVENUE FUNDED EDUCATION PROJECTS: FORWARD PIPELINE 2019-2021 BY VALUE (£M) 54
CHART 50: UK INDEPENDENT SCHOOLS SECTOR –SCHOOLS BY REGION (%) 2019 55
CHART 51: UK INDEPENDENT SCHOOLS SECTOR – PIPELINE OF INDEPENDENT SCHOOLS WORK BY REGION (% SHARE BY VALUE) 2019 56
TABLE 52: UK PUBLIC/PRIVATE SECTOR EDUCATION OUTPUT: UNIVERSITIES AND TOTAL OUTPUT – BY VALUE £BN AT CURRENT PRICES 2014 TO 2023 59
CHART 53: HE SECTOR – TOTAL CAPITAL EXPENDITURE BY HE PROVIDER 2015-16 TO 2017-18 (£M) 61
TABLE 54: HIGHER EDUCATION ESTATE MANAGEMENT DATA BY INSTITUTION – ESTATES DATA AND CAPITAL EXPENDITURE 2017-18 62
CHART 55: HEI APPLICATIONS 2015-2019 (JUNE DEADLINE) (UK, EU & OVERSEAS APPLICANTS) 63
TABLE 56: ANNUAL TUITION FEES IN THE UK BY COUNTRY (COURSES STARTING IN 2019) 64
CHART 57: UK HIGHER EDUCATION MAIN SOURCES OF INCOME: 2017-18 65
TABLE 58: OFS TOP FORMULA CAPITAL FUNDING ALLOCATIONS TO HEIS 2019-20 (£M) 66
TABLE 59: SFC SCOTLAND CAPITAL FUNDING TO HIGHER EDUCATION INSTITUTIONS 2019-20 (£M) 67
TABLE 60: TOP 15 UK UNIVERSITY ENDOWMENT FUNDS 2018 (£BN) 68
CHART 61: HE NON-RESIDENTIAL CONSTRUCTION CONTRACTS AWARDED IN 2018-19 BY TYPE OF DEVELOPMENT (%) 69
CHART 62: TYPES OF STUDENT ACCOMMODATION IN THE UK – APPROXIMATE SHARE BY TYPE 2017-18 70
TABLE 63: MARKET SHARES OF LEADING PBSA OPERATORS 2019 73
TABLE 64: PBSA DEVELOPMENT PIPELINE 2018-2023: BY YEAR OF ANTICIPATED COMPLETION, NUMBER OF SCHEMES, VALUE (£M) AND NUMBER OF BED-SPACES 74
CHART 65: ESTIMATED NUMBER OF NEW STUDENT BED SPACES BUILT PER YEAR: 2014-2023 75
TABLE 66: REGIONAL PBSA DEVELOPMENT PIPELINE 2018-2023: NUMBER OF SCHEMES, VALUE (£M) AND NUMBER OF BED-SPACES BY MAJOR CITY 76
CHART 67: FORWARD PIPELINE OF STUDENT BED-SPACES BY OPERATOR 2019-23 78
TABLE 68: TOP CLIENTS IN THE EDUCATION SECTOR – BY NO. & VALUE OF PROJECTS AWARDED IN THE YEAR TO JUNE 2019 (£M) 80
CHART 69: CONTRACT AWARDS IN THE SCHOOLS SECTOR – APPROXIMATE SHARE BY CONTRACTOR (YEAR TO JUNE 2019) 81
CHART 70: CONTRACT AWARDS IN THE HIGHER EDUCATION (NON-RESIDENTIAL) SECTOR – APPROXIMATE SHARE BY CONTRACTOR (YEAR TO JUNE 2019) 82
TABLE 71: TOP 15 CONTRACTORS IN THE STUDENT ACCOMMODATION SECTOR (BY NUMBER OF CONTRACTS AWARDED) YEAR TO JULY 2019 84