SCOTLAND: Highlands construction forecasts report 22% drop in turnover, 19% drop in employment and 50% drop in apprentices for 2009.

The figures published yesterday by the Scottish Building Federation's Highland Building Employers' Association show that the impact of the economic recession on the building industry in the Highlands remains severe.

The report also identified a 'massive fall in demand for new private sector houses' throughout the region – down 30% this year – as a major factor contributing to the downturn in turnover, employment and apprentices across the industry.

It highlighted the Highland industry's strong reliance on public sector work – traditionally viewed as a strength – as a potentially major source of concern as local and national government budgets face a major squeeze.

Three-quarters of respondents said they were 'heavily reliant' on the public sector with some suggesting that as much as 75% to 88% of their turnover comes from the public sector.

The report describes Highland Council's accelerated capital spend of £6m into the 2009-01 budget as 'helpful', having partially protected construction companies in the region from the worst effects of the recession.

The knock-on impact on budgets for the forthcoming financial year gives cause for concern, with capital expenditure in 2010-11 forecast to fall by as much as 50%.

The report concluded by recommending a series of specific measures to support the construction industry in the Highlands and Islands:

A joint campaign to ensure public expenditure on construction projects in the Highlands is maintained over the next three to four years.

An increase in spending on social/affordable housing.

Putting pressure on banks to help fund more private sector projects.

A reduction in VAT.

The provision of special assistance to enable companies to continue to employ and recruit apprentices.

The results of the survey have prompted SBF chief executive Michael Levack to raise industry fears that things might get worse for construction before they get better.

Commenting on the results of the new survey, he said: "These figures suggest an industry that is still under significant pressure.

"I have written to The Highland Council calling for a joint campaign to help get the industry back on track.

"The Government also has an important role to play. We need proper support for the industry, by slashing VAT on building works and continued pressure on the banking sector to start lending again in order that we can get more private sector construction projects moving."

The Scottish Building Federation promotes the interests of the construction industry to a diverse range of stakeholders and is the leading employers' federation for the industry, representing over 700 companies from Orkney to the Borders.