Growth remains muted in the construction sector in Scotland with firms set to turn to refurbs rather than new builds, according to Brian Smith, managing director at construction recruiter Vanguard.

Smith’s comments come despite January’s data from the Markit/CIPS Construction Purchasing Managers’ Index which signalled “solid” expansion of activity in the sector, with the seasonally adjusted index posting 53.7, up from 49.1 in December.

Smith told Recruiter: “December was terrible because people were shutting up a week or two early because of the bad weather. It was at a low base anyway. We’re not seeing growth up here [Scotland] in construction. We think it may get busier but contract and tender costs are extremely low and contracts are awarded to whoever is cheapest.

“Our clients are not doing anything like the business they were doing last year. We are more optimistic on prospects for later in the year in the third and fourth quarters. It’s all down to funding. If clients can get their hands on funding, they will grow. The banks need to lend again.

“There are still some projects being carried out by local housing associations and councils but once the funding is switched off people will be scratching their heads to find work.

“We think one area where it will get busy is refurbs of shop fronts and offices. Firms can’t afford to do new builds. With a new build, you’re not always sure how much it is going to cost, but with a refurb you know exactly how much it is going to cost. We think this will kick in during the third quarter.”