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The boss of Wates鈥� construction arm has admitted that bigger firms are being dragged into the materials shortages crisis that has been plagued smaller firms for months with worries growing that summer鈥檚 traditional building boom will stretch supplies to breaking point.

Yesterday, the latest data from the bellwether IHS Markit/CIPS monthly output survey said the index had reached a 24 year high fuelled by an ongoing housebuilding boom and a recovering commercial sector.

But it warned that confidence among construction firms had fallen to a six month low with businesses increasingly worried about access to materials and labour.

Now Wates鈥� executive managing director for construction Paul Chandler said bigger firms will increasingly have to face up to the shortages. 鈥淚 have no doubt it will have an impact.鈥�

He added that firms were starting to price in the extra costs caused by the problems, with hikes being driven by a post-pandemic building boom and the squeeze on labour following the UK鈥檚 decision to leave the EU.

鈥淏rexit meeting covid has created a perfect storm,鈥� Chandler said. 鈥淚f a materials supplier or subcontractor has signed a fixed price contract, then that can create tension. It鈥檚 going to have an impact on our supply chain.鈥�

In the wake of yesterday鈥檚 CIPS data, economists warned that the headline output figure was masking a series of issues that threaten to derail construction鈥檚 return from the ravages of the pandemic when output collapsed last April when the country was in the teeth of the first national lockdown.

KPMG鈥檚 head of construction Jan Crosby said: 鈥淭hese shortages and price rises are causing builds to be more expensive overall and making it difficult for the sector to plan for unexpected costs on projects.鈥�

The CIPS survey said that prices subcontractors were now charging had last month climbed at their sharpest since it began collecting data in April 1997.

And Max Jones, a director in Lloyds Bank鈥檚 infrastructure and construction team, said the 鈥渂attle鈥� for materials across commercial, housing and infrastructure jobs would 鈥渃reate pinch points and potentially push up prices, eroding margins鈥�.

One London-based developer said the threat from materials and labour shortages was so severe, the situation was creating an industry-wide bubble that would eventually pop.

Woolbro director Ben Woolman said: 鈥淏adly stretched supply chains and a global shortage of raw materials could lead to an abrupt and potentially damaging bubble-burst in the UK construction sector.

鈥淲hile the pockets of the big developers are deep enough to have allowed them to stockpile raw materials and safeguard their output for the months ahead, smaller to medium-sized operators have not been able to afford such assurances.鈥�

Meanwhile, a government minister has admitted it had 鈥渘ot assessed鈥� the impact of labour shortages on Hinkley Point C, HS2 and its housebuilding programme.

Business minister Lord Callanan, whose answer was published on Monday, was responding to a question from Liberal Democrat peer Lord Jones of Cheltenham.