THE head of Galliford Try's construction arm said the market remained stronger in Scotland than any other part of the UK and noted the division had recruited 200 people north of the Border since September.

However, Ken Gillespie said demand for new homes was not strong enough in Scotland to encourage the firm to increase its limited presence in the housebuilding market in the country although it reported encouraging signs of recovery in the south of England.

Mr Gillespie said the Middlesex-based building heavyweight performed well amid challenging market conditions in the six months to December 31, when underlying operating profits increased by 6% compared with the same period last time, to £37m.

Loading article content

Mr Gillespie said the group's Morrison Construction arm has benefited from relatively strong levels of public sector activity in Scotland.

The division has been performing better in Scotland than anywhere in the UK for Morrison "in terms of growth and the pipeline," he said.

It had increased employee numbers to 1200 in Scotland from 1000 at the time of the annual results announcement in September.

Mr Gillespie renewed the support for the Scottish Government's infrastructure investment policies he voiced then.

"The Scottish Government has recognised the positive effect on the economy that construction can have in terms of investment in infrastructure.

"They have been with it for some time and created a very positive pipeline of opportunities.

Morrison belongs to a coalition that was recently named as one of two preferred bidders for the M8, M73 and M74 improvement scheme.

Regarding the UK Coalition Government, Mr Gillespie said: "I don't think they have quite got the key relationship between infrastructure and economic recovery."

While oil and gas firms are investing strongly in the North East and Shetland, potential private sector clients remain "hesitant" in other parts of Scotland.

Galliford Try said: "As we approach the spring selling season, we are encouraged by indications in the housing market. Prices achieved are slightly above our expectations."

After noting that it focuses on the south of England, the company said: "Despite the economic uncertainty, our performance demonstrates the relative strength of chosen geographical areas... and the ability of purchasers of our homes to secure mortgage finance, which continues to improve."

Mr Gillespie said conditions were not strong enough in Scotland to encourage the firm to make the investment required to challenge established players in areas such as the central belt.

It has a small number of sites in the Highlands.