The North-East's construction sector is suffering from a lack of new private sector projects to meet the shortfall created by public sector cuts.

The latest Royal Institution of Chartered Surveyors (RICS) construction survey, released today (Thurs 19) shows Government spending cuts combined with a lack of finance for private construction projects are taking their toll in the North-East, with a further drop in activity.

Tom Haughey, chief executive of North Yorkshire steel firm Severfield Rowen, also believed UK private sector projects were not coming through fast enough for firms to fill the void created by the drop in public sector contracts.

The Dalton based company, which released an interim management statement yesterday, has worked on some of Britains most prestigious building projects of recent years including the 2012 Olympic stadiums, Heathrow's terminal five and Britain's tallest building, the Shard of Glass.

And despite the firm having a healthy UK order book worth £221m Mr Haughey said that demand in the British market remained at relatively low levels compared to two or three years ago, with little prospect of improvement this year.

The UK sector contrasts with fast growing economies such as India, where Severfields order book has risen to 36m, from 33m in March, after it launched a 50/50 joint venture with the countrys JSW Steel last year to take advantage of its burgeoning construction market.

Mr Haughey said: "What we said in the past about the retracting UK public sector being offset by increased private sector work, that is still what everyone is relying on but it is slow coming through.

"The UK market is virtually unchanged, demand is still a bit low and we see no great improvement for the rest of this year."

Michael Henning, RICS North East construction sector expert, said: "That is exactly what we are finding.

"It is obviously the Governments hope that the private sector will step in to fill the void with the public sector cuts, it is just how long that will take."

The RICS survey for the first quarter of 2011 showed workloads across almost all sectors in the North East fell away, with a similar generally negative picture in other parts of the North, as well as Scotland and Northern Ireland.

Mr Henning, a partner with Newcastle based Summers-Inman said that caution amongst private firms, problems with accessing funds and lenders not prepared to put in money until a project had a tenant, was all adding to the problem.

He expected little short term improvement, adding: "You don't want to be overly pessimistic but it is hard to be optimistic."

However he added: "The first few new developments will give others the confidence. The desire to build is still there and when it happens it will hopefully come through rapidly."