Concern for further cuts

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ePolitix.com speaks to Julia Evans, chief executive of the National Federation of Builders ahead of its Conservative Party conference fringe event.

Your fringe event at the Conservative Party conference is entitled 'The role of construction in rebuilding the economy: the impact of coalition policy'. How important is the construction sector to ensuring economic recovery?

The construction sector is vital to ensuring economic recovery. Currently construction employs two million people and contributes around eight per cent of the UK's GDP. Construction is also an important driver of growth for other sectors, such as the troubled manufacturing sector, without which there would be a loss of domestic production capacity and skills.

Construction has one of the lowest levels of imports, so the stimulus spending tends to stay within the national economy, and is thus a good way of getting the UK economic recovery on its way.

Finally, construction is not merely immediate economic production; it is an investment which provides long-term economic and social benefits. It is estimated that for every £1 spent in construction, £2.84 is returned to the local economy.

The National Federation of Builders (NFB) would also like to stress the importance of construction SMEs in the UK economic recovery. SMEs account for 90 per cent of all UK business and the NFB believes that they are the key to the country's route out of recession.

Being well embedded in their local communities, construction SMEs know first-hand of any circumstances that they need to quickly adapt to, or of any new opportunities for business growth. They typically use local materials, local labour and promote the development of local skills. By sourcing materials and workers locally, SMEs also have lower carbon footprints than larger national or multi-national organisations.

What impact have the economic cuts had on the construction sector?

So far, the construction industry has been concerned by the cuts already made by the coalition. These cuts include a massive scale-back of the £55bn Building Schools for the Future programme, and regional spatial strategies – the schemes that identify local areas for new development or regeneration – which have frozen planning and development while replacement measures are put in place.

Construction will not be immune from the spending cuts. Figures from the Office for National Statistics show that the total volume of new construction orders in the second quarter of 2010 fell by 14 per cent compared with the first quarter of 2010, demonstrating that any recovery so far is fragile and that further cuts would cause construction industry output to fall further.

The private industrial part of the sector has shown a rise in orders, signifying the importance of investment. However, private orders are not going to be enough to offset the losses facing the industry from cuts in the public sector arena.

The effect of the cuts has been felt even more strongly by SMEs who have had to compete with much larger national contractors which had previously not competed for smaller contracts.

Given the value the construction industry brings to the economy, the NFB has been urging the government to take this into account when the time comes to make cuts. In particular, we would urge the government to do two things:

1. to look at value, rather than just the sticker price, when finalising the comprehensive spending review;

2. to take radical action to create the conditions that will help private investment to increase. For example, it should reduce the regulatory burdens and costs that would enable private investment to replace public funding of new homes.

Who is speaking at your fringe event, and what expertise will they bring to the table?

I will provide the keynote speech setting out the views and concerns of our members and the improvements they would like the coalition government to bring about.

We have secured some excellent speakers for our fringe event panel debate, each bringing expertise from different perspectives.

Nick Edwards, the editor of Construction News, will chair the discussion, and comes with a very deep knowledge of the construction industry and how it sits in relation to the wider economy.

Anne Morris and Mark Pawsey, who are both Conservative MPs, understand the difficulties and needs faced by SMEs in the current economic climate. Mark Pawsey is also part of the all-party group on housing and planning.

Finally, Steve Vickers, managing director for urban design at Birmingham City Council, will be able to explain the changes taking place at the local level with regard to the construction industry.

What are you hoping to get out of this fringe meeting and how will you follow it up in the new Parliament?

The NFB will be launching the report of a major survey that examined public sector procurement and the impact of policies on construction companies. The survey was conducted in partnership with three other trade federations. This event provides an ideal opportunity to highlight some of the difficulties faced by NFB members and the industry as a whole, and also to discuss possible solutions.

The NFB will continue to highlight the positive contribution that construction makes to the UK economy, as well as working to reduce the barriers to achieving more efficient ways of working.