Member News
By Gerrard Clark - 29th June 2011
Steve Rotheram MP has called for the government to take new measures to stop the decline of the construction industry.
"Urgent action is needed from the government to save the industry from the brink," said Steve Rotheram MP, speaking during his Westminster Hall debate on the construction industry.
Rotheram started his working life as an apprentice bricklayer and worked in the construction industry for over 20 years.
"Construction had been hit extremely hard in the global financial crisis, but the 3.3 per cent fall in output in the last quarter of 2010 is the steepest the industry has suffered since the financial crisis of 2008," he said.
The Financial Times reported that construction orders have fallen by 40 per cent in the past 12 months
Rotheram stated his belief that the current government's actions have created some of this decline.
By 2015, "annual construction spending by the government will have been reduced from £59bn to £47bn, a reduction of more than 20 per cent", said Rotheram.
He pointed to large cuts in the budget of the Department for Communities and Local Government, as well the scrapping of public sector infrastructure projects such as Building Schools for the Future.
Rotheram quoted Steve Bratt, the group chief executive officer at the Electrical Contractors’ Association:
"Cuts to public sector construction projects are a case of short-term gain but long-term pain."
According to Rotheram the lack of investment in construction in the 1980s created huge skills shortages, and trouble for the industry many years later.
He said that the "training trap cannot be turned on and off", and that the current government does not understand the complexities of the training of apprenticeships.
Ian Lucas MP added that for every £1 invested in the construction industry, there is a multiplier of £2.84.
"A thriving and vibrant construction sector has a significant and beneficial knock-on impact on the wider economy, not least because 80 per cent of the materials that are procured by the construction industry are procured from within the UK, which creates an additional stimulus outside of the construction sector itself," said Chris Williamson MP.
Stewart Jackson MP said that cuts in government spending reflect a more efficient use of spending.
"The wider context of the government's construction policies is about rebalancing an over-reliance, in some parts of the country in particular, on the public sector, and trying to encourage, with tax policies and a regulatory regime, more private sector growth in jobs," said Jackson.
Minister for business and enterprise, Mark Prisk said, "I do not deny that there is a challenge in construction. We cannot force that number. The point is to ensure that we put the funding in place, so that businesses who wish to do so, can participate."
Prisk also commented on Building Schools for the Future:
"The reality is that it was a hideously complex programme with an overrunning budget, an incredible duplication of processes and wasteful outcomes.
"We recognise that many public procurement costs have been way over what they should be, which is why we have set a target of a 20 per cent reduction," said Prisk.
Rotheram maintained that "monumental cuts in construction make no economic sense".
Article Comments
The prospects for construction over the next three years are poor with no significant growth until 2014 and even by 2015, output will not have returned to pre-recession levels.
The main impact over the next 18 months is likely to be on public sector construction, where the industry is, in the main, going to greatly suffer. These cuts were announced in last year's CSR but the full effects have yet to be felt.
The government has rightly indentified construction as a key driver to help boost economic recovery but if this is to be realised it must do more to help stimulate the industry, such as accelerating changes to the planning system, improving bank lending, reducing regulatory burdens and increasing the likely success of the Green Deal proposal, by for instance reducing VAT on Green Deal activity in line with the VAT charged on energy consumption.
The Association is pleased that these issues have been highlighted during this Westminster Hall debate.
Construction Products Association
30th Jun 2011 at 2:41 pm
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