Job losses threaten Green Deal

The latest Quarter Two State of Trade Survey from the Federation of Master Builders (FMB) reveals that construction unemployment is still rising with the result that the SME construction sector has now been cutting employment levels for three and a half years. What is particularly concerning is that the survey shows that construction has still not hit the bottom, with a third of SME builders reporting that they had been forced to reduce employment levels over the last three months. Official employment figures have revealed that the construction industry lost 24,000 jobs in the first three months of 2011 and that 29% of construction SMEs expect to cut more jobs over the next six months.

All these job losses undermine the UK’s economic recovery but they also cause further long term problems for construction. Previous recessions have shown that once people leave the construction industry they tend not come back to it when the economy recovers meaning that their skills are lost to the industry on a permanent basis. In the past the UK has relied on economic migrants to fill our skills gaps but anecdotal evidence suggests that migrant workers may be less willing to come back to Britain as construction activity picks up in their own countries.

44% of our members thought that homeowners are unlikely to take advantage of the Green Deal

The government’s forthcoming flagship programme, the Green Deal, has the potential to create many thousands of jobs and get the UK on the way to economic recovery. There is also the added imperative that the UK has a legally binding target to cut carbon emissions by 80% by 2050. If the government is to achieve this legal target then the construction industry will have a critical role to play because our building stock accounts for 40% of the UK’s total emissions with housing alone accounting for 27%. More concerning is the fact that 85% of our existing homes will still be in use in 2050.

Of course, the success of the Green Deal all hinges on consumer take up which will means that homeowners will need convincing that the Green Deal is a good deal for them. Unfortunately, a recent survey of our members, small building firms that are in contact with homeowners on a daily basis, found that 44% think homeowners are unlikely to take advantage of the Green Deal when it launches in autumn 2012.

Small construction company owners need more evidence that homeowners will take advantage of the Green Deal. The creation of this demand is also important to ensure that there is an up-skilling in the building industry as many builders will be less inclined to train their staff if there is little or no demand. The good news is that for many small builders the challenge is less about skills and more about knowledge, which means that the training will be far shorter and more easily completed than if the building industry had to start from scratch.

To encourage homeowner take up and to make the Green Deal a success, the FMB wants to see the government offer additional incentives to homeowners and landlords to persuade them to make their properties more energy efficient. There are a number other incentives the government could consider in order to make the Green Deal more appealing. 70% of respondents to a recent survey of FMB members, believe that cutting VAT to 5% on the installation of all energy saving materials would increase interest. More than a quarter also believe that council tax reductions would be the biggest incentive for homeowners.

The government’s new construction strategy is an opportunity for the government to really demonstrate its commitment to help the construction sector. Without this support there is a real danger that the fragile economic recovery will be seriously undermined and the skills base that will be required for the Green Deal when we do finally move out of recession won’t be there to build the infrastructure and homes that this country will need.