Keep the engine running

It’s widely expected that the 2010 general election will be one of the most closely fought of recent times. Its outcome will also be hugely important for the construction industry. This reflects not just the significance of prudent economic management to secure the recovery on which the industry’s future growth will depend. It is also a measure of just how vital public sector investment is to the industry – indeed, it accounts for 40% of its activity. The decisions that will be taken by the government that is elected next month will have far-reaching consequences. So what should the industry be looking for from a prospective government, of whatever political complexion?

The starting point should be the rejection of simplistic rhetoric and miracle cures. It is not credible to call on the one hand for immediate government action to reduce the deficit in public finances, while on the other demanding increased government investment in all construction programmes. Reducing the deficit will call for some tough and painful decisions. The more exemptions are agreed (and politicians will be under huge pressure to exempt, for example, the NHS from any budget cuts) the tougher the impact will be on non-protected sectors. So a strong dose of realism is a necessary starting point.

But one message around which the industry can legitimately unite is the case for maintaining capital investment. As Sir Michael Latham pointed out in a recent Building article, politicians traditionally have found it easier to cancel capital projects rather than cut revenue expenditure, with consequent, highly visible job losses (although they often tried to cushion the impact of that by claiming the project was only being deferred). As he stressed, this was the way that governments of all political hues tended to react throughout most of the post-1945 era. This was particularly true of the period when Sir Michael was himself an MP from the seventies to the early nineties.

However to its credit, the current government has not followed this course. Instead it has done a great deal over the past two years to maintain or indeed bring forward capital investment programmes. Indeed, the contribution that has been made through targeted public investment – for example, in the housing market by the Homes and Communities Agency or in schools through Building Schools for the Future – has been important in mitigating the impact of the recession.

Our starting point should be the rejection of simplistic rhetoric and miracle cures. It is not credible to call for immediate action to reduce the deficit and investment in all areas of construction

 

As we begin to emerge from the downturn we need to avoid turning off the public investment tap too rapidly, before a swing in the private sector has really taken root. The risk of the economy being plunged back into a double-dip recession by over-hasty or ill-considered cuts cannot be ignored. We also need to make the case for investment in critical national infrastructure projects such as Crossrail and power stations, without which our economy will suffer in future.

The degree to which investment in construction creates additional economic benefits, and relies largely on materials produced in the UK, helps support the case for targeted investment in key construction activity. So too is its contribution to maintaining skills and capacity, so that the industry is not left, as it was after the early nineties recession, with inadequate means to respond to expanding demand once the recovery becomes embedded.

Above all, as Paul Morell’s interim report on the industry’s response to the low carbon agenda has reminded us, we need to support investment in green technologies and processes. This is essential not just to meet our ambitious climate change targets, but also to help the UK secure the substantial commercial benefits that will accrue to those in the vanguard of low carbon construction. The scope for positive outcomes, in cutting our carbon and providing a new underpinning for the industry itself, cannot be overemphasised. Challenges such as the retrofitting of more than 20 million homes over the next 40 years will have multiple benefits for our industry, climate, living standards and quality of life. “Never waste a good crisis” was the title of Andrew Wolstenholme’s incisive report on the construction industry’s implementation of the Rethinking Construction agenda. It is also an admirable theme for the incoming government to adopt and apply in its relationship to the construction industry.