The rising cost of energy in the UK is putting a strain on industry and making it less competitive than European counterparts, says new Construction Products Association president John Colley.

Dramatic increases and volatility in the price of energy are having an enormous impact on construction costs in the UK. The Construction Products Association (CPA) forecasts the cost of construction projects to increase by £1.3 billion a year, including an extra £500 million on the cost of public sector projects over and above what has been budgeted for.

Speaking at the annual lunch of the CPA, new president John Colley graphically voiced concerns to an audience of industry leaders, senior politicians and government officials, saying: "I still don't believe the government fully understands the dramatic impact the increase in the price of energy is having. Companies have reported increases of up to 300% over the last three years in the UK and these far outstrip the increases they face in their European operations, leaving British companies at a considerable competitive disadvantage."

Colley told his audience that the industry would continue to press the government about the consequences to the UK's economy of the cost of energy and the difficulties faced by companies that have to make future investment decisions within the current energy climate. "We have responded to the Energy Review with a number of ideas," he said, "but I am not sure how willing the government is to listen."

Despite rising energy prices, the sale of construction products rose in the first quarter of 2006, the first time for over 12 months. Commenting on the results, CPA economics director Allan Wilen said: "The survey provides early signs that the industry is going to bounce back from a disappointing year in 2005.

"While heavy industry is showing signs of recovery, the light side is experiencing the strongest growth, with a pick up in housing work and schools and NHS building programmes. Changes in the Building Regulations benefit those makers of products that will help make buildings more energy efficient," explained Wilen.

Contractors reported first quarter output ahead of a year ago, with 28% of firms reporting output as up on this time last year.

Source

Electrical and Mechanical Contractor