Call for Bank of England help for housebuilding

The Construction Products Association is calling on the government to use the Bank of England’s quantitative easing programme to invest directly in an organisation to build homes.

As part of the CPA’s budget submission statement, the organisation said that the government should help ease the housing crisis “by purchasing bonds through its asset purchase scheme in a company that provides homes”.

The CPA said the move would ensure that quantitative easing is used in a manner that fully benefits the UK economy, and that the Bank of England has another method for withdrawing the finance associated with quantitative easing in a swift manner without distorting one particular market.

So far the Bank of England has injected £325bn in to the economy, primarily through the purchase of government gilts from bank reserves. The CPA believes that the construction industry would be better served by direct investment in housing projects.

In addition, the CPA said the government needed extra measures to boost take-up of the Green Deal, and give intensive energy users, many of which are construction product manufacturers, an extra capital allowance on corporate tax.

Michael Ankers, chief executive of the CPA said; “To ensure the UK economy is given the best possible chance for recovery, it is essential that government focuses on sustainable investment for growth.

“Key to delivering the infrastructure that the country needs is the attraction of additional private finance to compensate for the shortfall in public capital investment and the use of additional quantitative easing to raise levels of housing supply.”

A budget submission by the UK Contractors Group called for a renewed commitment to private finance, and said the government was risking its agenda to reform procurement by the speed of budget cuts, particularly to local authorities.

The letter, from James Wates to chancellor George Osborne, says that procurement reform is dependent on the government acting as an intelligent client. It says: “High levels of procurement skills within government are essential, but there is evidence that the public sector skills base - especially at a local authority level - is being eroded due to current spending cuts.”