Construction Industry Plan to Rebuild Growth Unveiled

A rebalancing of public expenditure in favour of capital investment, a targeted cut in VAT on works to make homes greener, and new models for financing major infrastructure are needed to unlock growth in the UK’s strategically crucial construction industry.

These are some of the key recommendations of a new report, published today (24th November 2011), by an alliance of seven leading industry bodies from across the UK.  The alliance has a combined membership of more than 40,000 companies and thousands of individual built environment professionals.

The report highlights the critical importance of the construction industry to the UK economy, representing 7% of total economic output, and suggests it will have a pivotal role to play in rebuilding growth.  In addition to a lack of public funding and poor availability of private finance, the report identifies planning delays, burdensome bureaucracy and weak customer confidence as other major barriers to growth in the industry.  It urges the UK Government to press ahead with controversial reforms to England’s planning system and to accelerate planning reforms elsewhere in the UK.

The report suggests further action is needed to widen the availability of bank lending to construction firms and supports recently-announced measures to improve the availability of affordable mortgages for first-time buyers.  It urges the Government to prioritise additional funding for capital investment, calls for VAT on sustainable domestic upgrades to be reduced to 5 per cent and suggests new finance models for major infrastructure projects need to be implemented as a matter of urgency.

To inform the report’s key recommendations, members of the Association for Consultancy and Engineering (ACE), the Civil Engineering Contractors Association (CECA), the Construction Products Association, the Institution of Civil Engineers (ICE), the Federation of Master Builders (FMB), the National Federation of Builders (NFB), and the Scottish Building Federation (SBF) were all surveyed and asked to indicate what they considered to be the main barriers to growth in the UK construction industry.

Based on the responses received, the report outlines six key recommendations to unlock growth in the UK construction industry:

• Rebalance public expenditure between capital and current spending;
• Reduce VAT for sustainable domestic upgrades to 5 per cent;
• Identify new models of infrastructure finance;
• Ensure banking support to the construction industry;
• Maintain course on planning reform in England;
• Improve the availability of affordable mortgages for first time buyers. 

Commenting, SBF Chief Executive Michael Levack said:

“This is a hard-hitting report that sets out very clearly the key challenges that face the UK construction sector.  The key recommendations are very pertinent for the Scottish industry, either calling for specific action in policy areas that are reserved to the UK Government such as VAT and bank lending or urging more rapid action at a Scottish Government level in areas such as planning reform and cutting bureaucracy.

“With the setting up of the Scottish Futures Trust, Scotland is already well ahead of the game in reforming public private partnerships. But there is still significant scope to improve the new finance models so as to strike the right balance between delivering value for money, maintaining quality and achieving wider economic benefits such as the creation of jobs and apprenticeship opportunities in the construction industry.

“On reserved matters, we will take our case directly to the Chancellor and hope the report can exert some positive influence over next week’s autumn statement.  On devolved matters, we hope the report can add further weight to our call on Scottish ministers to prioritise additional funds towards capital expenditure, to streamline procurement and to deliver ongoing reform to our planning system.”

Notes to Editors 

1. Unlocking Growth in UK Construction was prepared by the Association for Consultancy and Engineering (ACE); the Civil Engineering Contractors Association (CECA); the Construction Products Association; the Institution of Civil Engineers (ICE); the Federation of Master Builders (FMB); the National Federation of Builders (NFB); and the Scottish Building Federation. 

2. The survey evidence, which was gathered in September 2011, asked member companies of these seven bodies about their perception of the specific barriers they faced when trying to deliver new construction activity. 

3. Founded in 1895, the Scottish Building Federation (SBF) is the lead voice of the construction industry in Scotland, an industry which is the largest source of private investment north of the border and contributes around £10 billion (c.10%) to Scotland’s GDP.  The overall aim of the organisation is to ensure that the important contribution of the Scottish construction industry to Scotland’s economy and society is recognised and valued, which it does through working with industry, government and the media, and that industry standards are raised. 

4. The SBF promotes the interests of the construction industry to a diverse range of stakeholders and is the leading employers’ federation for the industry, representing over 700 companies from Orkney to the Borders. 

5. The SBF provides an exclusive range of invaluable support services to a wide range of member companies, whether these are small single trade firms or major regional and national contractors.  The shared objective that all members have in common is their commitment to health and safety, skills and integrity, ensuring the delivery of the highest standards of performance, professionalism and quality within the industry in Scotland. 

For further information please contact Llynsey@scottish-building.co.uk.

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