Construction slump in 2009: ‘biggest for 20 years’

The construction industry will see its biggest fall for 20 years next year, despite Government commitments from the Pre-Budget Report to bring forward public spending, the Construction Products Association says.
Chief executive Michael Ankers said: “Overall, even if the £3bn (of spending to be brought forward) was all spent next year, the construction industry in 2009 would still see the largest percentage fall in output since the early nineties, brought about by the sharp fall in private sector investment in construction – offices, retail, entertainment, as well as private housebuilding.”

He said that the key issue has not been a shortage of funding, rather it is the bureaucracy around the delivery of building programmes and that the government has to address this to ensure the commitment actually comes to fruition on the ground.

While the Association welcomed the energy efficiency measures for housing, they are disappointed about the “fairly modest amount” of an additional £100m and that this focuses only on insulation when “much could be achieved by support for double glazing, upgrading of central heating boilers, and other measures.”

Ankers also warned about the huge level of government borrowing that it will take to fund the expenditure. “This borrowing will need to be repaid in the medium/long term and it is critical that this does not occur through cuts in capital spending within construction.”

The CBI have also welcomed the bringing forward of £3bn of public spending. John Cridland, deputy director-general said: “The CBI had been calling on the government to accelerate planned public capital spending programmes where possible. We, therefore, welcome the announcement in the Pre-Budget Report that £3 billion of capital spending is being brought forward from 2010/11.

“Not only will this give the construction industry a much needed shot in the arm, it will lead to increased motorway capacity, more social housing, primary and secondary schools being renovated, as well as investment in energy efficiency measures. ”

In order to avoid projects being held up by procurement and planning delays, the CBI is calling for the creation of a new post of Chief Construction Officer to drive action across the government sector.