With his Pre-Budget Report likely to be issued this month, it is essential that the Chancellor of the Exchequer recognises the importance of continued spending on construction projects according to the Construction Products Association.
The association has written to the Chancellor ahead of the statement, urging him not to cut capital spending on construction projects, as this will jeopardise both the short-term economic recovery of the UK as well as its longer-term economic prospects.
While the association recognises the need to tackle the levels of public finance debt, it insists that capital spending on construction should be maintained even during challenging economic times.
Simon Storer, CPA communications and external affairs director said: “Although there has been some fiscal stimulus in the UK, the amount compares very poorly to the massive injections of public funds into construction projects in other major Western Countries such as the USA, Germany and Australia, all of whom have come out of the recession sooner than the UK.
“Cuts to capital spending on construction have traditionally been seen as an easy way to address financial problems and yet, ironically, capital spending on construction projects provides the most immediate and beneficial way of stimulating economic recovery and leaving a beneficial legacy from the investment. A recent report by LEK Consulting, in which the Association was involved, has shown that for every £ spent on construction output, £2.84 is generated in additional economic activity.
“Maintaining capital expenditure is vital to ensure the provision of the housing, schools, energy and transport infrastructure necessary to give the UK a successful platform for long term economic growth.”
Among the other items on the CPA’s wish list are:
· Further pressure on the banks to make credit more freely available to viable companies
· An extension of the credit insurance top up scheme for a further six months
· A commitment to ensure that net public investment does not fall below 2.25% of GDP
· No further tax increases on business
· A commitment to tackle the regulatory burden on business and particularly to agree to review the impact of the planning system on business
· Agreement to undertake a review of the products and solutions which are eligible for a lower rate of VAT because they will help deliver improved energy and water efficiency in our homes