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Neither a borrower nor a lender be

I predict you will sink step by step into a bottomless quagmire, however much you spend in men and money.”

So our Darling Chancellor thinks that he can wave his magic wand and get the banks lending money to the general public again and all will be well.

It won’t.

With its current emphasis on banks, the government seems to think that the only thing that is keeping the country in recession is the lack of available credit. That’s rubbish. The lack of available credit is certainly a factor, but it’s only one factor. I really don’t believe that there is a huge underclass of people desperate to borrow lots of money that they can spend, spend, spend in our high streets and get us back to where we were at the beginning of 2007.

But in many instances businesses’ problems go much deeper than the cost and availability of credit, to a growth strategy that was optimistically built on the good times – and cheap, plentiful debt – lasting forever.

The lack of credit – and more importantly, credit insurance – is a big problem for businesses. Especially for businesses in the construction industry where builders are not striking insurers as the best possible credit risk. But equally problematic is the lack of demand for services.

Don’t get me wrong, the fact that Northern Rock – and whichever other banks the government persuades to do likewise – will be heading back into lending money for mortgages is a good thing and to be welcomed. But it is, can only ever be, just a small starting point.

Confidence is everything and it’s severely lacking. Spending habits have changed as have attitudes towards money. Those people lucky enough to be on tracker mortgages aren’t spending their windfalls, they are hanging onto them in case they need them to live on.

Many first time buyers are still stymied by the need to provide a minimum 10% deposit, more if they hope to stand any chance of the cheaper mortgage deals. There is no quick fix to this situation, we are in it for the long haul.

So it makes sense that the Get Britain Building manifesto looks beyond the obvious to demand long-term, sustainable solutions to ensure that the construction industry survives. Among the things they want to see are sensible, prudent lending, a simpler planning system, fast-tracked social housing programmes and a coherent strategy for the existing housing stock.

Even more sensible is the requirement that VAT be cut, not by a piddling 2.5% for a year or so, but to a flat rate of 5% for all building repair and maintenance work and the call for stamp duty to be graduated the same way that income tax is. Sensible, workable changes that will make a real difference to the industry.

Implementing such measures won’t make things better overnight, but they will go a long way towards ensuring a sustainable future for the industry and will help to prevent even more jobs from being lost from builders, manufacturers and merchants.

We are still woefully short of our target home provision – those houses will need to be built sometime and when they are, they should be done so utilising the skills and experience of the UK construction industry.

So, if you haven’t already, make sure you go to the Get Britain Building website and sign the online petition, join the campaign’s Facebook group, get hold of the car stickers and posters when they become available, let your customers and suppliers know you are supporting this vital campaign. This is too important an issue to just leave to the government.

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About Fiona Russell-Horne

Fiona Russell-Horne
Group Managing Editor across the BMJ portfolio.

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