REUTERS | Eduardo Munoz

Construction industry reaction to coalition government

The construction industry has been hit hard by the current recession. Beyond headlines like “Heathrow third runway scrapped”, the construction industry faces further uncertainty as it waits to see what the new coalition government’s public sector spending cuts really mean for key areas, such as housebuilding, and for major projects, such as Crossrail.

The coalition agreement

The coalition agreement outlines the deal that the Conservatives and Liberal Democrats reached on a range of issues, including employment, property and environmental matters. However, more is to come; a final coalition agreement will follow, covering the full range of policies and including foreign, defence and domestic policy issues not covered in this document.

The construction industry reacts

On the whole, the industry’s reaction to the new coalition government has been muted and it will surprise no-one that there are calls for more stability:

Michael Ankers, chief executive of the Construction Products Association:

“It is going to take some time to come to terms with the way the new government will work and how stable the relationships that are being established are.

This uncertainty could delay the investment decisions in both the public and private sectors, and prolong the construction recession beyond 2010. Manufacturers and suppliers need confidence that the recovery in the housing market will continue and clarity about public sector spending programmes going forward.”

Stephen Ratcliffe, director of the UK Contractors Group:

“The outlook for the industry remains at best uncertain. A big worry is that the inconclusive election result will have an effect on both public sector investment, with more delays and uncertainty, and the wider market because ongoing fiscal policy could be a muddle.”

Julia Evans, chief executive of the National Federation of Builders:

“With the construction industry still in recession and continuing to experience higher costs and less work, deep capital spending cuts can only make it more difficult to develop skills and deliver on low carbon building targets.

It is important to note that none of the major parties pledged to protect construction spending during the election campaign, a sure sign that the industry’s contribution to the UK economy is still undervalued.”

What next?

A new construction minister has been announced: Mark Prisk (the former shadow minister for construction) has been appointed as the minister of state at the department of Business, Innovation and Skills. He will report to Vince Cable.

The Queen’s Speech is on 25 May, although it is not yet clear what the government will put in it. No doubt more detail on the government’s policies will emerge over the coming days. An emergency budget is also planned for 22 June and there will be a full spending review, reporting in autumn 2010.

Until then, the industry (and the country) waits.

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