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Construction News - Economic Update

“Construction Needed to Stimulate Economic Growth”

Says Construction Products Association Chairman

Addressing an audience of more than 80 Parliamentarians and 150 construction industry leaders, civil servants and journalists at the House of Commons, Bill Bolsover, the Chairman of the Constructon Products Associaton, identfed the constructon industry as a key driver of economic growth and suggested ways in which government should kick start the recovery.

Bill Bolsover said; “Government must stick to its spending plans, but rebalance the economy between current and capital spending. Government’s own fgures show current expenditure rising from £632bn this year to £694bn in 2014/15, whilst capital spending is being cut from £61bn to £42bn over the same period. Rebalancing this could make way for the £5 billion package of essental infrastructure investment which is being widely talked about.”

He also called upon government to do more to stmulate the new build housing market. “The government must do more to support the proposed Green Deal programme. Through this scheme it is hoped that some 14 million homes across the UK will be improved by the early 2020s. The stmulus to the economy and the benefts to our industry would be huge, however without some fiscal incentive this will not happen. Government must ensure that all Green Deal compliant measures pay the lower 5% rate of VAT as it is perverse to charge 5% tax on a product, i.e. energy, that we want people to use less of, but 20% on the measures which help them stop using it.”

However, the Association’s Chairman also emphasised it was industry that would deliver the economic recovery and that the role of constructon would be crucial in achieving this. But he said, “Politcians must remember that many major constructon product manufacturers and suppliers are no longer UK companies so had a choice of where to put their investment. The signals government sends on its reform of the planning system; on the way it decides to support energy intensive industries; and on its carbon reducton measures are of concern to a world-wide audience of potental investors in the UK essental to our economic recovery.”

sector housing starts are forecast to fall by a third, leading to an overall reducton in the total number of housing starts in 2011 and 2012. By the end of the forecast period we will have a shortall of more than two million homes in the UK. “Equally worrying is the commercial sector, the largest constructon sector and a bellwether for private sector actvity. Although commercial constructon in central London is buoyant, there is litle actvity in the rest of the country. As a result this sector is expected to see a fall of 3% in 2011 and 4% in 2012 before a return to growth in 2013.

“On a more positve note infrastructure output is set to grow throughout the forecast period, driven by considerable increases in rail and energy related work, even though road expenditure contnues to decline. During this period rail infrastructure will see growth by almost 80% and constructon of energy related projects by a massive 200% .

“Government recognises that construction is a key part of economic recovery, yet these forecasts herald a very difcult few years, not just for constructon but for the wider economy. It is therefore essental that the government uses the Autumn Statement to stmulate recovery by rebalancing the economy between current and capital spending. Government’s own fgures show current expenditure rising from £632 billion this year to £694 billion in 2014/15, whilst capital expenditure is cut from £61 billion to £42 billion over the same period. Rebalancing this could make way for the £5 billion package of essental infrastructure investment that many commentators have called for.

‘Similarly, government must do more to stmulate house building and help frst-tme buyers onto the housing ladder. The announcement about the release of public sector land is welcome, but it is access to fnance, not development that is currently holding back the housing market. Government, therefore, needs to look at mortgage indemnity guarantee schemes, or government backed savings scheme for frst-tme buyers, to help ease this situaton.

“Finally the government must do more to support the Green Deal programme. The stmulus to the economy and the benefts to our industry could be huge. However, without a fscal stmulus, such as a reducton to 5% in VAT for

all Green Deal compliant work, Green Deal is unlikely to be successful. It is essental the Chancellor uses the Autumn Statement to address these issues as without these stmuli, the next few years will be very bleak indeed for the UK economy.”

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Page 22 Contractors World - UK & Ireland Vol 1 No 7

 

      More information: Construction Products Association Emai l

Page 22 - vwuk-1-7

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