Construction Facing Worst Decline for More Than 30 Years

Construction activity is unlikely to return to growth until 2014, sparking the worst decline for 30 years, according to the latest Construction Industry Forecasts, which were published today by the Construction Products Association. Since the start of the economic downturn in 2007 more than £32bn of construction activity has been lost.

Commenting on today’s figures, Michael Ankers Chief Executive of the Construction Products Association said: ‘Although government is committed to cut capital expenditure by 20 per cent over the next four years, the hoped for robust recovery from the private sector, to compensate for these cuts, is not materialising. With both the commercial and housing sectors still performing badly, our latest Forecasts indicate that construction output will fall by more than one per cent this year, a further 3.6 per cent next year and no growth in 2013. Recovery finally arrives in 2014, but by then we will have experienced the worst decline in construction activity for more than 30 years. It is essential that more is done by government to kick start the economic recovery.

‘Despite the government’s desire to support housing recovery, housing starts in 2012 will be the second lowest year since 1945. Private sector housing is slowly recovering. Unfortunately public sector housing starts are forecast to fall by a third, leading to an overall reduction in the total number of housing starts in 2011 and 2012. By the end of the forecast period we will have a shortfall of more than two million homes in the UK.

‘Equally worrying is the commercial sector, the largest construction sector and a bellwether for private sector activity. Although commercial construction in central London is buoyant, there is little activity in rest of the country. As a result this sector is expected to see a fall of three per cent in 2011 and four per cent in 2012 before a return to growth in 2013.

‘On a more positive 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 continues to decline. During this period rail infrastructure will see growth by almost 80 per cent and construction of energy related projects by a massive 200 per cent.

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

‘Similarly government must do more to stimulate house building and help first-time buyers onto the housing ladder. The announcement about the release of public sector land is welcome, but it is access to finance, 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 first-time buyers to help ease this situation.

‘Finally the government must do more to support the Green Deal programme. The stimulus to the economy and the benefits to our industry could be huge. However, without a fiscal stimulus, such as a reduction to five per cent in VAT for all Green Deal compliant work, Green Deal is unlikely to be successful. It is essential the Chancellor uses the Autumn Statement to address these issues as without these stimuli, the next few years will be very bleak indeed for the UK economy.’

Other key findings in the Forecasts include:

• Total housing starts to fall one per cent in 2011 and a further four per cent in 2012
• Public construction including PFI to fall 24 per cent by 2014
• Education construction to fall 41per cent by 2014
• Health construction to fall 45 per cent by 2014
• Private sector construction to rise 18 per cent by 2015
• Construction of commercial offices to rise five per cent in 2012 and 14 per cent in 2013

CAMERON SHOULD BE FIGHTING FOR BRITAIN NOT SQUABBLING WITH HIS BACKBENCHERS

Labour Leader, Ed Miliband, spoke today about Monday’s Parliamentary motion calling for a referendum to be held on UK membership of the EU.

He said: "We are going to be voting against a proposal for a referendum on getting out of Europe. It’s not the right thing for Britain. It is not the right thing for jobs. It is not the right thing for growth.

"The prospect of a referendum would create "David Cameron should show some leadership. He should not be spending the next few days negotiating with his backbenchers but negotiating for Britain to sort out the Eurozone crisis

"I fear we are seeing the same movie with this Conservative Party that we have seen played out in the past.

"They are looking inwards. They are out of touch. They are squabbling about Europe and not fighting for Britain."

NEW HOPE FOR BOMBARDIER

The appointment of Justine Greening as the new Transport Secretary offers new hope for the campaign to get the decision to build trains for the Thameslink line in Germany overturned.

I have therefore written to Ms Greening congratulating her on her appointment and asking for a meeting to discuss the situation.

The campaign is continuing to gain ground and the first Conservative MP to sign my Parliamentary Petition, (Early Day Motion), is an indication of the growing support. Gordon Henderson, the MP for Sittingbourne and Sheppey, in Kent added his name last Tuesday and I am very grateful for his support.

This is the text of the letter I have sent to the Transport Secretary.

Dear Justine

Congratulations on your new appointment as Secretary of State for Transport.

I appreciate that you will want a few days to assimilate your new brief, but I would be grateful if we could meet, at your earliest convenience, to discuss the Thameslink Rolling Stock Programme.

You will be aware that Siemens has been appointed as the preferred bidder for this contract, but they plan to build the new trains in Germany. The Derby based company, Bombardier, has been appointed reserve bidder.

The campaign to reverse this decision has received widespread cross party support, which includes backing from many Conservative MPs. The Invitation to Tender (ITT) documentation makes it very clear that the Secretary of State has the power to stop the process at any time.

There are a number of issues relating to the application of the ITT and the impact on the future of British train manufacturing that I would appreciate the opportunity of discussing with you. The Prime Minister has made clear his commitment to rebalancing the economy, but the plan to build the Thameslink trains overseas runs counter to the Government’s stated ambition.

I do therefore hope you are able to agree to my request for a meeting to confer about this important issue.

Yours sincerely

Chris Williamson MP

TORIES AND LIB DEMS ARE PENALISING PARENTS

Government’s recent childcare announcement won't mean a penny more help for parents already struggling on childcare tax credits.

The Government has been forced to admit that it will cut parents' entitlement to childcare down to £123 a week for one child - nearly £900 a year less than under Labour. Parents with two children will lose nearly £1,600 a year.

Universal Credit is now set to lock in a 'parents' penalty' that cuts back childcare payments so hard that many parents will be forced to give up work. With parents struggling to make ends meet, it beggars belief that the Tories are stopping parents working the hours and shifts they need by taking away their childcare.

Labour’s Shadow Work and Pensions Secretary, Liam Byrne MP said:
“The Tories are out of touch with most people’s lives and unable to address the big challenges facing Britain in the future.”

The Government has made its announcement ahead of Labour's childcare protection amendments, about to be debated in the House of Lords this week and the 'extra' money has been secured from existing Universal Credit funding.

This news comes at a time when even the Governor of the Bank of England is warning that we are facing the biggest squeeze on living standards since the 1920s. Iain Duncan Smith has failed to win any new money from the Treasury, and has been forced to raid other parts of the Universal Credit budget.

Last weekend, Liam Byrne said that childcare will be Labour’s key battleground for the Welfare Reform Bill as debate begins in the House of Lords. He has challenged the Tories to accept a raft of amendments Labour will be tabling, which are designed to ensure that parents don’t lose out on childcare entitlements when Universal Credit is introduced.

Highlighting new figures from the House of Commons library, he will point to lost tax of £47 million from 32,000 parents – mainly women – who have given up work in the last year mainly because they can no longer afford childcare.

The Government has already slashed family’s entitlements to childcare support from 80per cent to 70 per cent of costs – the equivalent of a 12% cut. The new money will simply plug a black-hole in child care funding which emerges in two years time when eligibility for childcare is widened. Today's funding does nothing to make up for the new 'parents' penalty' introduced over the last year.

Labour’s childcare protection amendments first tabled by Stephen Timms in the Commons establish a principle that families working more than 16 a week should not lose out. Tory Employment, Chris Grayling, brushed aside concerns saying “…we do not intend to make any further changes to the amount of money available for child care”.

FIVE POINT PLAN TO KICK-START ECONOMY

Repeat the bank bonus tax - and using the money to build 25,000 affordable homes and guarantee a job for 100,000 young people.

Bring forward long-term investment projects, such as schools, roads and transport, to create jobs.

Reverse January's damaging VAT rise now for a temporary period.

Immediate one-year cut in VAT to 5% on home improvements, repairs and maintenance.

One-year national insurance tax break for every small firm which takes on extra workers, using the money left over from the government's failed national insurance rebate for new businesses.

CAMERON AND OSBORNE IN U-TURN ON PRINTING MONEY

David Cameron and George Osborne used to be opposed to quantitative easing. Speaking on 9 January 2009 George Osborne, said...“printing money risks losing control of inflation and all the economic problems that high inflation brings. For the Treasury to float the idea carelessly is irresponsible in the extreme as it could shake the confidence of international markets.”

And on 5 March 2009 he said: “I don’t think anyone should be pleased that we have reached this point. It is an admission of failure and carries considerable risk”.

Then on 8 October 2009 David Cameron said: “Sometime soon quantitative easing will have to stop because in the end printing money leads to inflation”

In spite of Osborne’s and Cameron’s previous reticence the Bank of England has announced a further £75 billion of quantitative easing.

Commenting on this develpment Ed Balls MP said: “With our economy stagnated since last autumn David Cameron and George Osborne are now betting on a bail out from the Bank of England.

“The Government’s reckless policy of cutting spending and raising taxes too far and too fast is demonstrably not working. But rather than change course the Government has spent the last week urging the Bank of England to step in and essentially print more money. The Bank of England has been left with no choice but to step in and try to offset the contradictory effects of George Osborne’s Budget plans

“This is the Bank of England’s contribution to a Plan B. But while another round of quantitative easing may help, I fear it will do little to create the jobs and growth we desperately need if we are to get the deficit down. When monetary policy is already so loose – with interest rates at record lows – and with confidence depressed this is, as Keynes said, like pushing on a string.

“What we really need is a change in fiscal policy from the Government – getting the deficit down in a steadier and more balanced way with a credible plan to get the economy moving again, like the five point plan for jobs Labour set out last week.

“Two years ago George Osborne described quantitative easing as ‘the last resort of desperate governments’. Today he is desperately hoping it will bail out his failing economic policy."

DAVID CAMERON’S ABSURD CHOCOLATE ORANGE MOMENT

A NEW BATTLEGROUND IS BEING DEFINED.
By Ed Miliband

A week since I delivered my Conference speech. Watching and listening to the Tories this week, including David Cameron this morning, what is clear is that a new battleground is being defined.

It is around who can deliver a new bargain for our country built around values of responsibility and something for something. These are the values which the vast majority of the British people share.

On the one hand, we have David Cameron’s symbol of his new bargain: the chocolate orange.

I thought his “chocolate orange moment” was absurd five years ago and I have to say it was exposed on the radio this morning.

Yes he talked about it five years ago and yes, they are still being sold at the tills of WH Smith.

And that’s because the whole thing was a piece of absurd political positioning.

It was absurd not just simply because it was relatively trivial but because David Cameron failed to understand that politely asking commercial organisations to behave in the right and responsible way is not enough.

The question is whether you are willing to rewrite the rules of our society and whether you really believe they need to be rewritten.

So his symbol is the chocolate orange. I’m standing up to the banks that don’t do the right thing by small businesses, the energy companies that are too dominant in the market, the closed circles of opportunity that hold our country back, a short-termist culture in finance that has damaged our economy for decades, and huge inequality that comes in part from a take what you can culture.

The answer is not just to ask people to behave responsibly.

It is to rewrite the rules of the way our economy, our society and our welfare state works.

Do the rules of our economy encourage long-termism or short-termism, training of staff or not, unjustified rewards at the top or not, investment in research and development or not?

All the time in the rules it sets---such as on tax and procurement---governments make judgements about these issues, encouraging one type of behaviour compared to another.

We need a better set of rules in our economy to encourage businesses that invest, invent, train ,make and produce real products and services – rules that reward decisions made for the long term rather than the fast buck.
As I said in the speech “This isn't about one industry that's good and another that isn't. Or one firm always destined to be a predator and another to be a producer. It's about different ways of doing business, ways that the rules of our economy can favour or discourage.”

The old rules are not working for most people in this country nor for the British economy. Reform is essential.

Now let’s ask whether this is a government that is living true to rewriting the rules?

They talk tough on the banks but the very institutions which caused the financial crisis with grossly irresponsible behaviour are being told it is business as usual.

David Cameron and George Osborne are giving away hundreds of millions of pounds to the banks in corporation tax cuts – the wrong choice in a time of scarce resources.

They are showing no signs of taking on the other vested interests holding our economy back, just as they dragged their feet on phone-hacking.

And they are reinforcing the closed circles of opportunity: trebling tuition fees, abolishing EMAs, and so it goes on.

And on welfare, they are punishing couples who save, cutting childcare help from women who go out to work, and removing the requirement that young people have to take a job offer.

They are penalising something-for-something values, rewarding those who seek something-for-nothing and shrugging their shoulders at City bonuses or the excesses of boardroom pay.

On issue after issue David Cameron and George Osborne are showing they are out of touch and divorced from reality facing hard-working British families.
Every so often a political consensus needs to be challenged. This is one of those moments.

In the last seventy-two hours, the Tories have shown they are utterly confused about how to respond to the argument I have set out.

They can’t be the people who change the old rules. Why? Because they believe that the answer to the failures of 2007/8 and the financial crisis is more of the same.

They believe their own mythology: that the failure of that time was caused by government spending, not because of the wrong set of rules governing our economy.

So we have a Tory Party seeking to moving onto the ground I have set out. They will fail because they have not learnt the lessons of the past and no plans on how to build a future based on the values of the British people.

CONSTRUCTION PRODUCT MANUFACTURERS FACING WORSENING FUTURE

The Construction Products Association’s latest State of Trade Survey, which has been launched today, shows that the continuing economic uncertainty, coupled with rising prices and weakening domestic demand are adding to the concerns for many construction product manufacturers as the long awaited public sector cuts begin to impact heavily on the industry.

The latest quarter has shown a marked deterioration in trading conditions. Heavy side manufacturers are already seeing a falling off of sales activity and although light side firms continue to show some positive activity, their expectations for the coming year is also falling sales.

Commenting on the figures, Construction Products Association senior economist, Kelly Forrest said: ‘Although industry has been well aware of the cuts to public spending since the CSR last October, concerns for the industry have been heightened by uncertainty regarding UK and global economic activity. Furthermore, the state of the industry continues to be badly affected by rising costs with 71% of light side firms and 89% of heavy side firms reporting that costs rose once again in Q3.

‘While industry is well aware of the need by government to address its finances, it is critical that government does its utmost to sustain economic growth by investing in areas of long term benefit to the UK, such as house building and infrastructure by bringing forward finance allocated for future years and attracting private finance at a time when public finances are constrained.’

The Construction Products Association represents the UK’s manufacturers and suppliers of construction products, components and fittings. The Association acts as the voice of the construction products sector, representing the industry-wide view of its members. The sector has an annual turnover of £50 billion and accounts for 44% of total construction output.

CONSERVATIVE PARTY: OUT OF TOUCH AND OUT OF DATE

Far from offering anything new, the Tories are the last gasp of the old ways which don’t work for most people and benefit only a privileged few.

A year ago, the Tories gathered for their conference as a party of government for the first time since 1996.

They may not have won the election but they were in confident mood. Despite having announced cuts which went further and faster than those the last government had planned, the economy was still growing and unemployment was still falling.

Britain, they told us, was out of the danger zone. Nothing could possibly go wrong.

This year, the world looks very different . The doubt about whether David Cameron and George Osborne are following the right path is beginning to surface - not only among their coalition allies - but even in the minds of some Conservatives.

Stock markets around the world are falling, people in Britain are losing their jobs, consumer confidence has been wrecked by the cuts, economic crisis is threatening to return, the austerity programme is failing and the governent is beginning to wobble.

Families across Britain are worried about how they will make ends meet, anxious about what the future holds for their children and disgusted by the way irresponsibility is tolerated across our society.

But the Conservatives have no idea about how to restore growth in the economy and dogmatically refuse to consider a Plan B. Instead, cuts that go too far, too fast are choking off the economic recovery with the consequence of flatline growth and more unemployment.

Their priorities are clear from the way they are cutting corporation tax for the banks while trebling tuition fees for young people dreaming of a better future. This government is further restricting opportunities for the next generation by slashing back support for training and job opportunities.

The Tories won’t help families who face a cost of living crisis by standing up to vested interests.Middle-income families are being squeezed but there is no action on energy bills and rail fares rise. Instead, they are cutting childcare support and raising VAT.

The Tories won’t tackle irresponsibility at the top because they promise “business as usual” to a minority of company executives pursuing the fast buck and damaging the long term health of the economy.

Nor will they help tackle irresponsibility in the welfare system because they are punishing people who do the right thing and seek work.

The Tories are out of date; they are of the past. They are out of touch; they are for the few.