Government turmoil could hurt industry

Construction policy and spending plans could be badly hit by the current leadership turmoil within the Labour party, industry sources are warning.

Political correspondents believe that the current leadership crisis could leave the government paralysed. With Tony Blair stating that he expects to resign within the next year, and Gordon Brown's succession not completely watertight, they warn that the natural reaction will be for government ministers and MPs to enter a period of stagnation.

But for the construction industry, which is on the brink of one of its busiest ever periods, government procrastination could prove to be a real issue, said Specialist Engineering Contractor Group chief executive Rudi Klein.

"The immediate reaction to this news is, so what? On the surface, it doesn't seem to matter, but once you penetrate the surface, it matters greatly. In this situation, Blair and his ministers won't want to do anything controversial. We'll end up with a year of a lame duck leader - like the US President in his last year when he can't do anything of any consequence.

"The industry is on the brink of its greatest activity since Victorian times, with a massive amount of work about to start, and we need a strong government to support the industry and engage with it.

"This will create a serious vacuum," added Klein. "I fear the government will put off any major investment decisions on infrastructure, schools and hospitals, which is a real issue. That uncertainty won't be welcomed by the industry."

For the Construction Confederation, chief executive Stephen Ratcliffe is worried that the current air of malaise afflicting Downing Street could be prolonged. "It is feasible that this general malaise could percolate down throughout the workings of government, making decision-making a bit sticky. And if that affects the deal flow, it would be a source of great concern to us."

Others are more sanguine about the issue. Michael Ankers, chief executive of the Construction Products Association, said that as there was unlikely to be any big policy change - even with a change of leader - there would be little reason for the government to suddenly stop spending on key areas. "It's not an election," he added.

"I may be wrong, but I have lived through a few of these periods, and we are very resilient to events. Unless it becomes completely out of hand and they become unelectable, I can't see this being an issue. It is in Gordon Brown's interests to keep things going."

[Contract Journal, 13 September 2006, p  5]