Local authority maintenance will kick start recovery

The recession is continuing to have an enormous impact on the construction industry. Last year alone, it was estimated by the Office for National Statistics that more than 100,000 construction workers had lost their jobs, and the numbers are certain to have climbed further this year.

At the same time as colossal job losses in the sector, environmental and economic considerations are leading the government to advance a range of major sustainable development projects, along with some significant proposed improvements to national infrastructure, which, as the government highlights, should in theory spell good news for the ailing industry.

Renewable Energy Strategy

In the past few months, the government has launched its Renewable Energy Strategy and the Low Carbon Industries Strategy, promising a total of £60m of funding dedicated to the marine renewable industry. It has also announced four eco-town sites proceeding through to the next planning phase, with developers in the four successful locations able to bid for a share of £60m to support local infrastructure.

In addition, a £1bn plan has been announced to electrify the main rail route between London and Swansea, with a second line between Liverpool and Manchester to be converted from diesel to electric.

Investment in roads, railways, eco-friendly towns, and the significant drive towards renewable energy projects compelled by the UK's commitment to generating 15% of its energy from renewable sources by 2020, is surely a lifeline for contractors suffering due to the contraction of the private sector market.

Aren't these lucrative deals, if struck with smaller contractors, a way of kick-starting economic recovery on the ground? They could promote grass roots recovery, starting with contractors and subbies.

Contractors will, of course, need to be of a significant size to take on such detailed and complex projects. However, it is equally clear that most large contractors rely on subcontracted labour to make projects a reality. So, it can be said that the work, and the financial benefits and job opportunities, will feed down to those on the ground.

Unfortunately, despite the rhetoric, and the attempts made by government to fill the temporary void left by the private sector, it isn't that easy.

Devil is in the detail

As ever, the devil is in the detail. The projects that have been announced are likely to take years to gain momentum. It is thought, for example, that it is going to take until 2016 to electrify the main rail route between London and Swansea. Hopefully, by that time the dark days of recession will be well behind us.

Bringing forward the start date of major projects is a broadly sensible idea in theory, as the benefits will indeed feed down in time - just not in enough time to achieve the short-term objective of igniting much needed recovery in the industry.

An alternative, and more realistic solution with more tangible benefits, would be a return to the backlog of much needed local authority, education and health maintenance contracts and the kick-starting of public house building projects.

Maintenance backlog

For example, British Waterways estimates that it would cost around £200m to bring all principal and non-principal assets up to steady state condition; NHS buildings have a £4.04bn maintenance backlog, according to figures recently released by ministers; and the local authority highways maintenance backlog is estimated at a staggering £70bn.

Before the start of the recession, we had a prolonged period of growth and an enormous expansion of spend on new capital projects. As we are all well aware, the year-on-year increases in spending are behind us for the foreseeable future. Now is the time, when money is tight, to pursue the less sexy work essential to help put our infrastructure and public estate in better repair.

Not only are these small-scale projects and investments necessary to meet both statutory and safety requirements, but some will result in savings being made over time. For example, the annual cost of compensating victims of pothole-related incidents now exceeds £53m.

Spending money on maintenance contracts would also benefit schools and hospitals, and would put money back into the pockets of smaller contractors, quickly. This route is undoubtedly one of the quickest ways to stimulate an important part of the economy.

Arguably, what is needed to help the industry out of recession are smaller projects that contractors and subcontractors can sink their teeth into, tomorrow. Big projects are not the sole solution this time; small actions are critical too.