Campaign to safeguard construction spending gathers pace

The Construction Products Association has added its weight to the industry's call for Alistair Darling to ringfence spending on construction projects.

The trade body representing construction materials and product companies has written to the Chancellor warning that the UK construction recovery was lagging behind other countries like the US where construction spending made record gains in September as a result of a strong stimulus package.

The submission ahead of the Chancellor's Pre-budget Report warned more spending cuts would jeopardise both the short-term economic recovery of the UK as well as its longer-term economic prospects.

Simon Storer, communications director of the Construction Products Association said: “Although there has been some fiscal stimulus in the UK, the amount compares very poorly to the massive injections of public funds into construction projects in other major Western Countries such as the USA, Germany and Australia, all of whom have come out of the recession sooner than the UK.

In the US construction spending made its largest gain in a year in September bolstered by a record pace in public construction and the biggest increase in private residential building in more than six years.

The association’s submission recognises the need to tackle the huge levels of public finance debt, but insists that capital spending on construction should be maintained even during these challenging economic times.

“Cuts to capital spending on construction have traditionally been seen as an easy way to address financial problems and yet, ironically, capital spending on construction projects provides the most immediate and beneficial way of stimulating economic recovery and leaving a beneficial legacy from the investment.

A recent report by LEK Consulting, in which the association was involved, has shown that for every pound spent on construction output, £2.84 is generated in additional economic activity.

“Maintaining capital expenditure is vital to ensure the provision of the housing, schools, energy and transport infrastructure necessary to give the UK a successful platform for long term economic growth,” he added.

The association also called for:

• Further pressure on the banks to make credit more freely available to viable companies

• An extension of the credit insurance top up scheme for a further six months

• A commitment to ensure that net public investment does not fall below 2.25% of GDP

• No further tax increases on business

• A commitment to tackle the regulatory burden on business and particularly to agree to review the impact of the planning system on business

• Agreement to undertake a review of the products and solutions which are eligible for a lower rate of VAT because they will help deliver improved energy and water efficiency in our homes