Help us build a future

Nov 24 2009 by jez Davison, Evening Gazette

A NORTH East construction expert has called for more Government funds to be pumped into the region to help construction firms fight their way out of recession.

Douglas Kell, director of the Civil Engineering Contractors Association (North East), said skilled local construction specialists were losing out on vital work because insufficient public funds were being made available for infrastructure upgrades.

His comments coincide with a new survey in which only 15% of UK and foreign construction firms said they expected state intervention packages to bring a significant increase in opportunities over the coming year.

According to the survey by KPMG, 64% of respondents expect to either increase or maintain profit levels by mid-2010, despite falling demand and a tightening of credit.

Mr Kell said this optimism was not being reflected on Teesside and urged policymakers to release the purse strings for infrastructure projects “north of the M62 corridor”.

He said: “The North-east is forgotten about. We are not getting our fair share of the money.”

The “bleak” outlook for construction specialists was “likely to get worse before getting better”, he said, especially with the Government grappling with a debt mountain estimated to grow as high as £175bn this year.

The construction industry has been hit in the current recession, suffering a 9.1% slump in output during the first half of this year followed by a further fall of 1.1% in the third quarter.

However Mr Kell said the slump was no slight on the skills of Teesside’s construction professionals, which he claimed were well placed to carry out infrastructure projects currently on hold due to a lack of funds.

Jonathan Simpson, associate director in Sanderson Weatherall’s Teesside office, said public money for such projects could be hard to come by - especially with UK borrowing rising by a higher than expected £11.4bn in October.

“The private sector has had to cut its cloth; now the public sector will have to do likewise,” he said.

He said the construction slump - and in particular the fall in commercial property values - had been exacerbated by empty property rates, which were “hurting companies throughout the supply chain”.

The industry is urging Government to introduce measures that could help boost construction output and save jobs.

New research by Teesside University showed the benefits of a cut in VAT to 5% on property repairs would outweigh the resulting loss in Government revenue.

The study said the VAT cut would cost the Government £2.6bn in lost revenue, but the cost to the Exchequer of a predicted 300,000 construction workers remaining unemployed throughout 2010 would be £3.5bn.

According to the report - conducted for the Repairing Britain campaign aimed at stimulating construction- related activity - the proposed VAT reduction could save “tens of thousands” of jobs in the sector.

Property specialist Rok, which commissioned the report, has sent a copy to Chancellor Alistair Darling in advance of the pre-budget report expected next month.