CPA: Construction new orders paint bleak picture for industry
New orders data released by the Office of National Statistics (ONS) has highlighted the very bleak picture for the construction sector over the coming months. Reflecting the Construction Products Association own industry Forecasts which were released last week, the ONS statistics show that total construction orders in the three months to November fell by an unprecedented 27% compared to a year earlier, the largest fall since records began. Private housing also faced the largest falls in orders during the three months to November down 55% compared to the same period one year ago, which is also the largest fall in orders on record.
Commenting on the data, Noble Francis, Economics Director at the Construction Products Association said: “Previously the main effects of the slowdown have been on small and medium sized contracts, with larger contracts taking an increasing proportion of total orders. However, it now appears that the larger contracts are suffering more than ever and the industry is hugely dependent upon public sector work. This is reflected in the orders’ figures with public non-housing orders for the quarter to November 43% higher than the same quarter one year earlier.”
“As a consequence, the government has a crucial role in restoring confidence in the economy and its future prospects so that businesses can begin to invest and consumers can feel confident enough in their own prospects to start spending. For this to happen it is essential the government ensures the delivery of much needed investment in infrastructure and other public construction projects; these are vital to the country’s long term economic growth.”
The Association has written to the government and is urging immediate action in a number of areas to help the government address this growing problem and kick starting economic activity. Suggestions include:
. Investing in the future – there is an urgent need for investment in transport infrastructure, energy capacity and storage, social housing and flood defences. A long term commitment by government to programmes (with clear targets) in these areas will encourage the construction products industry to maintain investment in the UK, and ensure that the public sector obtains value for money for its investments at a time when there is capacity in the market.
. Improve project delivery – November’s 2008 Pre-budget Report included proposals to bring forward £3bn capital spending and the challenge for government is to ensure that this is not purely rhetoric but that it delivers projects on the ground. Only 41 schools have been opened under the Building Schools for the Future programme in the five years since it was launched and this is well short of an original target to complete 350 schools by the end of 2008.
. Increase credit availability – the Bank of England has played its part through the recent significant reductions in interest rates, but the government must ensure that the benefit of these reductions is passed on to businesses. Today’s additional announcement in the banking sector is an important step towards achieving this.
. Encourage Energy Saving – a lower rate of VAT exists on energy than on the products that reduce the need for it and we would like to see government reduce VAT to 5% on all energy efficient products and provide time-limited funding support for those who wish to improve the energy efficiency of their homes. This will particularly help SMEs in the industry as they typically undertake this type of work.
ENDS
NOTE TO EDITORS:
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 £40 billion and accounts for 40% of total construction output.
FOR FURTHER INFORMATION CONTACT:
Simon Storer Communications and External Affairs Director
Construction Products Association
Tel : 020 7323 3770
Fax : 020 7323 0307
Mobile : 0770 286 2257
E-mail : simon.storer@constructionproducts.org.uk
Noble Francis Economics Director
Construction Products Association
Tel : 020 7323 3770
Fax : 020 7323 0307
E-mail : noble.francis@constructionproducts.org.uk
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