Lib Dem policies alarm construction industry

23 April 2010

Liberal Democrat plans to slash building programmes have alarmed the construction industry, according to reports in both Construction News and Building.

The construction industry voiced its concerns after the surge in support for the Liberal Democrats raised the possibility of the party helping to form the next government.

The Liberal Democrats have pledged to scrap both the £40 bn nuclear building programme and the £1.8bn new prisons scheme and to levy 5% VAT on new-build housing. On the other hand, it would also cut VAT on refurbishment projects to 5%.  

Roger Humber, strategic policy adviser for the House Builder’s Association, told Building the proposals on VAT could effectively close down the private house-building industry overnight. “It is the single most catastrophic policy to be proposed by any of the main political parties since the second world war,” he said. Humber said VAT of just 5% would be enough to entirely wipe out developers' profit margins in the current market, with no possibility that price increases could be passed on to the consumer.

As part of the Liberal Democrats' plans to cut spending, the party would also tear up plans for a programme to create five new prisons in England and Wales.

Noble Franice, economics director of the Construction Products Association, told Construction News that scrapping the scheme would be a huge blow for the industry. “The current plans are already a cut back from the original scheme to build three large Titan jails,” he said. “To scrap it would be quite harsh, and have a significant impact on the industry.”

The Lib Dems would also abandon plans to build at least 10 nuclear reactors to help meet the UK’s future energy needs, which the party thinks is an over-expensive way of reducing carbon emissions.

Francis said: “There is no way renewables could be used to cover the nuclear deficit - to produce enough energy for England, you would have to cover Wales with wind farms.”

Other Lib Dem pledges include plans to look at reforming public sector borrowing requirements to free councils to borrow money against their assets to build a new generation of council homes.

They also promised measures to bring 250 000 empty homes back into use by giving owners grants or cheap loans to renovate them. 


We are in a public sector driven economy at the moment which is good in the short term for construction work, but where is the money coming from? Not from my children when they start earning nor from my pension I hope.
I think this country needs wealth to be generated from the entrepreneurial spirit from the likes of our specialist contractors, and specifically the skilled people they employ. Future wealth can also come from innovation - applying science and technology and turning ideas into reality. The eco - economy needs enthusiasts who may be private individuals or local organisations who club together with a vision that is achievable in small scale first.
I think big public sector and private sector organisations behave just like the banks - enjoying short termism on the backs of those whom we do not reward. They shift risk for short term financial gain rather than investing where real success could come. Meanwhile they are swelling with tiers of non-productive advisors and administrators to justify their short term decisions.
So I support this coalition government in not being afraid to act in the national interest.
Let long termism ride higher than short termism for a while, and instead of false levels construction activity that lead to an unimaginable problem of the UK having a shortfall in funds that has spiralled out of control, we will have a construction industry which has adapted to survive.


Max, 14 May 2010

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