Creating the policy environment for delivery
With inflation and energy prices soaring and the economy on the edge of recession it’s imperative we learn the lessons of the last decade to futureproof ourselves for the next, says Marie-Claude Hemming, Director of Operations with CECA
The Bank of England believes that our economy will fall into a recession this Autumn lasting until the end of 2023 with inflation rising to 13.3 per cent.
This is notably due to the impact of Covid-19, the legacy of Brexit and the war between Russia and Ukraine which is hitting supply chains hard and causing a dramatic increase in our energy prices.
The Bank is aggressively increasing interest rates while at the same time inflation is raising prices and wages at a time of extremely low unemployment.
The construction industry was hit hard by the 2008 recession and subsequent governments scaled back investment in a range of public infrastructure projects. This led to the collapse of many businesses and scattered a vital workforce.
In response, the construction industry came together to make the case for sustained and long-term infrastructure investment and governments of the day retrospectively acknowledged its strategic value.
Industry’s case was reflected in increased spend across all sectors and the established recognition that infrastructure investment goes hand in hand with economic and social growth.
Long-term Whitehall support for our sector, combined with an efficient industry response, ensured that when Covid struck, the construction industry managed relatively well. We were encouraged by Government to continue to play our part, post Covid, as part of #BuildBackBetter.
With an emergency fiscal event on the horizon, it is vital that the construction industry continues to demonstrate its value
But now is a critical time. Before the summer Parliamentary recess, CECA was fairly sure of Government’s commitment to infrastructure spend. But with an emergency fiscal event on the horizon, it is vital that the construction industry continues to demonstrate its value.
CECA research has already indicated that for each £1 billion increase in infrastructure investment, UK-wide GDP increases by a total of £1.299 billion and for every £1 billion of infrastructure construction increases overall economic activity by £2.842 billion.
In 2020 the construction sector developed a genuine cross-industry partnership to develop a united response to Covid.
The Roadmap to Recovery, published in June of that year, was the first detailed plan (supported by the UK Government) on how to bounce back from Covid. A key part of it was the recognition that industry was operating in unprecedented times, and as such had to work together more than ever to preserve clients, businesses and supply chains for the long-term.
It is vital that we continue to uphold these principles with the UK Government facilitating a climate in which industry can survive and deliver best value projects.
Such an environment must recognise the benefits of long-term and stable investment cycles across all the whole sector, combined with pipeline clarity and mutually beneficial procurement.
We face market decimation and increased long term public cost if existing opportunities and commitments fall by the wayside
We strongly believe that Government must fully commit to existing plans and projects such as the next roads, rail and water settlements and the Integrated Rail Plan. Just as important is continued support in the drive to net zero and energy efficiency.
We acknowledge the challenges of arguing for further investment in these difficult times – and we are not doing so – but instead are warning about market decimation and increased long term public cost if existing opportunities and commitments fall by the wayside.
CECA believes that there are three key steps Prime Minister Truss and her team can take now to support the construction industry and ensure market confidence in the coming months:
Maintain certainty, consistency and continuity of existing investment programmes.
Keep faith in recent work to improve commercial relationships and avoid backsliding into adversarial lowest-bid culture.
Work with industry to target business support where it is needed.
We continue to operate in extremely difficult times. We must continue to stand together to continue to deliver a society fit for the Twenty-First century.
Marie-Claude is CECA’s director of operations. An experienced communications and policy professional she has complete oversight of CECA’s communications and public affairs work. She also develops and manages the corporate business plan and is responsible for other operational duties, including the establishment of CECA’s three-year plan.