The Green Deal doesn’t have long to secure cash from private lenders and there’s still lots to sort out

Sarah Richardson, editor of Building

The prospect of the build-up to the party conference season and George Osborne’s Autumn Statement may not be quite as emotionally stirring as the hoopla that preceded the Olympics, but there is no escaping the fact that the next few months will be critical for the construction industry.

With the government limping towards the second half of its electoral term, and having half an eye to the next election, there is inevitably growing pressure on it to ensure that policies designed to stimulate economic recovery actually deliver results. For construction, this means that areas such as infrastructure and housebuilding - hailed as potential saviours but where the government has so far floundered in a fog of half measures - should increasingly come under the spotlight.

There is still huge doubt over whether funding will be found to finance the Green Deal, despite the emphasis being on it as a means of reinvigorating the sector

Nowhere, however, is the need for action more pressing than in the Green Deal. As Building explores in depth (click here for our Green Deal feature), there is still huge doubt over whether funding will be found to finance the project, despite the emphasis being placed on it by the government as a means of reinvigorating the sector. The programme, which would not only improve the energy efficiency of existing homes but also provide a potential £14bn of work to the industry, is one of the most pioneering calls on private finance in recent times, and yet despite several attempts, the government still cannot be even remotely sure that private lenders will provide the cash needed to get it under way.

The recent announcement that the programme would be eligible for support under the government’s Infrastructure Guarantee scheme was a welcome step, but could also be taken as an admission by ministers of their fears about attracting lending. And the detail of how even this support will work in practice - whether it will be used to underwrite warranties, or cover early or later losses of investors, for example - has not been thrashed out.

With the scheme due to be launched in October, and the first loans to homeowners for work available from January, there is still time to find a way through the complexities - but it’s rapidly running out. And from many construction firms’ point of view, a problematic launch would not just be a frustration; it would be catastrophic.

A survey published this week by the Building & Engineering Services Association, which represents many of those contractors that will be hoping for Green Deal work, for example, found that one in three M&E firms took a hit to workload in the first half of 2012 - but that the majority believed rising demand for renewable technologies would improve business outlook in the near future. Against a backdrop of continuing uncertainty in other sectors of construction, and with the long lead-in time for bigger infrastructure projects, it’s a reasonable call to make. But if sufficient finance for the scheme cannot be secured quickly, for some there may not be time to make another.
Sarah Richardon, editor