Instead of cutting costs, the government should be focusing on initiatives that work from a ground level upwards to protect the industry we have left, says Richard Steer
So, it’s another strategy from government to help the construction industry. I am all for reducing costs, improving productivity and increasing output but this was not a report that went the ‘whole hog’ in meeting these objectives. Instead it bore a considerable resemblance to the Groundhog, from the film ‘Groundhog Day’ where the same thing happened again and again and again with monotonous repetition.
In the last 20 years we have had the Latham report, then the Egan report and finally, during Paul Morrell’s tenure as government construction tsar, we had more recommendations still. All had bold aims to show the industry how it could reduce costs and embrace a new management philosophy and so we watched as that same industry lost 89,000 jobs and contracted to a level not seen in a generation. Advice is cheap - investment is harder to find.
Advice is cheap - investment is harder to find
To put all this into context, quite rightly the fact that Vince Cable is supporting a new strategy has been welcomed by many and I am pleased that the business secretary has found time to prioritise this initiative. However, Cable sat across my own dinner table some three years ago at a private meeting with many senior figures from the industry and promised to take on our concerns, many of which turned out to be prescient predictions of the calamity that was to befall the industry. It has taken some time since that dinner to gestate into a strategy and it may well be too late for the recommendations to have any impact on the economy before the 2015 election, which will no doubt disappoint Cable’s cabinet colleagues.
The idea of cuttings costs in an industry that is working on margins as thin as wings of gossamer was novel and interesting. What I would like to have seen were some concrete initiatives that work from a ground level upwards to protect the industry that we have left:
- How about cutting VAT on home improvements and building refurbishments provided they meet certain green criteria?
- How about strengthening the prompt payment code and making it compulsory for contractors? That may reduce the number of sub-contractor bankruptcies that threaten to reduce choice and fuel future inflation.
- How about ensuring that firms are unable to dump debts, liquidate to avoid their creditors and then restructure quite legally to start trading within days?
- How about revisiting some of the U-turns made on the Green Deal, ramping down the rhetoric and ramping up the commitment to the sustainable agenda?
For years commentators have complained that politicians have not taken this industry seriously. Now they are articulating their support it can only been seen as a good thing. However, in the month during which we have seen the brand Davis Langdon disappear into the dustbin of history, arguably a victim of the worse recession in living memory, it may take more than political platitudes to help persuade those of us with long memories that the government and their advisors are serious about boosting growth.
The fact that Peter Hansford has been quoted as saying this strategy is “not about measurement but a direction of travel” leads one to wonder why such ambitious targets for cost reduction, building completions and carbon reductions have been stated. Either it’s a target or it’s not a target and if this is the case I shall be interested to see how far the industry has got in reaching these in the next five years, let alone by 2025.
Richard Steer is chairman of Gleeds Worldwide