But business secretary defends the government’s efforts to boost the ailing sector


Vince Cable has defended the government’s effort to boost the ailing construction industry, after a fall of 5.2% in output across the sector over the second quarter helped dragged the UK economy into a third successive quarter of recession.

Speaking on the Radio 4 Today show this morning the Liberal Democrat business secretary insisted that the government was working hard to boost the construction industry and pointed to the announcement last week that the government would use its own balance sheet to underwrite investment in up to £40bn of nationally significant infrastructure projects.

Cable said the main reason the construction industry was “depressed” was because of the “property bubble leading up to 2008 in private housing and commercial property”. “That collapsed - that’s what destroyed the construction industry,” he said.

He said: “We realise that the construction industry is the weak link in the economy, and we’re putting in place measures to deal with it. There are a whole lot of things that we’ve got to do to get the economy moving, and housing and infrastructure is one area.

“This has started; the underlying problem with construction, as I said a few moments ago, related to the weakness in the private market, because you had a bubble that burst. We’re dealing with the legacy of a decade of a property market that got out of control.

“The government has a role, has a big role, in getting housing moving, and infrastructure, which is why we’re now putting the system of guarantees in place, and on top of that we’re doing a whole lot of other things to attract inward investment - all the stuff that’s going on with the Olympics today.

“We’ve got very good figures coming out around private investment, supporting the growth of the private sector: one of the good indicators of the last two years is that we’ve had 800,000 new private sector jobs. People find it a bit difficult to reconcile that with the GDP figures, but it is reality and it is happening.”

Cable’s comments come after figures yesterday revealed the economy had contracted 0.7% in Q2, meaning the economy remained in recession.

Business and industry leaders yesterday hit out at the government for its failure to turn around the ailing economy.

Stephen Ratcliffe, UK Contractors Group director, said the government’s infrastructure push was welcome but the construction industry - and the economy - needed “shovels in the ground” now, not in the near future. He called for spending to be directed towards social housing and repair and maintenance projects. “These are labour intensive and can be got off the ground quickly,” he said.

“Declining public sector spend and a lack of confidence amongst private investors, means action is urgently needed to kick-start the construction economy.

“The public sector remains the industry’s biggest client but capital spending will fall by a quarter over the current spending review period. At the same time, private sector confidence is unlikely to return while credit conditions remain tight and the Eurozone crisis casts a shadow over domestic economic prospects.

“Government needs to speed-up decisions on school building and other major projects, and ensure capital investment benefits all parts of the UK - not just London and the South East.”