Government holds urgent talks with industry ahead of pre-Budget report as crisis deepens

Almost 400,000 jobs in the construction sector could be lost over the next two years, it was predicted this week. The report came as industry leaders held crisis talks with Peter Mandelson, the business secretary, over how construction work could be used to underpin the wider economy.

The research, carried out by Public and Corporate Economic Consultants for the Local Government Association, found that 385,300 out of the 1.9 million people employed in the construction industry in England could lose their jobs before the end of 2010.

It is predicted that the area worst affected will be London, where 23% of the 215,800 workers are expected to be made redundant (see map).

Mandelson and senior government aides have held a series of meetings with industry bodies over the past month to establish how an accelerated public spending package should be implemented.

Chancellor Alastair Darling is expected to announce the package in the pre-Budget report on Monday. The aim is to bring forward billions of pounds of investment that was to have been spent in the 2010/11 fiscal year.

It’s essential that the government makes sure timetables don’t slip

Stephen Ratcliffe, MCG

The meetings, which have involved delivery bodies including Partnerships for Schools and industry groups such as the Major Contractors Group (MCG) and the Construction Products Association, have focused on how to fast-track procurement processes.

This follows concerns that some of the money is only available because of delays in programmes such as the £45bn Building Schools for the Future initiative.

It is thought the government may fast-track projects in areas like education and health through local authority partnerships or frameworks, where the original Official Journal notice allows.

One source close to the situation said: “The key to making this work now seems to be short-circuiting procurement processes, because the companies are there, the materials are there, and prices are more competitive.”

Stephen Ratcliffe, director of the MCG, said: “It’s essential that the government makes sure timetables don’t slip and does what it can to speed up deal flows and cut bidding times.”