A ninth construction minister in under four years is symptomatic of the decline of construction’s reputation in government. The sector needs a seat at the cabinet table, argues Graham Harle.
Here’s a pub quiz question for you: what is the name of the UK’s construction minister? I don’t blame you if you’ve not been keeping track. Few noticed the appointment of former construction minister Jackie Doyle-Price in September, and her departure just two months later didn’t capture the headlines either, thanks to all the furore of recent months. Even less airtime has greeted the announcement that Nusrat Ghani will now be stepping into the breach as the ninth construction minister in under four years.
In a way, this is symptomatic of the decline in reputation of a sector that should be front and centre of any government’s industrial strategy. Employing more than 1.5m taxpaying workers, worth over 7% of the UK’s GDP, construction output is worth approximately £110bn per annum.
The built environment is massive and yet barely referenced by the business secretary, Grant Shapps, who has spent more time debating Matt Hancock eating crocodile anus than examining a sector worth more to his department than car manufacture and aerospace combined.
Missed opportunities
Remember “build back better”? That blast from the past, now hardly mentioned in the course of today’s febrile political discourse, encapsulates why we are a vital bellwether sector by which the UK’s economic performance should be measured. Only a quarter of our workload uses public funds, with more than 75% of investment coming from private sources.
Over the past few weeks of unnecessary and entirely self-created turmoil we have seen a plethora of projects parked, delayed, or cancelled. As sterling tanked, offering great value for buyers of UK property, we should have been viewed as a sound, good value proposition compared to our competitors across the world. However, such was the horror show that, in the real world, we found clients suddenly scared of investing in the UK. Hopefully this was simply short-term paranoia, but a good illustration that theoretical economics dreamed up in think tanks and imported into a dysfunctional treasury has real-world consequences for businesses.
Unintended consequences
The reversal of the mini budget may have calmed the markets slightly, but it also had unintended consequences. Money is now more expensive to borrow, business taxes are back at rates that make working in the UK even less attractive. If you compare our corporation tax rates with Germany at 28.8%, Japan at 29.7% and Italy at 27.8%, for instance, we are still cheaper but also now have a risk premium attached to us due to lack of confidence in our stability – not helped by the IMF casting doubt on government competency.
Also, the ‘new budget’ is not helping to reduce inflation, which is still making materials and labour costs prohibitively expensive. The Northern Ireland Housing Executive recently released 10 firms from contracts signed in 2020, as it became apparent that inflationary pressure would have driven firms into administration were they to continue. And just when we thought there was some clarity on energy costs for business, this has also been thrown into confusion with a considerable rowing back on government support.
Restoring confidence
Before all this, construction output was bucking the trend to show a positive increase in work as projects delayed during covid came back on stream. I would not wish to get giddy with optimism as business confidence was still low, but it was turning a corner. Now I am not so sure about growth opportunities.
We need something from government to instil confidence that we can build ourselves out of the doldrums and talk of austerity 2.0 from the current chancellor is not terribly uplifting. Finally naming our ninth construction minister in less than four years will do little to assure us that the sector is a priority. Just as the announcement of Lucy Frazer MP as the thirteenth housing minister in the last 10 years does nothing for housebuilders.
Until we start getting cabinet level posts to represent a vital sector like the built environment then our voice in government will simply be no more than an answer in a Sunday pub quiz.
Graham Harle is CEO of Gleeds Worldwide.
