Richard Diment Federation of Master Builders – UK EBC Congress 2009.

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Presentation transcript:

Richard Diment Federation of Master Builders – UK EBC Congress 2009

Content Overview of the impact on the construction sector in the UK FMB’s proposals What has the UK government done so far What is likely to happen next

UK GDP

Impact on the construction industry in the UK

And in the sectors that FMB members work predominantly

The views of FMB members

Other key economic indicators in the UK Return to pre-recession activity levels in construction sector not expected until 2013 Inflation low (CPI currently 2% - 0% by year end – rising to 1~2% by 2012) Public expenditure deficit unsustainably high (forecast at £175bn – 12.5% of GDP - for 2009/10) Public sector deficit likely until 2017 Central bank base rate 0.5% (down from 5% in mid-2008) – lowest rate since central bank set up in 1694! House prices down by about 20% in 18 months – 1 in 9 householders estimated to be in negative equity

The industry’s response Cross industry alliance of 30 Trade Associations, Material Suppliers and Trade Unions Clear message to all politicians that unless they act quickly, thousands of companies and tens of thousands of jobs will be lost Industry will not be in a position to tackle the UK’s building needs when recovery comes

Our 10 Point Plan/1 Get the banks lending to responsible borrowers Cut VAT to 5% for all building repair and maintenance work Produce a coherent plan for modernising the existing housing stock Targets for local authorities to release land for social housing Simplify the planning process

10 point plan/2 An implementation plan for school, hospital and prison upgrading in S106 agreement holiday - Abandon Community Infrastructure Levy Reduce the regulatory burden. Make it easier for SMEs to win public contracts. Reform stamp duty Reintroduce empty property rate relief

The scope for sustainable refurbishment 21m (out of 25m existing homes) likely to still be in use in 2050 Few of them are environmentally efficient Need to reduce emissions of those existing homes by around 75% Similar work needed on non-housing building stock

Other immediate problems Social Lengthy and growing social housing waiting lists Millions in fuel poverty and/or living in sub- standard homes An industry in crisis Biggest downturn for building in 80 yrs Thousands of jobs at risk Training in freefall Real fears about future capacity

A win-win-win situation Improve environmental performance of existing stock to meet carbon target Improve the housing conditions of millions and reduce fuel poverty Get Britain Building again Give Britain’s builders – and the next generation – the skills to make our buildings sustainable

Building a Greener Britain A whole new market Modernise the existing building stock Up to £6bn a year Audit of property Knowledgeable builders Intelligent customers Financial incentives

What has the UK Government done? Slow to react – very little construction sector specific Priority has been to stabilise the financial sector Interest rates at 300yr + low Fiscal stimulus Purchased a major share in several big banks Reduced VAT from 17.5% to 15% from 1 Dec 2008 to 31 Dec 2009 Quantitative easing – up to £150bn agreed for asset purchasing - £125bn used to date Support for SMEs to defer tax bills

Sector specific initiatives Brought forward some public expenditure – social housing, schools & hospital building into – but no additional money over 2008/ /11 Some extra money (£100m) in funding for improvements to social housing £500m to support restarting work on ‘mothballed’ house building sites Extended ‘stamp duty’ holiday Changes to permitted development rights Commitment (by 2030) to improving housing stock – no new money as yet

Prospects for the building sector Recovery will come – best guess recovery to 2007 levels by about 2013 Massive housing crisis – both quality + quantity Commitment to upgrade the building stock Urgent need for infrastructure improvements – but SME builders don’t usually have civil engineering skills UK must have GE by June ‘10 – change of Govt likely Risks – need to reduce public expenditure deficit– less state money available + higher personal/business taxes If inflation rises – what will happen to interest rates?

Recession is expected to end by late ‘09/early ‘10 but recovery to pre-recession levels unlikely before late 2011

The nightmare to be avoided

Thank you Any questions?