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Construction Industry

Volume 227: debated on Wednesday 30 June 1993

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To ask the Secretary of State for the Environment what steps have been taken by his Department since April 1992 specifically to assist the United Kingdom construction industry.

I refer my hon. Friend to the reply on 27 January, Official Report, columns 762–63. Since then, the Government have introduced measures in the Budget to help the industry and my Department has undertaken a range of supporting activities including a review of sponsorship, three successful overseas trade missions, new consultative arrangements, an increased commitment to collaborative research and guidance on the involvement of private finance.

Is my right hon. Friend aware that more than 500,000 people have lost their jobs in the construction industry during the recession, that housing starts are 46 per cent. down since 1988 and that commercial output is down by 35 per cent. since 1990? Does my right hon. Friend agree with the House-Builders Federation, with the Building Employers Confederation, with the Federation of Master Builders and with the Manufacturing and Construction Industries Alliance which urge the Government further to reduce interest rates modestly, to abolish stamp duty, to increase expenditure on the repair and refurbishment of public building and housing stock and to ensure that those measures are introduced by our right hon. and learned Friend the Chancellor of the Exchequer in the autumn Budget?

I will ensure that my hon. Friend's recommendations for the Budget are passed on to our right hon. and learned Friend. I agree that the construction industry has gone through a difficult time during the recession. It would be wrong of us to underestimate the degree to which that has harmed businesses. There is no doubt, however, that things are a little better. Total construction orders for the first quarter of 1993 are 22 per cent. higher than in the previous three months. Public works new orders are up 43 per cent. on this time last year. Public housing and housing association orders are up by 26 per cent. There is no doubt that the situation is improving after a very difficult time. What is important is that our right hon. and learned Friend should not take measures that would make even more difficult our exit from the recession. To burden us with greater debt would do that. I hope, therefore, that my hon. Friend will not seek to press our right hon. and learned Friend to move in that direction.

Is the Minister aware that only a few weeks ago the Employment Select Committee conducted an inquiry and that the chairman of Blue Circle Cement appeared before it? We were told about the crisis and the job losses in the cement industry, due to the fact that electricity costs had increased by 40 per cent., with the result that the company is closing down many of its establishments and is now importing cheap cement from countries such as Greece. What does the Minister intend to do about high energy costs that are affecting the construction industry?

I am happy to look at the point that the hon. Gentleman has raised, but I think that he must accept the fact that the cost of energy is something which all industries have to bear. Energy costs are particularly difficult in the cement industry because of the very high degree to which its costs are affected by electricity prices. However, these are not costs which can be passed on to others. It is a natural part of the cost of cement production. What is really difficult for the cement industry is the fall in orders because of the recession. What is therefore most important for the industry is that the Government continue with their economic policy and get us out of the recession much more quickly than any of our competitors.

Ought not the construction industry and my right hon. Friend salute with gratitude Mr. George Soros and all those who saved the British economy on 16 September and gave us a new economic policy, lower interest rates and the construction industry the chance once again to play its important role?

I am not sure which people we should salute, but we should have saluted the exchange rate mechanism which enabled us to bring down our interest rates in the way that we did. We began to come out of the recession before we moved out of the ERM. My hon. Friend's thanks should range more widely.

The Secretary of State claims that, in his words, things are a little better. Is he not aware of yesterday's reports from the United Kingdom's largest housebuilders which show that the pace of recovery in the housing market has slowed down in the last four weeks, which is precisely the length of time that the Secretary of State has been in his new post? Is not the reality, as the Building Employers Confederation spelt out today, that the construction industry is one of the hardest hit industries in this Government-induced recession? Output was down by 14 per cent. between 1990 and 1992 and it is still on a downward trend. The number of new housing starts has fallen by 46 per cent. since 1988. Repairs, maintenance and improvement work is 18 per cent. lower than it was in 1989. Why does the Secretary of State for the Environment not take some responsibility for it? Why does he not use the recently published English house condition survey as a charter for renovation and repair and tackle the problem of the 1·5 million homes that are now revealed to be unfit? Why does he not re-employ the 500,000 building workers who are on the dole and ensure that sufficient homes are provided for all those who need them?

If I may take the House back to the hon. Gentleman's first sentence, his early seminary training will remind him that that piece of logic does not stand up. One cannot take four weeks and think that that will lead to any understanding of what is actually happening. In the three months to April, housing starts and completions rose by 20 and 14 per cent. respectively. That is a sensible measure and one which the hon. Gentleman would normally take.I am sure that if he were judging the circumstances of a local or national Government run by Labour, he would take that kind of measure.

If we talk sensible measurements, the fact is that we are slowly but surely emerging from the recession. We shall get better. However, I am unlikely to have had the particular effect that the hon. Gentleman suggests I have over the past four weeks. He offers me the kind of power that would lead me to take credit for the good weather and that would obviously also be wrong.