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Construction

Volume 477: debated on Thursday 12 June 2008

To ask the Secretary of State for Business, Enterprise and Regulatory Reform what assessment his Department has made of the likely effects of difficulties in obtaining credit on the commercial construction industry in the next three years; and what steps he plans to take to support the industry over that period. (207535)

We continue to keep the availability of credit to business under review in all sectors, including construction, and have regular dialogue with the banks. Lending to the UK construction sector has increased throughout the first quarter of 2008. However, we have concerns about the potential impact of the credit crunch on property markets and the consequences for construction activity. House builders, in particular, are experiencing a slow-down in activity, with lower site visits and forward reservations.

The Enterprise Strategy, published alongside the Budget, announced extended eligibility criteria for the small firms loan guarantee and a £60 million uplift in lending allocations designed to encourage greater usage of the scheme by the banks. Advice to businesses on managing their financial position in the current economic climate has been made available on businesslink.gov.uk Our proposed reforms to the ‘Construction Act’ published in the recent draft legislative programme 2008-09 will help promote better cash flow and greater certainty of payment in construction contracts.

In addition, the Government recently announced that the Housing Corporation will provide up to £200 million for RSLs to purchase newly built properties from developers, where these are of an appropriate quality and represent value for money. These will be made available for first-time buyers to purchase through the existing homebuy scheme or for social rented tenancies.