Richard DimentFederation of Master Builders – UK
EBC Congress 2009
ContentOverview of the impact on the construction sector in the UK
FMB’s proposalsWhat has the UK government done so far
What is likely to happen next
The views of FMB members
Other key economic indicators in the UKReturn to pre-recession activity levels in
construction sector not expected until 2013Inflation low (CPI currently 2.3% - 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 2017Central 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 responseCross 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/1Get the banks lending to responsible
borrowersCut VAT to 5% for all building repair and
maintenance workProduce a coherent plan for modernising the
existing housing stockTargets for local authorities to release land
for social housingSimplify the planning process
10 point plan/2An implementation plan for school, hospital
and prison upgrading in 2009-10S206 agreement holiday - Abandon
Community Infrastructure LevyReduce the regulatory burden. Make it easier
for SMEs to win public contracts.Reform stamp dutyReintroduce empty property rate relief
The scope for sustainable refurbishment21m (out of 25m existing homes) likely to still
be in use in 2050Few of them are environmentally efficientNeed to reduce emissions of those existing
homes by around 75% Similar work needed on non-housing building stock
Other immediate problemsSocialLengthy and growing social housing waiting
listsMillions in fuel poverty and/or living in sub-
standard homesAn industry in crisisBiggest downturn for building in 80 yrsThousands of jobs at riskTraining in freefallReal fears about future capacity
A win-win-win situationImprove environmental performance of
existing stock to meet carbon targetImprove the housing conditions of millions
and reduce fuel povertyGet Britain Building againGive Britain’s builders – and the next
generation – the skills to make our buildings sustainable
Building a Greener BritainA whole new marketModernise the
existing building stock
Up to £6bn a yearAudit of propertyKnowledgeable
buildersIntelligent customersFinancial incentives
What has the UK Government done?Slow to react – very little construction sector
specificPriority has been to stabilise the financial sectorInterest rates at 300yr + lowFiscal stimulusPurchased a major share in several big banksReduced VAT from 17.5% to 15% from 1 Dec
2008 to 31 Dec 2009Quantitative easing – up to £150bn agreed for
asset purchasing - £125bn used to dateSupport for SMEs to defer tax bills
Sector specific initiativesBrought forward some public expenditure –
social housing, schools & hospital building into 2009-10 – but no additional money over 2008/09-2010/11
Some extra money (£100m) in funding for improvements to social housing
£500m to support restarting work on ‘mothballed’ house building sites
Extended ‘stamp duty’ holidayChanges to permitted development rightsCommitment (by 2030) to improving housing
stock – no new money as yet
Prospects for the building sectorRecovery will come – best guess recovery to 2007 levels
by about 2013Massive housing crisis – both quality + quantityCommitment to upgrade the building stock 2013-2030Urgent need for infrastructure improvements – but SME
builders don’t usually have civil engineering skillsUK must have GE by June ‘10 – change of Govt likelyRisks – need to reduce public expenditure deficit– less
state money available + higher personal/business taxesIf 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?