BUSINESS COMMENTARY
 the times

Time to put oomph into construction

Rewind a month. Theresa May had just lost one of her endless Brexit votes. No one had the faintest idea what would happen next — as usual. And there was the chancellor Philip Hammond and business secretary Greg Clark hosting a late-night conference call in a bid to reassure business.

Up piped Leo Quinn, the Balfour Beatty boss. He warned that the construction industry was “at a very critical point”. And that, unless a “normal, functioning government” was swiftly restored: “The challenge I see . . . is that as decisions don’t get made and projects get pushed out, the industry is going to face . . . a large-scale restructuring.”
As he put it, without stuff to build, “the industry cannot carry the capability and resources” that Britain needs — and once such capability had been “lost”, it was “very difficult” to get it back. Mr Hammond and Mr Clark wittered on about stopping a no-deal Brexit, as The Daily Telegraph’s transcript of the call showed. But they hardly addressed Mr Quinn’s concerns.
You doubt yesterday’s GDP figures have done much for his mood, either. Among the general carnage was the latest construction stats: growth of just 0.7 per cent in the past 12 months, the lowest year-on-year improvement since 2012.
Yes, construction accounts for just 6 per cent of UK GDP. But it’s a sector where the government has levers to pull — not least when UK borrowing costs are at historic lows. Ministers trumpet an infrastructure pipeline over the next decade with £600 billion of projects. But there’s a big difference between a pipeline and shovel-ready schemes.
Far too much political capital has gone on big projects that aren’t being built, such as the £14 billion third runway at Heathrow — when a second at Gatwick would be far easier to get off the ground. Or schemes construction groups don’t even know will happen, not least the £56 billion HS2 that’ll probably cost twice that. For a fifth of the price Britain could transform northern rail links connecting Leeds, Manchester and Liverpool, helping to rebalance the economy away from London.
Then there’s the new nuclear farrago. True, the £20 billion Hinkley Point C is under way — at a ruinous price. But Japanese schemes in Cumbria and on Anglesey are predictably in meltdown. And where are the gas or renewable projects to replace them? All ministers can promise is another energy review.
And that’s just the big stuff. Mr Hammond killed the private finance initiative that at least delivered new schools and hospitals, but replaced it with zip. And what about the £40 billion infrastructure guarantee scheme, designed to lure in private capital? It’s lent only £1.8 billion, and nothing since August 2017.
Yes, Mr Hammond has devised a pothole repair fund, while private housebuilders have built more homes — even if they’re well short of the 300,000 a year target. But it’s not hard to put government oomph behind construction. As Mr Quinn noted: “Despite Brexit, we need to make some decisions.” Too right.