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Steve Rotheram (Liverpool, Walton) (Lab)
It is a pleasure to serve under your chairmanship, Mr Caton. I am delighted to have secured a debate about an issue on which, for once, I believe I can actually speak with some authority.
I started my working life as an apprentice bricklayer under a scheme administered by the Construction Industry Training Board in the late 1970s. In those days, under the CITB training programme, people were given six months off the site to get relevant tools experience, site understanding and health and safety training, before being placed with the company under an indentured apprenticeship agreement. My placement was with Fairclough Civil Engineering, and after completing my three years, I worked for Fairclough International—it is now part of the AMEC group—in the Falkland Islands. That was in 1983, just a few months after the cessation of hostilities with Argentina.
On my return, I started my own construction business. After surviving two Tory-led recessions in the 1980s, I was persuaded to go into training to pass on my skills to a new generation of construction trainees. Eventually, I took up a post as a business manager at the now defunct Learning and Skills Council, where I oversaw funding for—yes, you guessed it—construction training programmes across Merseyside.
During that period, I graduated in construction studies from Liverpool John Moores university and began a master’s degree in contemporary urban renaissance. Although I did not manage to complete it, it gave me an insight into many different, and sometimes tangential, construction perspectives. Although there are far more eminent construction commentators than me, I can speak with a degree of understanding on this issue, given my broad personal experience.
I want to record my interest as a member of the Union of Construction, Allied Trades and Technicians and as one of its sponsored MPs, although I receive no remuneration for that. I would also like it noted that my son, Steven, is an apprentice electrician with M. J. Quinn. For the purpose of clarification, I should also say that I have previously proudly professed that I am the only brickie in Parliament, although my hon. Friend the Member for Derby North (Chris Williamson) also lays claim to that most sought-after designation because of his trade background.
In recent weeks and months, much of the business, innovation and skills debate has been about ways to improve the opportunities for a high-skilled work force in a low-skill economy. One of the previous Labour Government’s greatest achievements was to give those who wanted to do so the chance to go on to further education through the introduction of the education maintenance allowance and the university loans system. As a result, Britain now has the most talented generation in recent history. Job opportunities in science and technology, graphic design and public relations, which were the preserve of the well connected, are now at the fingertips of this more industrious generation of Britons. Real progress has been made in diversifying the skills sets offered to young people across the country, but in areas such as my constituency, traditional industries such as construction also have a real part to play.
I am pleased that the Minister, who is responsible for construction, recently said:
“An efficient, effective and profitable construction industry is at the heart of any growing economy.”
That is why urgent action is needed from the Government to save the industry from the brink. The Government’s approach must change, because it is clearly not working, as we saw from the previous quarter’s growth figures. We already knew that construction had been hit extremely hard in the global financial crisis, but the 3.3% fall in output—the steepest the industry has suffered since the financial crisis of 2008—is all the evidence we need that things need to change.
I have given Members an insight into my background in the industry, and although I do not profess to be an expert, my interest in the sector spans three decades. That is why I know there is a fundamental problem with the Government’s thinking when the Construction Products Association’s economics director, Noble Francis, says:
“It is likely that construction output will fall 2% in 2011 and this will inevitably hold back economic recovery given that construction accounts for around 10% of the UK economy.”
Susan Elan Jones (Clwyd South) (Lab)
Does my hon. Friend agree that the VAT rise is having a significant effect on the construction industry and making life extremely hard for the many small and medium-sized construction firms in many of our constituencies?
Steve Rotheram
My hon. Friend is absolutely correct. That is certainly true of the refurb and maintenance sector. At the end of my speech, I hope to come up with some suggestions, which the Minister might like to take away to contemplate, given this issue with VAT.
I can almost predict what the Minister will say in reply to my comment about economic stagnation. I will try to pre-empt him by simply pointing out that although last winter’s adverse weather conditions will have had an adverse effect on construction, the weather was bad the year before, and we saw nothing like the fall in output that we did this year. The fall has more to do with a lack of confidence than with too much snow or the wrong kind of snow.
Jim Shannon (Strangford) (DUP)
I represent an area where construction is very important and job opportunities for apprentices are critical. The construction industry has suffered a significant downturn over the past few years, and the background information certainly indicates that; indeed, another company in Northern Ireland folded just this week. We are always hard on the banks, but they were keen to lend money, albeit often without suitable guarantees. Does the hon. Gentleman feel that the Government should have more contact with the banks to encourage them to show more flexibility now so that companies that are having difficulties can get through them?
Steve Rotheram
The hon. Gentleman makes an important point about the banks. Again, I would like to tease the issue out further in my contribution. We cannot underplay the fact that one reason for the failure of construction is the lack of lending by banks.
Urgent Government action is needed to save the industry from the brink. The Minister must surely understand the relationship between public sector spending and private sector growth. Despite the at times relentless desire of the coalition Government to drive a wedge between the public and private sectors, the two are heavily interlinked and co-reliant in the construction industry. If we cut one, the other will bleed, and the construction sector is now haemorrhaging and in need of a transfusion.
To take the example of Building Schools for the Future, the cancellation of 719 school improvement projects was devastating for not only head teachers, staff in classrooms and parents and children left with substandard facilities, but the construction companies that had won the contracts, and that has serious ramifications for the sector. As Steve Bratt, the group chief executive officer at the Electrical Contractors Association, said:
“Although any party in power would have had to take major steps to reduce the deficit, the cuts to public sector construction projects such as BSF are a case of short-term gain but long-term pain.”
The cancellation of the schools building programme is creating uncertainty in the construction industry. Furthermore, ambiguity over potential construction jobs in hospitals and prisons, in building and civil engineering alike, continues to cause great concern and leads to low confidence in the Government’s ability to secure the UK construction industry.
Gordon Banks (Ochil and South Perthshire) (Lab)
Like my hon. Friend I spent 40 years of my life in the construction industry, and I am glad that people from that industry are in the House. Does my hon. Friend agree that the Government’s target on skills is significantly at risk, because their approach significantly challenges the construction sector’s ability to give training and to deliver skills to the marketplace? The Government treat the industry as the private sector, whereas as my hon. Friend said, it is fed from both private and public sectors. Will my hon. Friend also comment on the ownership of not only construction companies but supply companies in the UK, and whether he is worried that we are losing UK ownership of those companies?
Steve Rotheram
My hon. Friend is right. There are big supply chain issues that need to be addressed. On the earlier point, about apprenticeships, uncertainty in the sector prevents companies from thinking long term, so they stop taking on apprentices. I remember when, in the 1980s, under the Thatcher Government, pretty much all the construction industry stopped taking on apprentices. That created long-term problems for the industry, and skills shortages many years later, which meant heavy intervention was needed to plug the gap.
I am sure that the Minister is fully aware that every £1 spent on construction leads to an increase in gross domestic product of nearly £3 and stimulates growth elsewhere in the economy worth nearly £2; I think he recognises that, so surely he agrees with me that monumental cuts in construction make no economic sense. The Minister and the Department for Business, Innovation and Skills need urgently to tackle the problem, but that urgency, like leadership, has been sadly lacking in the past few months. It has been widely reported that currently one in five firms going into administration are from the construction industry. That is a frightening figure, when we recall that construction is responsible for about 10% of the UK economy. The alarming statistics keep on coming for the Minister. Research undertaken by the Financial Times has found that construction orders have fallen by 40% in the past 12 months. That is before the Government’s programme of the deepest and most unfair cuts in recent history has even taken full effect.
Jonathan Hook, global head of construction at PwC, said:
“It is the end of the money—coming through from Government stimulus—and no one knows if, when and to what extent, the private sector will come back.
It is a substantial reduction, but if you look at the numbers companies are reporting—you are not really seeing it reflected yet. They are trading off work that was won three years ago, but it is creating a bow wave of falling activity in two years.”
There is more: Anthony Cork, director of Wilkins Kennedy, said;
“The Government has slashed capital spending on infrastructure across the board in order to plug the deficit and that has pushed the construction sector into a double dip.
The question now is how quickly private sector construction work will be able to pick up the slack left by the public sector. So far this has not happened.”
The most devastating impact, in areas such as Liverpool, Walton and many other pathfinder areas, has been the withdrawal of housing market renewal funding, which has not only decimated the house building industry but left swathes of derelict land and boarded-up terraced streets without much prospect of development. Because of the economic downturn it is widely acknowledged that the construction industry’s saving grace was major public sector infrastructure projects such as Building Schools for the Future, and new hospitals and prisons. The Labour Government were right to bring forward additional capital project spending to help the industry to stay afloat. They were also committed to the building of additional social housing, including new council homes, in the latter half of 2009 and early 2010, with additional commitments to employ local workers and train apprentices.
I made my maiden speech as a councillor in Liverpool on the ability of local authorities to use social clauses to ensure that, for publicly funded construction projects, they would achieve the best possible outcomes for local labour and apprenticeships. Unfortunately, Liverpool was at that time controlled by the Liberal Democrats, and they missed the opportunity. Our current Labour administration is not making the same mistake. The previous Government put their money where their mouth was, and provided Kickstart funding in October 2009 to help 54 stalled private sector housing projects to restart work. Those commitments were primed to give the depressed housing sector a much-needed stimulus. The confidence that the Labour Government were instilling in the industry was the key factor. By the first quarter of 2010, all the construction surveys and indicators showed that confidence was returning to the sector. Firms were reassured that work would come their way, with many projects scheduled to start in mid-2010, and those companies were gearing up to take advantage of the opportunities.
Cancelling those programmes devastated the sector and demonstrated that the Government have little regard for the work that it does. It ripped the confidence out of the industry. The state is obviously the largest client of the construction industry. The Government’s role in procurement policy is therefore vital—and more so in times of economic downturn, when the private sector is less able to provide the work that is needed. I can personally testify to the way lack of investment in the 1980s stored up trouble for the industry many years later, and created huge skills shortages. That is because the industry operates on a two to three-year lag. It did not need to have the confidence torn out of it once again, within weeks of the formation of the coalition.
Given the time constraints that we are under, I shall catalogue just a few of the licentious achievements of the coalition in the past year, as they have single-handedly knocked the stuffing out of the fragile construction industry. On 17 June 2010 the Government cancelled millions of pounds worth of infrastructure projects including the North Tees and Hartlepool hospital, the A14 road widening, the Kent Thameside strategic transport programme, the Leeds Holt Park well-being centre, and the Birmingham magistrates court. On 4 July 2010, the Government announced major cuts of £220 million to the budget of the Department for Communities and Local Government. It was claimed that that was because of a black hole in the funding for the Homes and Communities Agency, and that it would result in many of the newly announced social and council housing building projects being cancelled. We later proved that there was not a black hole in the funding, so why have the cancelled projects not been reinstated?
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
I congratulate my hon. Friend on securing a timely debate. Does he share my concern about the Homes and Communities Agency, and the fact that it has scrapped its national targets for the number of apprenticeship scheme places provided through agency funding? Is he concerned about the impact of that on the number of apprenticeships that will be created?
Steve Rotheram
That decision is regrettable. It seems that the Government say things such as “We are going to create 250,000 apprenticeships,” but do not realise the knock-on effect of other policies. The training tap cannot be turned on and off. For construction trades colleges need to gear up, and they need space. Sometimes, once construction programmes have ceased, other uses are found for the space and it is not possible just to go back and scrap whatever it has been used for temporarily, to re-instigate construction training. It is more complex than that, however, because the staff that have been let go cannot always be re-employed, yet relevant construction experience is necessary; we also need people with teaching qualifications to train students to the NVQ standards. It is another short-term gain, but there will be long-term pain for the construction sector.
On 5 July 2010, the Education Secretary announced that the Building Schools for the Future programme was effectively being scrapped. BSF was the biggest construction project in Europe; it was intended to rebuild all 3,500 secondary schools in England. The work was to have been done over 15 years. When the Secretary of State made his announcement, 180 schools had been rebuilt and 231 projects had been given the green light, as they had already reached financial closure. BSF would have cost £45 billion over the lifetime of the project.
Early in September 2010, it was revealed that the Government’s decision to scrap the regional housing strategy had resulted in plans to build 100,000 new homes being shelved by local authorities. That has severely depressed private sector housing. On 20 October 2010, the Government announced their comprehensive spending review. That further confirmed the reduction in Government spending on construction; by 2015, annual construction spending by the Government will have been reduced from £59 billion to £47 billion, a reduction of more than 20%.
Again, the most savagely affected sector was public housing. The housing and regeneration budget is to be cut by 70%, from £6.8 billion to £2 billion—but that £2 billion will be used only on projects to which the Government are legally committed. Surely the Minister cannot blame all those policies on snow. The general consensus is that, at best, the industry is treading water; although some sectors of the industry are improving, such as office building in London, others remain in the doldrums. Despite its flexibility, construction is a complex industry, with hundreds of job roles and professional and technical relationships. Despite being only a few months old, the Government’s construction strategy needs impetus in order to achieve its objectives.
What else can the Government do? To answer an earlier point, we know that bank lending is a major problem for small and medium-sized enterprises; indeed, the banks failed to meet their Project Merlin proposals earlier this year. That is a particular difficulty for construction companies.
Firms in Liverpool tell me that part of the problem is that banking has become too impersonal. Years ago, when a construction firm secured a contract it would phone the manager of the local branch—he was probably known to the firm—to explain the job, say what would be needed and how the job was to be staffed. The bank manager would sometimes pop down to the site to make a physical assessment, and a loan would be negotiated. However, the relationship manager—the bridge between the construction firm and the banker bureaucrats—has now gone. Many banks have their central office space elsewhere, not in places such as Liverpool or wherever the construction firm is based, and companies are refused loans before a thorough assessment can be made.
Gordon Banks
I thank my hon. Friend for giving way again. Although some banks do not lend to the sector, in some ways the Government’s broader economic policies are having an impact on the banks by restricting them and preventing them from making the right decisions on lending to the construction sector. The underlying current of concern is the Government’s economic policy.
Steve Rotheram
There are real issues with regard to the Government’s economic policy. However, on that aspect of Project Merlin I agree with the Government; setting targets that forced banks to lend to SMEs was the right approach. Unfortunately, they missed their own targets once again.
Gordon Banks
The fact that the Government have pulled the rug from under the construction industry through the reduction in state spending is making the industry a less attractive proposition for the banks. That is the point that I was trying to make; the Government’s policy on the construction industry also affects the banks.
Steve Rotheram
That point is well made, and spot on. More than a third of members of the Federation of Master Builders have seen their access to credit restricted, and nearly half have had their costs increased since 2008. That is restricting. It is for the Chancellor to use his powers to force the banks that caused the financial crisis to assist SMEs, the very people who will help get the economy going again. It is not acceptable for the Minister and his colleagues to hide behind Project Merlin until the end of the year, hoping that they will meet their targets and reacting only if they do not. The construction firms with which I speak are looking for proactive solutions now, not reactive compromise in six months’ time, after the Government have blundered their way through yet another failed policy.
Markets hate uncertainty, and at present the construction industry does not have enough confidence to kick-start its recovery. It pains me to say that, because I have a vested interest in the industry and plenty of friends who still work in it. It is therefore for the Government to consider matters that affect the industry to determine whether there are mechanisms to assist it.
One such matter is insurance. Ian Fletcher, a friend who runs a small scaffolding company despite the economic uncertainty, is just about keeping his head above water. However, spiralling insurance costs are jeopardising the jobs that he has created. Pressure must be brought to bear to ensure that businesses are not priced out of the market by excessive insurance premiums. We need to restore confidence in the domestic construction sector. Housing has huge potential for growth. The demand is there, but the Government lack a coherent and well considered fiscal plan. Such indecision means fewer homes, fewer construction jobs and fewer supply chain opportunities.
I am reminded of yet another policy cancellation that has devastated construction—Labour’s HomeBuy Direct scheme. In places such as Liverpool, the construction industry can take people off benefits and put them into a lifetime of work. I know from my own experience—and more latterly from my advice surgeries—that Liverpudlians are desperate to get back to work. They understand the dignity that comes with having a job and being able to provide for their families, and they are worried about their future.
For me, one of the most alarming things is that construction is failing to recruit a sufficient number of apprentices. Every year, despite the recession, the industry still needs more than 30,000 recruits. The lack of confidence in the relationship between the Government and the industry means that, for many people, a job in construction is only a short-term measure and far from stable. For businesses, that lack of confidence manifests itself in a climate in which few SMEs have enough confidence in the future of their business to recruit an apprentice. Quite simply, they are too busy trying to stay afloat.
Catherine McKinnell
My hon. Friend is generous in giving way. As he knows, increasing the number of apprenticeships is something that I have been promoting in Parliament through a private Member’s Bill. In discussions on the subject, I have met representatives of the majority of trades in the construction industry, and they all raise significant concerns about the skills shortage for the new green economy. Some of the new business opportunities are available now and will become more so, but we will lose some of those investment opportunities because we do not have the skilled work force, either now or in readiness for the future, to meet those challenges.
Steve Rotheram
My hon. Friend makes another important intervention, but it is not even as simple as that. Some of these new technologies need to find space in colleges to train those who will train the providers; we also need to train people with relevant construction qualifications in their specific fields, which means that there will be a lead-in period for such changes. If we had a medium-term strategic plan, we should be considering future job opportunities and starting to plan for when they come to fruition, so that we can ensure that we have people trained and qualified to take up those jobs.
Another fundamental problem is that companies are thinking only in the short term because that is all the Government are doing. Firms are not directly employing workers and they are not prepared to make the effort or take on the cost of training anyone, despite the evidence of significant returns on such investment.
The previous Government recognised that construction companies were not training sufficient numbers of apprentices and began to introduce procurement policies that required contractors to train apprentices on Government construction projects. If companies did not train, they did not get the work. I hope that the Minister will cover that issue in his contribution. Will he tell us whether the present Government support such a policy? If they do, will he explain that to the Minister of State, Cabinet Office, the right hon. Member for West Dorset (Mr Letwin) who apparently does not?
The construction industry and I want the Government to provide additional resource and investment through a major programme of social housing. The housing industry is desperately in need of assistance for both economic and social reasons. There are currently more than 1.8 million people on housing waiting lists. Hundreds of construction firms are ready and willing to get back to work to begin building those houses. Perhaps such an investment would help to rebuild the shattered confidence in the sector. We need to promote a policy to develop green building technologies; to help get people back to work and to create new apprenticeship opportunities. Such a policy would tackle the growing homelessness crisis and the ever-expanding housing waiting lists.
Perhaps the Minister could consider lowering the VAT on home repair, maintenance and improvement works. Such a move could be used as a catalyst to stimulate activity. It could increase the overall tax-take that growth in the sector would generate.
Gordon Banks
My hon. Friend talks about finance in the sector. Does he not agree that there is also a need to address mortgage lending? In 2006, the Halifax conducted some research and found that first-time buyers in the private housing sector injected some £2.1 billion of spend into the UK high street. Does he not think that the challenged retail sector would benefit from more first-time buyers re-entering the market? The Government must work with the banks to ensure that we have a decent level of mortgages from about 90% without punitive interest charges and punitive arrangement fees.
Steve Rotheram
Most commentators would support that economic argument. Growth creates further growth and confidence. If mortgages were secured for first-time buyers, it would help both the house-building sector and the industry to get back on their feet. To me, such a proposal seems like a no-brainer, but we still have to persuade the Government of our arguments.
I have gone over my time because of all the interventions, so let me say in conclusion that to do nothing but to cross our fingers and hope for the best is not good enough and that our industry deserves better than that.
Chris Williamson (Derby North) (Lab)
I congratulate my hon. Friend the Member for Liverpool, Walton (Steve Rotheram) on securing this important and timely debate. Like him, I have a building industry background. I trained as a bricklayer and come from a long line of building workers: my father was a plasterer, one brother was a carpenter and my other brother trained as an electrician and can turn his hand to plumbing and many other things. Following in my footsteps is my own son who has gone into the construction industry and is training as a surveyor with Bowmer and Kirkland, so we are keeping the family tradition going.
I want to make a brief contribution about the central importance of the construction industry in rebalancing the economy. The Government say that they want to rebalance the economy and to see the private sector taking a leading role. I cannot see how that ambition can be realised without the construction industry playing a central role. The Government have made it much harder for the construction industry to contribute to the rebalancing of our economy by scrapping the Building Schools for the Future programme. Let me talk for a moment about the impact that such a decision has had on my own constituency of Derby North. Although Derby is made up of two and a bit constituencies, schools in the city are all affected in a similar way.
The five secondary schools in my constituency—Bemrose, Lees Brook, Murray Park, Littleover and St Benedict’s—were all looking forward to the impact that a new school would have on the children, the staff and the parents. Some of them have real problems. Lees Brook in particular is a health and safety hazard, suffering as it does with problems related to asbestos. The scrapping of the BSF programme was a great disappointment to everybody in the city and it had a huge impact on the construction industry in the local area.
The aim of rebalancing the economy and of enabling construction to play a key role was made even harder to achieve when the Government decided to halve the social housing grant. As a consequence, the number of affordable homes coming on stream has been severely diminished.
A further obstacle to the Government’s ambition was the decision to abolish the regional spatial strategy and the consequential abolition of the housing targets. Although the Government were critical of those targets, the number of planning permissions that have now been jettisoned as a direct consequence of that decision is running in excess of 100,000 homes.
Ian Lucas (Wrexham) (Lab)
On the issue of planning, does my hon. Friend agree that the confused regulatory framework that now exists because of the advent of the Localism Bill has created a massive amount of uncertainty for the construction sector and has been an additional bar to making progress?
Chris Williamson
My hon. Friend makes a central and pertinent point. The confusion that has been brought about as a consequence of the Localism Bill has created a real problem. I do not particularly want to make a partisan point here, but I was disappointed in the debate on the Bill that Government Members were queuing up to say how the measures would enable them to stop housing developments from taking place in their local areas.
Mr Stewart Jackson (Peterborough) (Con)
I apologise for my late arrival to this debate, Mr Caton. Circumstances beyond my control meant that I could not get here on time, so I sincerely apologise.
Let me take the hon. Gentleman back to regional spatial strategies. He will no doubt be aware that in August 2009 the then shadow spokesman for Communities and Local Government, my right hon. Friend Member for Meriden (Mrs Spelman), wrote to council leaders and developers indicating that an incoming Government would probably scrap the regional spatial strategy and that they should continue with plans to build, but based within a context of working with local authorities in developing local development frameworks. There was never a moratorium on building. That was just a different way in which to pursue the same ends—to build more homes for people who need them.
Chris Williamson
The real problem is that the housing targets offered some cover for local authority planning departments and planning committees. With those targets gone, they are much more exposed. As we have seen up and down the country, they have come under pressure from people who do not want to have their view spoiled or who do not want to see new housing developments. None the less, we all know that new housing is desperately required. But now local authorities will be much more exposed, because they cannot refer back to the regional targets set by Government. I know that the RSS was not perfect, but I genuinely believe that local authorities and in particular locally elected representatives need some additional support to help them to drive through the new housing that is needed throughout our country.
I want to say a little about the contribution that the construction sector makes to the wider economy. A thriving and vibrant construction sector has a significant and beneficial knock-on impact on the wider economy, not least because 80% of the materials that are procured by the construction industry are procured from within the UK, which creates an additional stimulus outside of the construction sector itself.
Gordon Banks
On that point, I just want to reiterate a point that I made earlier. I come from the materials side of the construction industry and I understand it very well. However, does my hon. Friend have some concerns that although 80% of construction materials are produced in the UK the ownership of the companies producing that material is rapidly falling into the hands of multinational conglomerates, and that as a result decisions are being taken in Australia and Mexico that can affect British jobs and the production of that 80% of construction materials within the UK?
Chris Williamson
That is another valid point and the Government need to consider it; it is a source of some concern. As I say, we are in a fortunate position at the moment, in that 80% of construction materials used in the UK are procured within the borders of the UK, but that might not always be the case. As my hon. Friend suggests, the Government need to be alive to the potential for change as the ownership of firms passes to multinational conglomerates. If that trend continues, the percentage of construction materials procured within the UK could diminish quite rapidly and quite significantly, and we need to be vigilant about that.
Susan Elan Jones
Does my hon. Friend agree that another important factor in this debate is the employment of young men in the construction industry? If we are to accept—as I think, at times, the Government seem to be accepting—a high level of young male unemployment, there are serious social consequences to that as well.
Chris Williamson
Yes, there most certainly are. My hon. Friend puts her finger on another important element of the construction industry. Clearly, it is a very labour-intensive industry. A vibrant, thriving and growing construction sector provides plenty of training opportunities, as she points out. That has significant social implications, because we all know the detrimental consequences—both for individuals personally and for the wider community—of large-scale unemployment. When we consider some of the Government’s other targets, supporting the construction industry and creating training opportunities in the industry would have huge beneficial impacts well beyond the obvious impacts, which I think are clear for all to see.
I wanted to make a point about housing and the importance of having a vibrant housing sector. In particular, I wanted to say why I am so disappointed with the decision to get rid of the housing targets. I have already mentioned the procurement of construction materials from within the UK, but a vibrant housing market also has much wider beneficial impacts, in that people are moving house and buying new carpets, curtains, furnishings and so on, which also benefits all the people employed in those sectors. At the moment, all those sectors are in significant decline.
I would like to talk again parochially for a moment, this time about the commercial sector. In Derby, we have 1.25 million square feet of office space that has planning permission. Those development sites are now standing empty; some have been cleared and some are just a dilapidated eyesore. We were looking forward to those sites being developed, possibly with a view to civil servants moving into them as part of the Lyons review. At the time of that review, developers were talking about building speculatively, but that will not happen at the moment. Derby is not the only example of a town or city where there is a plentiful supply of commercial space available. In the current climate, no developer will build speculatively; they need end-users and certainty. In fact, they need certainty to get a development funded for a start.
I will be interested in hearing the Minister’s response to that point, because I plead with him to say what assistance the Government are prepared to provide to give that stimulus to the construction sector. There is one very simple thing the Government could do that would achieve another one of their targets, which is reducing public spending. That simple thing is to move civil servants from extremely expensive central London locations and out into the regions. When the Government are looking at the relocation of civil servants, I hope that they will consider Derby, because developing a prestigious site in Derby could be achieved at around £20 to £25 per square foot and I know for a fact that in central London some of the prices that some of the Government agencies are paying are in excess of £100 per square foot; indeed, they might be up towards £150 per square foot. Clearly, relocating those agencies and staff to Derby would be hugely beneficial, not only to Derby and the construction sector but to the Government’s own target of reducing public spending. In fact, it will reduce public spending in a way that will not hit front-line services. However, it seems that that relocation process has stalled. I do not know why that is and I would be interested to hear the Government’s thoughts on that.
I am pleased that the Minister is here today for this debate and I know that he is considering locations for the green bank. I have written to him to say that Derby would make a perfect location for the green bank and I hope that he will consider Derby, particularly as Barclaycard has moved out of significant premises in the city. Derby would be an ideal location for the green bank and I hope that he will bear that in mind when he makes his final decision on that issue.
The Government are going in the wrong direction at the moment—the opposite direction to the one they need to go in. What they need to do is to create an economic virtuous circle and construction can play a really important role in delivering that virtuous circle. That means investing in the economy to create the growth that my hon. Friend the Member for Liverpool, Walton referred to, which will have a knock-on impact. I think that he said that growth begets growth, or growth generates more growth, and clearly it does.
My hon. Friend and I are not the only ones saying that. I myself am a humble bricklayer—what do I know about economics? But I just look at my history books. I look at what President Roosevelt did in the 1930s, when there was 25% unemployment in the US during the great depression. A lot of the recovery from the depression was built on the back of construction, including huge construction projects such as dams, roads and housing. We saw that happen again in 1945 in this country, with the efforts of the post-war Labour Government.
Gordon Banks
On that point, does my hon. Friend agree that not only does such investment help the economic situation at the present time but it prepares us better for generations to come?
Chris Williamson
My hon. Friend is absolutely right, because such investment creates employment opportunities and the better infrastructure that future generations, as well as the current generation, will benefit from. I was talking about the Roosevelt legacy; Americans are still benefiting to this day from some of the investment that Roosevelt was responsible for. Surely, therefore, it makes sense to invest in the economy now.
I want to conclude by saying that we also have a perfect example of such investment in this country. In 1945, following the ravages of the second world war, the post-war Labour Government did not shirk their responsibilities. At that time, they faced massive debts and a massive deficit, but they demonstrated that by using the power of the state we can turn the economy around and build a better life for people, including better houses, good-quality services and a better, more cohesive community and society.
We all know that Britain is facing very difficult times, but they are not as dark or as bleak as the times that we faced in 1945. We demonstrated then that we could achieve so much, so I plead with the Government to think again. We have talked about a plan B, which will probably be an issue that is beyond the Minister’s pay scale; it is a matter for the Chancellor. But there are certain things that I have mentioned today that the Government can consider—the green bank, slightly tongue in cheek, being one of them for Derby. We must also consider how we can get civil servants out of the centre of London and into the regions, which will help to stimulate the local economy, including the construction sector, in those regions, creating jobs and a better society for all of us.
Mr Stewart Jackson (Peterborough) (Con)
It is a pleasure to serve under your chairmanship for the first time, Mr Caton, and to be able to contribute to this very important debate.
I pay tribute to the hon. Member for Liverpool, Walton (Steve Rotheram). We perhaps do not have much in common politically, but we both represent cities that have a district called Walton at their heart, so there is some agreement across the Chamber. I spoke on regeneration for Her Majesty’s Opposition in the previous Parliament, and during a visit to Liverpool—to north Liverpool, Rock Ferry and Bootle—in 2009 I was struck by the positive and good work undertaken by the Liverpool NewHeartlands pathfinder scheme. From what I heard of his speech, the hon. Gentleman put his case this morning confidently and reasonably, and I will try to pick up on some of the issues that he has talked about.
I particularly want to look at the wider context of construction, because it strikes me that Opposition Members are not giving due credit to some of the things that the Government have done in the 15 months of this coalition Administration. They do not concede that in 12 or 13 benign economic years, with incremental growth, there was still failure to deliver the appropriate results in the construction sector. An average of 145,000 new homes were built between 2000 and 2010, but in 2009— the last year for which figures are available—only 103,000 housing completions were delivered, which is the lowest number since 1923, and that was, coming back to the point that the hon. Member for Derby North (Chris Williamson) raised, with the regional spatial strategy.
The regional spatial strategy was not a panacea or an answer to the conundrum. It did not deliver what it was meant to. There might have been elements of localism, and some stasis in planning departments, in the competence of councillors and in the willingness of people to use the existing legal system to block such development, but the bigger question is: “Were we building the right homes in the right places?” Between 1997 and 2005 we built 117,000 homes in the east and south-east, on the flood plain, and we need to look at that. Were we building the appropriate quantity of homes, and on what demographic basis?
Chris Williamson
Will the hon. Gentleman at least concede that before the unprecedented worldwide economic downturn the regional spatial strategy was making a positive contribution? The number of new housing starts in the past year has fallen again to a new record low, so the policies being pursued by the Government are not working. Will he concede that the economic downturn is the biggest reason for the reduction in the housing stock, and not the regional spatial strategy?
Mr Jackson
The hon. Gentleman is persistent, not least in his aspirations for Derby to host the green investment bank. I have to tell him, regretfully from his point of view, that Peterborough got in first, and we have a good chance because we are an environment city with excellent transport links—we are a sustainable bus city. However, I must not stray too far from the locus of the debate.
What the hon. Gentleman says is not necessarily true. If we look at the first quarterly figures on private sector housing starts, yes, they are patchy but we are looking at an upward trajectory, certainly in the eastern region and also possibly in the east midlands and other parts of the country. I accept that there will be a difficult time, because historically this is the worst period that the construction industry has suffered in the past 60 years.
Gordon Banks
I have worked in the private housing industry for a significant time, and I think that it would be an experience for the hon. Gentleman to make a journey up to Scotland to see the absolute decimation of the private housing sector there. Major developers are releasing four or five plots for development at a time, where 10 or 15 years ago there were four or five completions per week. The housing industry in the UK, and in Scotland in particular, is as far down on its knees as it can get.
Mr Jackson
The hon. Gentleman will therefore support the views of the Government, and particularly those expressed in the ministerial statement issued by the Secretary of State for Communities and Local Government on 23 March, which focused on a presumption in favour of sustainable development, encouraging developers to question local planning authorities vis-à-vis section 106 and the financial viability of each development.
Gordon Banks
I do not think that the hon. Gentleman has been listening to the debate. The driver behind the private housing sector is bank finance and mortgages.
Mr Jackson
If the hon. Gentleman will allow me to proceed, he will hear my comments on that in due course.
I agree with the premise of the financial importance of the construction sector. It is certainly the case that there is a multiplier of £2.84 to every £1 invested in the construction industry. I also agree that we have a social and economic responsibility, and the Government see it as such, to tackle the historically high levels of people on social housing waiting lists—currently 1.75 million. That concentrates our minds, whichever constituency of the country we represent. We must not be too churlish, however, about what the Government have done. The new homes bonus, which we developed while in opposition, is a fiscal incentive, to encourage local authorities to build appropriate housing, and because it is based on council tax bands rather than on capital values, it builds in a predisposition for quality homes at the same time as paying due regard to the need for social housing.
Chris Williamson
Is the hon. Gentleman aware that when this matter was considered by the Communities and Local Government Committee, all the expert opinion was that the new homes bonus simply would not work and that it needed an overlaid target? The hon. Gentleman throws his eyes into the back of his head but that was what they said. They were unanimous. All the expert opinion was that the bonus would not work without an overlaying of a national target system.
Mr Jackson
We all know that there were limits to the concept of localism. It would be foolish for any Secretary of State or any Minister in the Department for Communities and Local Government or the Department for Business, Innovation and Skills to say that they could second-guess the development control—to use the old term—or the planning policy of each of the 400-odd local authorities. In densely populated areas of the south-east of England local authorities might feel that they have reached an equilibrium in quality of life and do not want more house building. There are large parts of the north of England, however, for example County Durham, Northumberland and the north-west, where better quality housing perhaps is needed.
Mr Jackson
If the hon. Lady will forgive me, I will not give way for the time being because I have quite a few points to make and others might wish to speak. I will let her in later.
It is not possible to design a system that delivers the same result in every part of the country, and the experts the hon. Gentleman mentioned will be disproved, I believe, by the impact. Six years’ matched funding for infrastructure, giving genuine fiscal power to local authorities, will deliver, using the market mechanism, the right kind of quality housing in the right place. None of us can prejudge that until we have seen it in action. The new homes bonus will work, based on a council tax band D of £1,414, and the Home Builders Federation projects that that will bring £1.2 billion into local authorities each year. That is income to the local economy of each authority that builds new homes, which can only be good, and it is 215,000 jobs.
The wider context of the Government’s construction policies is about rebalancing an over-reliance, in some parts of the country in particular, on the public sector, and trying to encourage, with tax policies and a regulatory regime, more private sector growth in jobs. We have already begun to see that. We are not steaming ahead with the creation of private sector jobs, but the trend is in the right direction, and I expect more jobs to be created in the construction industry.
[Mr Charles Walker in the Chair]
The Government’s plan for growth, published in March at the same time as the Budget, introduced significant changes that will help the construction industry. Of course, it makes a presumption in favour of sustainable development, and the wording was criticised for being opaque, but it is now in place and subject to consultation and discussion. The national planning policy framework is coming forward. I have some concerns about it. I am particularly mindful of the possibility of a watering down of the primacy of town centres over out-of-town shopping centres, and the Treasury needs to be mindful of it too. It is all very well creating Asdas and Tescos on the fringes of towns, but that effectively destroys the viability of niche retailers in town centres.
Generally, however, the national planning policy framework will de-clutter the governance of planning, which can only be good. The hon. Member for Liverpool, Walton is right that certainty and the ability to plan properly are absolutely integral to a successful construction industry. That is why this Government’s remit includes simplifying generic planning policy.
To my mind, we are not going fast enough in piloting local land auction models, but we are going in the right direction. Public land will be the first to be auctioned. There is a myth about the availability of land, and a lack of available land clearly contributed to the overheating of the housing market between 2006 and 2009. However, even in the south-east of England, only 12% of land is used for housing, and 10% is used across England as a whole.
The conversion of commercial premises to residential premises and a duty to co-operate would meet some of the objections made by the hon. Member for Derby North about regional spatial strategies. The Local Government Association and others, including KPMG in its report on regional governance, found that regional development agencies did not alleviate differences between regions, or even within regions. He will know that there is a world of difference between Rutland and Melton and inner-city Nottingham or Derby. We as a Government believe—I cannot speak for the Minister—that there are sub-regional economies that were not reflected in regional development agency boundaries. We believe that it is much more practical and flexible to consider a duty to co-operate, particularly in the development of infrastructure.
We are proceeding with a major infrastructure planning system overhaul and consulting on the liberalisation of use classes as a way forward, but the hon. Member for Ochil and South Perthshire (Gordon Banks) is absolutely right that the principal issue is mortgage finance and the capital available for the development of housing. None of us can deny that—it is absolutely the case—but he must concede that the Minister for Housing and Local Government, my right hon. Friend the Member for Welwyn Hatfield (Grant Shapps), did an extremely good job in raising with the Treasury the importance of not throwing the baby out with the bathwater in terms of the Financial Services Authority’s mortgage market review. Both the Chancellor and the Secretary of State for Business, Innovation and Skills are mindful that the FSA review must get the balance right. Without reckless spending, they must make available the mortgage moneys that young people need to buy their first property.
To give my own local authority a plug and pay tribute to it, Peterborough city council voted just last week to put £10 million aside for a local authority mortgage scheme. Without wanting to be too partisan, I must say that I am slightly disappointed that the Labour group on Peterborough city council has seen fit to call in that decision, which will delay the process of getting young people the finance that they need to buy property. Not everything that the previous Government did was wrong. The HomeBuy Direct scheme was good, and we have built on it pragmatically and practically with the Firstbuy scheme, which will put about £1 billion into the system and help 10,000 first-time buyers.
The other issue is the planning system. We cannot get away from the fact that the planning system in this country can be construed as dysfunctional. One hears anecdotes all the time. Developers bring an expensive, costed plan for the development of a few hundred houses to a planning department and an officer says, “Yes, that’s a good plan. We can run with that.” He leaves, and another officer comes in and says, “Hmm, I don’t really like the aesthetics. Will you do it again?” Time is money, and that takes an enormous amount of time. It is extremely frustrating, and it is not fair on shareholders or on the people who want to buy the new houses.
We must develop a way to break through the shroud of mystery around town planners, as we used to call them in the old days. They are a bit like hospital consultants: “Don’t question my professionalism on this.” However, it matters to economic growth and people’s jobs and livelihoods that planners expedite decisions. We must develop a way to incentivise them to get inherently viable projects off the ground. They must work much more closely with developers on things such as section 106 and focus on the affordability of individual projects. The evidence that has been presented shows that it is complex. Some supplementary planning documents for large-scale developments can take 18 months to two years. With core strategies, site allocation plans and consultation on local development frameworks, the process can be frustrating for developers. We must find a way to simplify the system.
A report by Michael Ball of Reading university, “The labour needs of extra housing output”, suggests that the costs associated with development control could be up to £3 billion a year. That is not acceptable if we are committed to a pro-growth agenda. Since January 2005, 3,250 pages of national planning policy guidance have been issued. The complexity and cost of development are significant. The hon. Member for Derby North made the point that the gross cost of regulation, the cost of construction and the market price of floor space are significantly greater in London and other UK cities than elsewhere.
I am being admonished by you, Mr Walker, to conclude my remarks, but I will say that we need to see construction policy holistically. We need to consider residential real estate investment trusts and what the Treasury can do to simplify them. We need to consider how EU procurement rules affect large-scale regeneration. We need to consider brownfield remediation to make it simpler for construction companies to build. We need to encourage special purpose vehicles through the tax system so that local authorities can work with developers. We need to push forward tax increment financing so that there is a fiscal incentive to regenerate town centres and other areas. We also need to concentrate on empty properties.
We must find a way to deal with land banking by people who hold land but will not release it—
Mr Charles Walker (in the Chair)
Order. We must find a way of concluding this speech as well, Mr Jackson.
Mr Jackson
I am happy to conclude my speech, Mr Walker, with three brief points. Developers must engage properly with local authorities and local planning authorities, and with politicians here in Westminster, to lobby hard for changes in the Budget next year. Mortgage providers must provide more flexible mortgage products. We must also concentrate on developing the right houses in the right places at the right price. There is a wider issue, which is not just a local issue of building.
My final point concerns apprenticeships. This Government have a good record on apprenticeships and announced 50,000 new apprenticeships in the Budget. That will be an integral part of growing and enhancing the construction sector.
Mr Charles Walker (in the Chair)
The Front-Bench spokesmen have about 10.5 minutes each.
Ian Lucas (Wrexham) (Lab)
It is a pleasure to serve under your chairmanship, Mr Walker. My time is about half of the 20 minutes that the hon. Member for Peterborough (Mr Jackson) has just taken, and 20 minutes is exactly how late he was for this debate, so he has done well out of the past hour and a half. I know that he apologised.
I congratulate my hon. Friend the Member for Liverpool, Walton (Steve Rotheram) on securing the debate. I will not enter into the argument between him and my hon. Friend the Member for Derby North (Chris Williamson) about who is the best brickie in the House, but it was a delight to hear from both of them and to hear about the Labour party’s commitment to the construction industry. This debate is taking place because it was sought by Labour MPs, and I contrast the attendance of Labour representatives with that of Government representatives. We have had one contribution from the Conservative party and no contributions whatever from the Liberal Democrats. We will be on tenterhooks when we listen to the Minister, whom I am very fond of and have listened to on many occasions. Although we disagree on practically everything, I think that his comments are starting to resemble some of the things that I said when I was in government. That certainly did not happen when he was in opposition.
This is an important debate, because the construction industry in the UK is in crisis. The situation is extremely serious. My hon. Friend the Member for Liverpool, Walton has already provided some quotes from the industry. A survey by Wilkins Kennedy suggests that the number of businesses going bankrupt rose sharply in the first quarter of 2011, from 706 to 948. Analysts at the firm also warned that the private sector was not providing the necessary growth to substitute for the withdrawal of the investment that the public sector provided in response to the worldwide banking crisis. My hon. Friend has outlined what Mr Cork from Wilkins Kennedy has said.
The reduction in capital investment that was announced by the Chancellor of the Exchequer in his first Budget last summer is only now beginning to kick in. We have heard a lot about deficit reduction, but we are now beginning to see the impact of this Government’s deliberate decision to take matters forward. The construction industry does not like it. The Federation of Master Builders says:
“The workload net balance has now been negative for thirteen consecutive quarters, which means more construction businesses are reporting a decline in workloads than are reporting any increase.
The latest results from the FMB’s State of Trade survey showed that construction workloads continued to fall at the start of 2011, and around 35% of respondents anticipated lower workloads in the second quarter of the year.
Employment conditions also deteriorated in the first quarter of 2011. When members responded to our last survey in March 43% had reduced employment levels in the first three months of the year, compared with 32% in the last quarter of 2010. Figures recently released by the Office for National Statistics showed a total of 24,000 construction job losses in the first quarter of 2011.”
The situation is very serious indeed. The FMB also points out that the pressure on small construction businesses in particular is intense. Their output decreased by more than twice as much as that of bigger companies, which is very worrying, considering that 93.5% of Britain’s private contractors employ fewer than 14 people.
When the UK economy contracted by 0.5% in the last quarter of 2010, the fall in construction output was 3.3%. Responding to that drop, the Construction Products Association’s economics director, Noble Francis, said:
“Although the poor weather in December inevitably had an adverse effect on construction work, it also did one year earlier. It is clear that the recovery in construction during the middle of 2010 has now ended abruptly and that private sector work is not coming through strongly enough to sustain growth.”
He predicted a 2% decline in construction in 2011.
We have heard the key statistic that every £1 spent on construction generates a total of £2.84 in economic activity. We need, desperately and urgently, to generate economic activity, which is the exact opposite of what the Government are doing. For smaller construction firms in particular, a lack of available work is being caused by the deliberate decisions of this Government to withdraw investment from projects such as Building Schools for the Future. The interlink between the public and private sectors in construction is of huge importance. We lack work in the construction sector, but, at the same time, there are also increases in prices for construction companies. The Specialist Engineering Contractors’ Group tells me that the price of copper has risen by 275% in the past two years, and that the price of iron ore has more than doubled to $200 per metric tonne since last summer.
Some good work is going on in relation to project bank accounts. It was initiated by the previous Government and has been taken forward by this Government, but even that is under threat.
Gordon Banks
On the issue of price increases, my hon. Friend is right to highlight international commodity prices, but price increases are also being forced by the economic conditions delivered by this Government. Production capabilities are being closed down and jobs are being lost, so the price of the finished product is being driven up.
Ian Lucas
Absolutely. The other key point is that this Government increased VAT at the beginning of this year. They have increased the price of any business that offers goods for sale and services within the construction sector. The FMB says:
“The situation for small construction firms has been made more perilous by the VAT increase at the start of the year.”
A deliberate decision and act of Government policy is making the position of construction companies more perilous. That is a damning statement.
The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)
The hon. Gentleman has rightly cited the concerns of the FMB. Does he support its call for a 5% cut in VAT, over and above the claims of the shadow Chancellor, the right hon. Member for Morley and Outwood (Ed Balls)? Is that what the Labour party would do?
Ian Lucas
If the Minister listens to the rest of my speech, he will hear me address that particular point. The increase was wrong-headed, the wrong policy and an example of the Government being wrong again. They are beginning to look increasingly like Herbert Hoover, rather than Franklin D. Roosevelt. That is why we are saying that we need to look at alternatives to the policy that is being pursued at present. If we continue with the policy that the Government are doggedly pursuing, it will be disastrous for the construction industry. That is why the Labour party will propose reductions in VAT when we next discuss the Finance (No. 3) Bill. My right hon. Friend the shadow Chancellor has already proposed an emergency reduction in VAT. The Government make complacent observations on the matter, but the situation is urgent. Not only is the construction sector under massive threat, but it is not able to provide the number of apprentices needed within the sector to maintain it. Businesses have no confidence in offering any jobs to people, let alone in taking on employment. The Government simply have to recognise that sort of reduction in confidence in the sector.
The FMB has made various proposals, as the Minister has mentioned. Our shadow Treasury team has made proposals in relation to the Finance (No. 3) Bill, and I hope that the Minister and the Government will start listening. If they do not, all of the rhetoric about growth and rebalancing the economy that we hear coming out of No. 1 Victoria street will be recognised for what it is, which is rhetoric alone. The Government are being hounded by the Treasury, and the Department for Business, Innovation and Skills is being sidelined. It is a Department with no influence in a Government who are pursuing a bankrupt economic policy that is leading to more bankrupt companies. Such companies are increasing in number, as shown by the figures that I quoted earlier. That is the reality of what is happening on the ground.
I pay tribute to the good work that the Minister is trying to do in areas such as the development of a low-carbon economy, the green investment bank and the green deal, but they are chugging along and are nowhere near arriving yet. The position is urgent. The Government need to contribute a positive answer to the crisis facing the construction industry. We need action, not words, and we need it now.
The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)
I congratulate the hon. Member for Liverpool, Walton (Steve Rotheram) on securing the debate. It is great that we have among our specialist crafts and trades two bricklayers who have been in the business. I am a mere surveyor, but I hope that I am trusted to at least get the pricing right. I am pleased to say that we have had a very constructive discussion, albeit with a fair degree of partisanship. I was glad to hear the hon. Member for Wrexham (Ian Lucas), who speaks for the Opposition, say that he is fond of me. It would be slightly worrying if he were not—I am not sure what we would have had at the end in terms of just how fond he is.
Let us consider some of the facts and see whether I can respond to some of the key points raised. The debate has been very wide. We have covered skills, access to finance, the importance of the green economy and of apprenticeships, as well as the planning regime system and how that works. I suspect that hon. Members from all parties would share the view that the construction sector is crucial, as is shown by the numbers. It makes up 6.8% of the total economy and directly employs around 2 million people.
As we have heard in the debate, we recognise that construction and housing related to construction have been through a tumultuous time—a savage period—since 2007. Over the two or three years during and through the recession and, yes, into difficult times now, many businesses have faced a real rollercoaster. Good firms have gone and firms that, frankly, were struggling anyway have gone. There has been a headcount loss, which we note and regret, but we should not simply paint a wholly gloomy picture. Some months the figures go up and some months they go down, but if we consider the most recent output figures that have been published on the three months to the end of April, there has been a 6.2% increase in output, which is about £16.7 billion. So it is not a wholly gloomy picture.
Gordon Banks
On that point, I take it that the Minister is referring to ONS statistics. Does he have any concerns about how the ONS gathers statistics on the construction industry?
Mr Prisk
Concerns have been raised. The Construction Products Association, which has been mentioned, has asked whether the strength of the sector is in fact underplayed. That issue is being considered by the ONS.
The hon. Member for Liverpool, Walton will not agree on this analysis, but I did not hear from him any recognition of the enormous financial deficit that we inherited and therefore the tough decisions that we had to take. What I heard from him was the suggestion that we are not investing at all. I do not accept that. Let me highlight how, despite those difficulties, we have set out the first national infrastructure plan and shown how £200 billion of public and private funding will be put into the sector—into infrastructure and construction—over the next five years.
The spending review has started to spell out how that will work. There will be £10 billion additional funding for roads and maintenance, which is crucial, and £14 billion additional funding for rail. Of course, Crossrail is going ahead and we intend to proceed with High Speed 2. That is crucial for the overall sector. In the hon. Gentleman’s area, the Mersey Gateway is a £600 million project that will create 460 direct jobs. The project should open some important opportunities in the area and generate around 4,500 jobs. In difficult circumstances, we are making an investment that could help.
Several hon. Members mentioned the question of how we can help the economy and the construction sector more broadly. The Government can do a number of things. My hon. Friend the Member for Peterborough (Mr Jackson), the hon. Member for Derby North (Chris Williamson) and others talked about the planning system, which is a sclerotic system that needs to change. That is why we are progressing with a presumption in favour of sustainable development, so that the default answer is yes and the burden of proof is moved to those who seek to oppose development. We are streamlining the planning process and the consents that go with it and stripping back the 3,250 additional pages of planning guidance of the past five years to around 100.
We want to speed up the system and to get developments under way by setting a time limit. That important issue has not been raised in the debate. If we establish a clear 12-month deadline, including appeals, it will give business, construction and corporate clients the certainty of knowing that there is a timeline within which planning will progress. That is a vital part of the process.
Mr Prisk
I am not going to give way because, with respect, the hon. Lady did not make a speech and I am trying to respond to those who have.
The construction strategy is important because it provides certainty about the future pipeline of public projects. Several hon. Members said, “Let’s have some action, not talk.” I agree. That is why, from this autumn, we are rolling out a two-year programme of pipeline projects that are funded. Therefore, the industry—infrastructure and construction projects—will know what is coming, can plan for it, invest for it and put money into the skills. That is crucial. We have never had that before. It seems painfully obvious now that that is what the industry wants. We are doing that, and we are doing it for the first time. Such an approach will make an important shift.
That brings me to the question of public procurement. We recognise that many public procurement costs have been way over what they should be, which is why we have set a target of a 20% reduction. I pay tribute to the industry because it is great that it has stepped up to the plate and said, “Yes, we agree. We want to be part of this.” We have set out a clear process of how we are going to eliminate waste and duplication, and introduce a whole new way of procurement that will not only reduce the costs, waste and duplication, but open the market to newer entrants—small and medium-sized enterprises—who perhaps in the past have felt shut out.
Gordon Banks
Does the Minister not agree that for that to happen there must be a constructive programme—to use an appropriate word—of varying sized contracts throughout the UK? Crossrail is fine, but a small SME will not be involved in that and certainly will not make any money from it.
Mr Prisk
Absolutely. That is why our approach is not just about one part of central Government; it is about the whole of government. The hon. Gentleman is right. We need to ensure that the package sizes are varied sufficiently, so that SMEs can participate.
On skills and apprenticeships, first, we are ensuring that young people can at an earlier age—14 onwards—get their hands dirty and start to learn good trades and crafts. We are expanding the university technology colleges—there will be 24 of them—so that we can ensure that, yes, young people get their basic English, maths and so on, but that from 14 onwards they can start to learn a trade and a craft. That is important. Secondly, we have rightly heard a lot about apprenticeships. That is why, over the coming four years, we are putting £250 million of extra money in to deliver 250,000 additional apprenticeship places. Concerns have been raised about whether we are making enough progress and whether there are enough places. In this first year, the evidence is that the take-up has been 100,000 places. That is double the number originally expected and is an encouraging sign.
Mr Prisk
I do not deny that there is a challenge in construction. We cannot force that number. The point is to ensure that we put the funding in place, so that businesses who wish to do so can participate. In that first year, we have seen a good picture overall.
The important issue of green skills was mentioned. For the record, we have agreed a clear strategy with the sector skills councils and established a programme to create an additional 1,000 apprenticeship slots for green skills. Last week the “Low Carbon Construction Action Plan” was published. That document sets out our response to the industry’s programme in terms of 65 specific tasks, including skills and investment. We do not simply want to set out what we might do in five, six or seven years’ time; there is a programme for what happens now, through the next four or five years. The programme is specific in that context.
I shall turn briefly to Building Schools for the Future. The reality is that it was a hideously complex programme with an overrunning budget, an incredible duplication of processes and wasteful outcomes. It has been suggested that Building Schools for the Future is the end of school building. It is not. The Department for Education has spelt out clearly that we intend to ensure that £15.8 billion is available for schools spending over the four-year comprehensive spending review period. Clearly, we need to get value for money and to strip away what the industry has told us are some of the processes that block the system and do not deliver the calibre of buildings that our children deserve. That is why the Department will be responding to the independent James review. I am mindful of the time, so I will respond in writing to the point that the hon. Member for Wrexham made on low carbon.
Let me draw my thoughts to a conclusion. I come from the sector, so I recognise that these have been tough times and that the industry is not out of the woods yet. There are glimmers of opportunity, but there are challenges as well. For the first time, we have an infrastructure plan in place and a rolling programme for the funding of infrastructure and construction schemes—