Chief Executive’s Blog: Timing Is Everything

A chill ran through me as I read the reports of Chief Secretary Danny Alexander’s announcement of public spending cuts even before the budget.  Regardless of the departmental budget affected, every item seemed to hit the construction industry. And there were ominous noises that the schools building budget was “heavily over-committed”. Some of this may be the now-customary tactic of talking up the pain in a Budget, so that the sense of relief at slightly less pain than expected means a more favourable reception for unpleasant news.  But the mood music all seems to be preparation for a fundamental shift in approach towards the role of the public sector and a prediction of a change in the national lifestyle as a result. I accept the need to control the deficit and reduce public spending.  What I still don’t understand is the timing.  The economy is barely out of recession: the Office of Budget Responsibility’s figures emphasise this by reducing the growth forecast.  The construction sector is still in recession: the Construction Products Association forecasts an overall fall of 3% during 2010. Public sector investment represents 40% of the construction market.  Just think how much worse the recession in construction would have been without it.  I know of many BWF members who say that work in schools, hospitals, prisons and other government buildings has sustained them over the past two years. There are clear signs that the private sector is recovering, but claiming that the private sector will move in if the public sector withdraws seems to me to be an assertion that owes more to ideological conviction than economic evidence.  I’m not reassured by the fact that the commentators who called the recession right, such as David Blanchflower and Will Hutton, seem to think the same. We’ll know more once George Osborne reveals his Budget tomorrow.  But I have a very bad feeling about this.  I have never in my life wanted to be more wrong about anything. Building Magazine has been running a campaign to lobby MPs to support continued investment in the construction economy.  There’s a template letter on the Building website.  If you share my worries, download it and send it to your MP, so that they can make the case during the five-day debate that will follow the Budget statement.