CBI survey says spending cuts will hit construction firms

ALMOST 90% of UK construction firms expect public spending cuts to act as a drag on operating conditions, according to employers’ body the CBI.

The first CBI/Speedy Services national construction survey also showed that two-thirds of building sector firms see the UK’s planning system as an obstacle to business, while four out of 10 have seen a worsening in the availability of finance over the past year.

However, it said the Chancellor’s autumn statement contained encouraging news for the sector, including details of the Funded Construction Pipeline and infrastructure spending.

The CBI said the survey portrayed a sector well-placed to boost skills and create jobs – with more than three-quarters of firms planning to maintain or increase spending levels on training and investment in apprentices in the coming year.

Of the 635 construction leaders who took part, 40% said the availability of finance had deteriorated in the past 12 months, 52% reported no change, and only 8% said they had seen an improvement – resulting in a negative balance of minus 32%.

Firms expect credit conditions to deteriorate further in the next 12 months, with a negative balance of minus 20%.

Over the next five years, 86% of firms expect public spending cuts to have a significant or very significant impact on their business while 24% expect business to decline in 2012. While 42% predict growth, the vast majority of them anticipate growth will be weak.

The UK’s planning system is seen as a barrier to their operations by nearly two-thirds of survey respondents.

Asked about the most significant barriers to house building in particular in the past year, half of respondents identified mortgage availability with 17% blaming consumer confidence, 14% business finance and 10% planning.

Dr Neil Bentley, CBI deputy director-general, said: “Construction firms are facing tough operating conditions and they are clear about what can be done to give the sector a boost. Firms want certainty and they need guaranteed infrastructure spending to deliver it.

“Now the sector has grounds for optimism. The Chancellor’s autumn statement outlined the Construction Pipeline and increased the Government’s commitment to housing, and spending on roads, rail, energy and other crucial infrastructure.”