Renovation nation

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The consensus on the Budget appears to be that the Chancellor had very few options. With growth forecasts downgraded yet again, borrowing up and the deficit essentially unchanged, he has little room for manoeuvre.

After an £11bn departmental “underspend” in 2012/13, public sector spending is set to be even more tightly controlled, with £11.5bn worth of savings (or cuts, depending on your politics) to be found in the June spending review.

Measures for growth amounted to a stimulus for the housing market by underwriting some mortgage lending, a cut in corporation tax (but not for two years) and an increase in spending on infrastructure, also from 2015.

“Infrastructure” was the budget buzzword. It appears 57 times in the Treasury’s Budget Report, compared with construction, which is mentioned just three times. Of course infrastructure investment usually involves some construction but the key issue is timing.

Research by The Guardian shows that less than a quarter of the Government’s projects will be completed during this parliament. The regularly updated “pipeline” of more than 500 infrastructure projects lacks start dates for many schemes. As the paper puts it, the national infrastructure plan includes “dozens if not hundreds of schemes that will not start buying equipment and materials or employing labour until long after the next general election.”

The UK certainly needs long-term investment in infrastructure but the economy, and in particular the construction sector, needs a stimulus now.

It’s instructive to read reactions to the budget from some of the organisations involved in the sector.

Here’s the RICS on infrastructure:

“The £3bn a year announced by the Chancellor is welcome but will not come on stream until 2015-16 – far too late for many businesses that are struggling now. Our members have told us repeatedly that the success of infrastructure projects are about delivery on the ground. RICS believe Government should spend more time and resource in supporting business to gain access to these public sector projects.

“The Government has largely failed to realise that infrastructure projects don’t need to be big to be effective in creating growth. In fact small might very well be beautiful. Across the regions and the  nations it’s the smaller repair, maintenance and upgrade projects which can be picked up by medium and small construction businesses. Rail maintenance and school refurbishment are just  two areas where a small amount of capital investment would quickly deliver great benefits.”

… and the Federation of Master Builders on housing:

“The FMB worries that the measures announced today may not go far enough to allow smaller builders to deliver the energy-efficent new homes Britain needs. Britain’s SME builders are in need of relief after years of shrinking workloads and rising costs. More than three-quarters of our members recently told us that the most important thing the Government could do to revitalise the home repair, maintenance and energy-efficiency markets would be to cut VAT. This would also provide a level playing field when competing with builders who choose to avoid charging VAT.”

In austere times, maintenance and repair always suffer. While new, large-scale projects are being proposed and (eventually) funded, the everyday infrastructure on which we all rely is being neglected – from roads to rail, from houses to hospitals.

Put this together with the need to make buildings of all types more energy efficient and you have a once in a generation opportunity to tackle the maintenance backlog, to upgrade and to improve performance. Surely that’s worth investing in?

World trade

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At last week’s Workplace Week Convention I was struck by a comment from Mark Wood who opened the event with a great presentation on trends in demographics, economics and society. Wood is a finance expert and he talked from a global, not a UK, perspective about the big forces shaping the future. His “new realities” include scarce energy; income not capital; equity versus debt; creativity not credit and productivity not wealth.

He said: “Asia is a source of high intellect and productivity not cheap labour.”

For some time now western political and business leaders have talked about the need to focus on the knowledge industries. We may not be able to compete in manufacturing but we can still lead in high-tech research, development and design. But for how long?

Mobile telephony has exploded across the world. In some developing countries it has leap-frogged fixed-line technology and in many a smartphone is the preferred device for accessing online services.

Most of the world’s smartphones run on just three platforms: Android from Google, iOS from Apple and Windows from Microsoft. The hardware may be made around the world but the software originates in labs on the west coast of America.

Surely it won’t be long before Asia’s “high intellect” produces innovation born from Asian rather than western culture.

And if research and development migrates East, there’s just a hint that there might be some movement the other way.

Apple’s iPhones and iPads are made by Taiwanese manufacturer Foxconn, mostly in China. As Workplace Week ended, an article on the business pages of The Guardian ran under this headline: “Taiwan’s Foxconn weighing up plan to outsource jobs … to America.”

Apparently Foxconn has been looking overseas for opportunities as labour costs rise in China and has “evaluated” US cities including Detroit and Los Angeles.

A visit to the Olympic Park

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Now and again everything falls into place. Sunday was one of those times, as we visited the Olympic Park on the second day of the London 2012 Games.

Short drive to Ebbsfleet International station to pick up the High Speed Javelin train – 10 minutes to Stratford International. Short walk through Westfield shopping centre to the Olympic Park entrance.

Admittedly there was nothing on in the main stadium, so no surges of spectators to deal with but the marshalling and security (army personnel) were friendly and efficient.

The Olympic Park looks wonderful. I visited it just over a year ago and it was great to see how the landscaping and planting has matured – helped no doubt by the record-breaking wet weather!

We didn’t have tickets for an event, so spent the day wandering along the waterways, watching the big screen and soaking up the atmosphere, with the odd bit of retail therapy thrown in.

The infrastructure seemed to cope well although as the Park got busier long queues formed for the official merchandise shops and the mega MacDonald’s outlets.

Perhaps realising that they couldn’t shelter everyone from the British summer, the venues planners offered virtually no protection from the rain at all. At one point footpaths by the water were temporarily closed because visitors were taking cover beneath the bridges! But this was a minor inconvenience and the mood of park visitors, event ticket holders, staff and volunteers was almost universally sunny.

If you can’t get to an event, then sitting on the lawns of the Olympic Park watching live on the big screen is surely the next best thing. We’ll remember cheering on Lizzie Armitstead to her cycling Silver Medal, as thunder echoed around London skies, for a long time.

Well done to all the construction professionals, facilities and support staff who made it possible.