The Government's promise to "build, build, build" the country's way out of a looming recession is commendable in it's intent, but can it overcome some very obvious hurdles?
The construction industry is responsible for 7% of the UK's GDP, or around £120 billion p.a. When it's supply chains are taken into account, it is probably nearer to double that. So the promised £5 billion in spending really isn't going to have too much of an impact. If, however, substantial new money is found, there are a couple of problems the industry will need to solve. Quickly.
Who will do the build, build, building?
The number of skilled workers in the UK's construction industry has been in decline for decades. They are also aging, with 15% in their 60s. Pre-Covid, part of the shortfall was met by migrant workers, of which there are 150,000 to 200,000, representing 10% of the industry's workforce - up to 30% in London. Around two thirds of these migrant workers are from the EU, many of whom went home when the pandemic struck. How many will return remains to be seen. Even if they all come back, there remains a huge skills gap - their simply aren't enough carpenters, plumbers, bricklayers. electricians and a host of other essential trades. Significant ramping up of the construction industry won't be possible without the people needed to do it.
What will they build with?
There are many articles from authoritative sources, even before Covid, about materials shortages, from bricks to aggregates, mortar to plasterboard. If new spending is ramped up significantly and other countries choose a similar route, can the supply of basic materials keep up? Perhaps there is some excess capacity in the system but will companies invest large capital sums to increase production to meet shorter term demand? I am reminded of the American coal CEO who, when asked if he would invest in expanding operations after the administration's relaxation of environmental restrictions. "Presidents are in office for 8 years at most. We plan far longer term than that."
An inconvenient truth
With apologies for borrowing Al Gore's headline - if the cement industry was a country, it would be the world's third largest CO2 emitter, behind China and USA. The production of lime is very energy intensive and involves heating calcium carbonate to break it down into lime and.... yes, carbon dioxide. Not a political point, but given last year's success by environmental groups in stopping Heathrow runway 3 in the courts, any large new projects could be delayed by similar issues.
So, build, build, build may not be as straightforward as the Government hopes. It will involve far more than promising money.