The Construction Products Association has sent Alistair Darling a letter urging him to maintain public sector net investment if the public sector built environment is not to start deteriorating.
In its letter to the Chanceller, the CPA noted that the UK economy has returned to growth in the final quarter of 2009, but warns that output is expected to fall further in 2010, following record falls last year.
It says that construction and product manufacturing are worth £110 billion to the economy every year, which is equal to 9 per cent of GDP.
In its letter, the CPA has highlighted several priorities for the budget, which it says are essential in helping a faster and stronger economic recovery.
The CPA says the budget should:
- Prioritise capital investment and show a clear commitment that public sector net investment does not fall below 2.25 per cent of GDP
- Ensure the UK is a competitive place to conduct business. This means no additional tax or regulatory burdens placed on business that harm competitiveness
- Make quicker progress towards making the UK a low-carbon economy. Government should undertakes a review of energy-saving and water-saving products and solutions that are eligible for a lower rate of VAT
- Extend the Boiler Scrappage Scheme. In the two months since it was set up, the scheme has already committed all 125,000 vouchers initially allocated for the full two year life of the scheme.
Construction Products Association chief executive Michael Ankers said: “We recognise the urgent need to reduce public borrowing, which is expected to have reached £178 billion in 2009/10.
“However, the government needs to ensure that spending occurs where it is of most benefit; ensuring that recovery is not harmed and long-term growth encouraged.
“Capital spending on essential housing, schools, energy and transport infrastructure stimulates economic recovery in the short-term, with crucial benefits for employment, and leaves a beneficial legacy from the investment by increasing productivity in the longer-term.
He added: “The government must provide incentives to help the creation of a low carbon economy, especially with regard to the energy efficiency of the existing housing stock.
“Finally, the government should allocate an additional £50 million to the Boiler Scrappage Scheme.”
The scheme which was launched in January this year, has already exceeded everyone’s expectations in the first two months.
It is estimated that on completion of the scheme, 945,000 tonnes of carbon will have been saved at a cost of just £53/tonne – a much better return on public investment than many of the alternative schemes to promote renewables.”