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Construction Parliamentary Update - 7 October 2011

A round-up of all the construction news from Westminster this week, brought to you by the Madano Partnership

GENERAL

Osborne announces ‘credit easing’ boost to SMEs

The government is considering economic measures to increase the amount of credit available to small businesses, Chancellor George Osborne announced. Osborne said that he has asked the Treasury to look at a programme of “credit easing” as a way to “inject money directly into parts of the economy that need it, such as small businesses.” It is understood that such a move would involve the government buying bonds issued by companies, in a bid to lower the cost of credit to firms and also increase the availability of finance. The move would not add to the deficit under current accounting rules as, although the Treasury would bear the risk, it would be buying a tradable asset. (3 October)

CONSTRUCTION

Construction output grows 1.1%

Output across the construction industry increased by 1.1% during the second quarter of 2011, according to new figures from the Office of National Statistics (ONS). This compares with a fall of 2.7% in the first quarter of 2011. Recent figures have generally recorded a drop in the sector’s output. ONS statistics released earlier this month show that output is now 3.3% lower than at the same time a year ago. Private industrial work has taken a particular hit of late, and saw a drop of 13.4% year-on-year according to the three-month average for May, June and July 2011, compared to the same months in 2010. (5 October)

Company failures jump 11%

The number of property and construction companies falling into administration during the third quarter of 2011 was 11% higher than at the same time last year. Research by business advisory firm Deloitte showed that 117 firms were affected in the past three months, up from 105 in Q3 of 2010. (5 October)

Manufacturers predict gloomy 12 months

Construction manufacturers have started to report a fall in sales activity due to public sector cuts, according to the latest CPA State of Trade survey. ‘Heavy side’ manufacturers reported a deterioration in sales activity in the last quarter, though ‘light side’ suppliers still reported positive growth. Manufacturers were pessimistic about growth over the next 12 months with 94% of heavy side manufacturers saying that weak demand would constrain growth. The majority of manufacturers said they expected no significant change in exports of employment in the next 12 months. (3 October)

HOUSING

House prices edge up in third quarter

House prices rose fractionally for the first time in 18 months during the third quarter of this year, according to theHalifax house price index.Prices rose by 0.1% during the last three months, but fell by 0.5% on the more volatile monthly basis during September. The average price of a house in September was £161,132. House prices are still well down on last year, at 2.3% lower than September 2010. (6 October)

Prime Minister calls for new Tory housing revolution

David Cameron has called for a “new Tory housing revolution” in his leader’s speech to the Conservative conference. Speaking to delegates in Manchester, Cameron confirmed announcements made earlier in the week to boost housing supply, including the return of Margaret Thatcher’s right-to-buy policy. He said: “Because lenders won’t lend, builders won’t build and buyers can’t buy. We’re sorting this out, bringing back the right-to-buy and using the money to build new homes.” (5 October)

Government on track to provide land for 100,000 new homes

Housing Minister Grant Shapps has hailed the rapid progress of Government plans to release formerly-used public land with enough capacity to build up to 100,000 new homes by 2015. In a major boost for house building and Government transparency, departments with significant landholdings have published, for the first time, strategies that set out how their formerly-used land and property has the capacity to deliver more than 50,000 new homes. (5 October)

Gap between housing supply and demand widening

The gap between housing supply and demand is widening, a survey has found. The monthly national housing survey from property research firm Hometrack found that the number of new properties coming to the market in the nine months up until September grew by 22%, compared with an 11% increase in demand. The number of new buyers registering with agents in September 2011 was 2.6% lower than the number who registered in August, and the researchers expect continued economic uncertainty to contribute to a drop in demand as winter approaches. (3 October)

EDUCATION

Gove targets 50 London free schools by 2015

The government wants at least 50 free schools to open in London by 2015, education secretary Michael Gove has revealed in the latest sign of education department’s drive to increase the programme. The statement comes a month after eight free schools opened in London, with 24 now open nationally. Free schools are currently mainly procured through the academies framework for contractors, run by delivery body Partnerships for Schools. It is understood that this will continue to be the case for the next wave of free schools, with only a minority of work going to firms outside the deal through local arrangements. (5 October)

OLYMPICS

Plans revealed for Olympic site

The Olympic Park Legacy Company has submitted its first plans for the next stage of the Queen Elizabeth Olympic Park. The Legacy Communities scheme (LCS), the framework which will guide the long-term development of the park after the Games, covers 64 hectares. Five new communities will be built there over 20 years. They will open in phases from 2013, and the first residents will move in in 2015. The new neighbourhoods will be called Chobham Manor, East Wick, Sweetwater, Marshgate Wharf and Pudding Mill. The park will provide room for 8,000 homes, 6,800 of them in the LCS, while the Olympic Village will house a further 2,800 units. Around 40% of the houses will be family homes, and up to 35% will be affordable housing in line with the London Plan. (5 October)


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