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Which party boosts construction?

ECONOMY - As the general election looms Brian Green looks back at construction output over the past 50 years to see which party has been best for the industry

THE RUN-UP to an election is a fascinating time for forecasters at polling companies but the mood of business forecasters tends to be more circumspect.

When a general election looms the normally accepted rule for economic forecasters in construction, outwardly at least, is to assume there will be no change of administration.

This is sensible, since the fog of confusion about which party is promising what, what their promises mean in reality and how likely it is those promises will be kept becomes thicker.

But it is tempting to look at the figures for the past 50 years to try and figure out how good for construction each party has been in power.

A quick look at construction's output since 1955 seems to show the Conservatives are the boom and bust party that Gordon Brown says they are.

But they have been in power for more of that period, so are more likely to have reigned over boom and bust, and they have had to contend with two massive oil price shocks that wreaked havoc on the global economy.

That does not excuse the cycle of the late 1980s and early 1990s but that was a global phenomenon powerful enough to throw the mighty Japanese economy into a spin.

Taking the average growth rate over an administration does not help much, either.

The Conservative Government of 1959 continued to produce the strong growth in output of construction that characterised the post-war period.

The administration, which ran to 1964, produced an annual growth rate of 6.3 per cent.The Labour Government that took office in 1964 saw an average annual growth of 1.4 per cent in construction output in the period to 1970.

When it left office in 1974 the Conservative Heath Government had seen output fall by an average of 0.4 per cent annually.

But there was the Barber boom, which saw a surge in activity in the middle of Heath's four years.

The decline continued in Harold Wilson's second reign, although the fall was far more modest - averaging 0.2 per cent per annum by the time Jim Callaghan left Number 10.

The years under Margaret Thatcher were like a roller coaster. But the net result after John Major departed was an average rate of growth for construction of 1.2 per cent over 18 years.

Tony Blair and Gordon Brown inherited an industry enjoying modest growth - a good base to start from.Their achievement to the end of last year was to deliver an annual growth rate of 2.7 per cent.

And while that steady growth appears to be waning slightly, there is no reason to think a slump in output is due in the next year, meaning construction will have enjoyed one of its best periods of sustained growth.

On output alone the Labour party may well have the edge but this is a narrow measure of an administration's success.

Moreover, how much success or failure is down to political levers pulled in Westminster and how much is down to the global economic climate is hard to tell.

There are many other measures that need to be assessed before judging how the political parties' performances have aided or hindered the construction industry.

No doubt the debate over which party favours construction most will rage in the boardrooms of contractors up and down the country.

But the real challenge for the Government is to provide the best climate and to use construction most effectively.

Whatever the outcome of the election, it is fair to assume that prospects for the construction industry should be set fair for a couple of years at least.

But, as Allan Wilen points out, in his expert view (see below) there is the major issue of improving the transport system to be addressed. Beyond improving Britain's transport infrastructure the next Government will have to remain focused on the environment. In both of these areas construction has a significant role to play and if these two issues are sincerely addressed the future should remain bright and in turn the nation as a whole will be better off.

Whether the next Government will rise to the challenge is a tough one to call.

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