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Vince Cable: Construction is "our way out of this mess"

Vince Cable has asked major contractors how they and the government can help tackle the UK’s housing shortage, acknowledging that “things are moving frustratingly slowly”.

In an exclusive interview with Construction News, the business secretary described construction as the “backbone of the economy” and said he wanted to see a “huge push” behind housing and infrastructure.

He has asked the UK Contractors Group – which represents the majority of major contractors – for views on how contractors and government can help tackle the housing shortage when they meet in a fortnight’s time.

Dr Cable described construction as “a very big chunk of the economy”.

The business secretary - who was at the Construction Products Association’s parliamentary reception on Tuesday - told CN today: “It’s not just important for the construction industry and house builders – 20 per cent of our manufacturing industry is made up of construction products; glass, bricks, piping.

“It’s the backbone of the economy and it’s often been neglected, and if we are going to get out of this period of economic crisis, the construction industry is a key driver, which is why I want to see a huge push behind house building and infrastructure.”

Mr Cable conceded that “things are moving frustratingly slowly” because the banking sector is dealing with “quite complex” problems such as regulatory issues.

“The government has financial problems of its own and we have to use the money carefully, but we have got initiatives launched like the Green Investment Bank, the government is trying to create a platform for the pension funds to invest.”

Mr Cable said the government is looking at guaranteeing projects to make them more attractive to investors who are averse to the construction risk.

“We are doing a bit of that; the principle of using the government balance sheet to guarantee some of the  risks… we do accept that in principle, but have to be careful; we can’t just offload all of the risks on to the tax payer.

“I think we are already seeing programmes on some big infrastructure projects – the area of weakness is housing, because housing starts are going down, not up, and we badly need the housing for social residents…and it’s a rich source of jobs – that’s the big area.”

Attending the launch of Kier’s new apprenticeship leaders programme, Mr Cable suggested that major contractors are “actually the people to drive housing” and asked UKCG chief executive Stephen Ratcliffe to come to a meeting they have planned for a fortnight’s time with views on how this can be taken forward with government.

“The big question we are asking in the government is if there is one way of driving our way out of this mess, it’s actually through construction and housing – it’s just getting the trigger,” he said.

The business secretary conceded there is frustration surrounding government progress on the private finance initiative and talks with UK pension funds about investment in infrastructure.

He said:  “I think we accept that there’s some frustration but the problems are quite deep-rooted; finance has dried up for traditional PFI; we are trying to remedy it.”

Mr Cable also said government has completed the first stage of the National Infrastructure Plan by laying out the 40 priority projects.

“The other (stage) is actually getting the projects to happen,” he said.

“We set up this sub committee of the cabinet – that I’m a member of – where we are taking the 40 biggest projects to make sure they come through with them.”

He said there are “some really positive things already happening” with ports at the Thames Estuary and Felixstowe, as well as in rail with Crossrail and High Speed 2, along with broadband telecommunications.

Mr Cable also dismissed reports today that HS2 is “effectively dead”.

“We are fully committed to it,” he told CN.

Government is also focused on ‘higher level apprenticeships’, similar to the initiative by Kier, where young people are trained for more senior positions.

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