Posted on Thursday 14 October 2010 byUlster Business
The construction sector could be among the biggest losers from the impending public sector spending cuts. Symon Ross asked representatives from some of the related professions what actions they believe would best revitalise the industry
It is an often quoted statistic that every £1 invested in construction generates £2.84 in economic activity.
It is a number that is meant to illustrate that a recovery in the construction sector could play a big part in lifting the whole economy and improving society.
As it stands, the recession has left a large dent in the local industry.
In the last two and a half years employment in the broad construction, property and building materials sector has fallen by over a quarter. It is estimated that as many as 30,000 people have lost their construction-related jobs. Some 13,000 ex-construction workers are now claiming unemployment benefit. There are also now few opportunities for apprenticeships, lots of workers are on short time or have taken pay cuts and many individuals have had to look abroad to find work.
In the build up to the Comprehensive Spending Review the construction industry made sure that those at Stormont were well aware of how important it is. The Construction Industry Group of Northern Ireland contacted every MLA to impress upon them the need for collective responsibility and quick decisions as they engage in debate on the future Northern Ireland budget, presenting a 10 point action plan they believe would boost the economy.
• Prioritise investment in building and maintenance of infrastructure.
• Provide assistance to construction companies seeking to win work abroad.
• Change the status of the NI Housing Executive so it can borrow funds against existing stock.
• Implement the recommendations in the Review of Planning.
• Improve the availability of reasonable lending facilities to local firms.
• Use private finance to deliver infrastructure projects where value for money has been established.
• If water charging is introduced, ringfence the revenue generated to reinvest in infrastructure.
• Incentivise and facilitate the speedy retrofitting of housing stock to improve energy performance.
• Implement proposals for fully employed construction apprenticeships
• Continue to reduce regulatory burden on local business.
Here, we talk to three representatives from professions linked to construction to get their views on what needs to happen to ensure the sector can get back on its feet.
Norman Hutchinson, President of the Royal Society of Ulster Architects says the situation in architects offices in Northern Ireland is pretty grim in terms of available work.
Housing development and commercial offices – the sort of work many smaller architecture firms relied on – have all but dried up.
“I think it is fair to say that work is desperately short, there are very few new projects coming through to local offices and there’s real fear for the future,” he said.
“In the last year we’ve already got the feeling that there are a lot of public sector projects that are just not being released. There are some very high profile projects, the new police academy, the project at the Giant’s Causeway, the Signature Project at Titanic Quarter, the new Lyric building, but right at this minute it is absolutely desperate in architects offices.”
The RSUA president notes that a lot of the bigger architecture offices have already gone through their second or third round of redundancies and that some well known practices have cut staff numbers by a third or a half. The situation in the Republic is worse with suggestions work in architects offices has gone down to 15% of peak levels.
Though a lot of firms are jumping across the water to work in Scotland and England, he believes most local practices do not have the scale to compete on price outside of Northern Ireland.
Releasing some public projects would get work into architects offices and mean developments are prepared in the event of an economic upturn.
“In a time when there is a recession, why in Northern Ireland can we not get projects released through to the architects offices and into the design offices, quantity surveyors, mechanical, electrical and structural engineers? That would take the pressures off those offices and mean that whenever the recession lifts we have sets of drawings and everything done so that we can press the button a build a school wherever it may be.”
If this doesn’t take place we risk a skills shortage as young architects are forced to look elsewhere for work, he believes.
“The younger architects will travel. They will try around Northern Ireland to get a job. If there’s nothing doing they will go to Scotland, London, Australia or wherever, and they will not be back, they’ll stay away. As time goes on, as things pick up, you’ve lost that skills base.”
Ben Collins, the Northern Ireland director of the Royal Institution of Chartered Surveyors, says that while he has no clear idea of the level of redundancies that have taken place among surveyors, the recession has obviously had an impact.
House prices have fallen and transaction levels are low, with the lack of first time buyers able to get finance having a knock on effect on the market.
“It has been difficult across all professions,” he says. “While we will have to wait to see what the impact of the Comprehensive Spending Review is, since the emergency budget in June we have seen a greater degree of caution.”
He adds: “Going forward we realise there are going to be cuts in capital spend, that’s unavoidable. But for our perspective we’re very keen to emphasise the importance of investment in infrastructure for future competitiveness as well as the high economic input this sort of investment has.”
Collins says continued investment in infrastructure is necessary to keep Northern Ireland competitive as a region and to ensure that we retain a quality skills base. He says Government needs to work with the construction industry to develop a new investment strategy that prioritises key areas for action.
“There’s a wide acceptance that the economy needs to be rebalanced to allow the private sector to grow. But at a recent conference I attended Planning Service officials said there were 350 outstanding renewable energy planning applications. There is clearly an opportunity there to bring in private sector investment to suitable located renewable energy applications,” he says.
“At a time when Planning Service is under pressure, it is an area they should look to see whether it can be fast-tracked.”
Collins adds that the downturn has placed a greater importance on qualifications in the sector and has led RICS to launch an associate membership as a non-graduate route into the profession.
“In the boom times there is less of a focus on the skills of professionals, if everyone feels they are able to do well and there is less focus on resources. What we are finding now is that there is a keener focus on ensuring that people carrying out work on land, property and construction have the right levels of skills and expertise. Whether its is a piece of land or property people want to get best value from their assets.”
Wendy Blundell, regional director for the Institution of Civil Engineers, acknowledges that the spend on physical infrastructure in recent years has somewhat shielded the profession from the worst of the recession.
But she says while many new assets have been funded through the public purse, civil engineers are looking at what comes next, and are keen to highlight the need for ongoing investment in and maintenance of infrastructure.
“In recent years there’s been quite a bit pumped into infrastructure compared to the rest of the UK, but we probably needed it after years of under funding. The key issue is that infrastructure is vital. It is just trying to make sure that our politicians and policymakers don’t forget that, because it is all for the public good,” she says.
“The concern is that while education and health needs are all vying for a smaller pot of money, the pipes beneath the ground are not visible to people so they are only an issue if they start to fail. They are perhaps not as relevant to the public as perhaps education and health are until the infrastructure starts to fail. The example would always be New Orleans and what happened when the infrastructure failed. Fortunately, we have never had that sort of catastrophic disaster here so infrastructure is not as high up people’s agendas as we think it should be.”
Civil engineers are involved across the spectrum of transport, ports and airport, roads and rail, energy and delivery of energy, water and waste water. She says they are prepared for the challenges ahead.
“We all generally have to be much more creative with the resources we have. There are opportunities out there in trying to develop a low carbon economy. We are sitting poised to grasp those opportunities,” says Blundell.
“It all tends to come down to funding mechanisms and the government are quite keen to get infrastructure taken off their balance sheet and taken on by the private sector. But in order for that to happen they must create a new low risk framework for encouraging investment,” she adds.
“If governmentt haven’t got the money to fund projects themselves, we have to look at alternative sources of funding. But those are empty words unless we actually think through innovate new ways to fund projects.”