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Tory trouble for construction?

The impact of a conservative election victory on future UK investment in the built environment has been discussed in the new report, 'Building a conservative britain'.
Key issues for the construction industry include the conservatives' preference for spending cuts over tax hikes, their focus on local governance and the likelihood that major schemes such as Building Schools for the Future will be trimmed to cut the budget deficit.

The 128 page report, compiled with the help of construction analyst Glenigan, says tight public sector funding and the desire to protect frontline services will severely constrain the resources available for construction projects. Routine repair and maintenance contracts will be affected because such work is typically funded from current budgets and will have to compete directly with frontline resources.

The report said the need to tackle the budget deficit will also severely limit available government funds for capital projects. The conservatives will also look to increase private funding in education and social housing.

The party's intentions to overhaul regional planning and transfer more powers to councils or sub-regions are a concern for the construction industry. While streamlining planning may be beneficial long-term, the immediate consequences will be a lack of mechanisms to enable major region-wide projects to get going, while local authorities' likely focus on frontline services will see many ditch capital investment if they are able to. The reforms could increase the scope for councils to block housebuilders' efforts to bring forward sites for housing development.

Infrastructure and utilities are likely to remain areas of significant activity. Labour's emphasis on nuclear and renewable energy will also be maintained.

The report says indirect support for the industry should emerge from proposed cuts to the main rate of corporation tax to 25p, a 20p rate for small businesses, a six-month deferral of VAT bills, a pledge to reduce corporate regulation by 5% and scrapping of stamp duty for first-time buyers.

The report is available to purchase for £795 via www.glenigan.com/conservative
14 January 2010

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