CPA Bulletin

www.cpa.uk.net CPA Bulletin > August 2020 19 POLICY: 1 POLICY When writing a preview of what construction in the 2020s looked like for the February edition of the CPA Bulletin, I did not realise quite how the next few months would pan out. Admittedly the piece was written back in the time when terms such as ‘Covid-19’, ‘lockdown’, ‘home schooling’ and ‘easing’ became part of popular vocabulary. Since then, as has been well documented, the pandemic has raised a host of questions and issues not just for our industry or the wider construction sector, but what our priorities should be as nation as we move forwards in the coming decades. As outlined in the previous Bulletin, the government has set out a series of steps and measures to preserve jobs and keep companies functioning in the short-term. Against the worst recorded economic figures in post-war times - where construction output alone fell 40% in the second quarter to May (against ‘only’ a 35% drop in the wider economy), this was absolutely the right move to take. As lockdown starts to ease and the country begins its return to some form of normality, it is essential the next stage of the recovery involves government and business working together to secure the future of businesses which, through no fault of their own, are now at risk. Ten years on from the credit crunch, many commentators have looked at what lessons we can learn from the previous downturn, especially how the government reacts and what companies can do in helping this process. Firstly, there are several areas where the situation is different from last time. Structural imbalances in the economy and the then regulatory regime for financial services meant the credit crunch was in retrospect, coming for a long time. Coronavirus took only three months to impact on the global stage. While the pandemic has seen levels of demand collapse spectacularly, several commentators see the recovery being equally as rapid - a tick shaped return to growth against a more prolonged U shape. While some observers think this is at the optimistic end of speculation, that is not to say there is merit for such optimism. Last time, lack of credit and liquidity within the economy were key drivers of the recession, with real doubts as to the viability of the entire global finance system. Banks withdrew credit facilities overnight for many companies deemed to be operating in so called ‘risky’ sectors such as construction. While cash-flow even in the best of times remains a concern for companies operating in the construction sector, at the time of writing, we have not received similar reports this time from CPA members. Lessons have been learnt from regulators, and the government has supported companies through the Coronavirus Business Interruption Loan Scheme and the Job Retention Scheme. In addition, banks are under obligation to support companies they loan to and work with. As these state schemes come to their end, the challenge is what happens next? What the credit crunch did do was highlight the need for levels of government intervention unthinkable just a short space of time before. Successive governments from both ends of the political spectrum have recognised the need to be far more collaborative and engage with industry in preparing for the future, developing new strategies and ideas of what the coming decades look like. While state intervention and the role of government in picking winners was largely derided due to the failed industrial and economic policies of the 1960s and 1970s, industrial policy is here to stay in some form or another. Started under the last Labour government, industrial strategy policy is now accepted as a critical enabler in how businesses and government work together. The Construction Sector Deal and the role of the Construction Leadership Council (CLC) have shown how the government can work with construction in identifying the problems and coming together in working out the solutions. This is best exemplified with the publication of the CLC’s ‘Roadmap to Recovery’. Developed with the Department for Business (BEIS), the plan sets out how the industry can recover over the course of the next two years. It centres on areas such as sustainability, improving productivity, looking at new skills and technologies and building on the work construction businesses have already made in innovation and research. The main parts of the plan are to: • Get industry back to work wherever it is safe to do so • Maximise employment and retain key skills • Ensure a pipeline of future workload for all parts of the sector • Boost productivity to secure improved value • Transform the industry through technology & digitalisation. A series of taskforces and working groups are being built now to take this work onto the next stage. While elements of the recovery plan were in the original construction sector deal, Covid-19 has forced construction to refocus and develop new ways of working. On the back of this, the Prime Minister Boris Johnson used a visit to Dudley as an opportunity to outline the first stage of the government’s wider economic plan. Titled ‘Build, Build, Build’, the plan was publicised as a chance for the UK to emulate the New Deal of 1930’s America with a range of public building works and infrastructure projects. While there were no plans to build the UK’s own Hoover Dam, there were several noteworthy projects. Monies Covid-19 and Government Policy - Learning from the Past & What Happens Next?