Like a critically panned disaster movie, 2012 offers little for the construction industry to get excited about. Most will be expecting wooden performances from the principle players as they attempt to breathe life into an ailing script for an economic recovery just as the wobbly sets of UK industry threaten to fall and crush them at any moment.
However, don’t be completely fooled by the critics’ words, it’s not all doom and gloom in the building world. Just like some ‘straight to DVD’ flicks earn a cult following because they’re just so bad they become irresistible to watch, it seems there are those who refuse to be put off by damning statements such as the Governor of the Bank of England’s warning to banks to withstand the current “extraordinary serious and threatening” economic situation.
In steps an unlikely leading man of the construction industry, our Chancellor of the Exchequer, George Osborne. In his Autumn Statement Mr Osborne appears to have recognised that investment in construction projects can actually deliver sustained economic growth – gasps from the audience.
The Chancellor’s statement drew together a number of initiatives designed to free up the construction sector to act as the catalyst for growth, including: a promised £30 billion of additional infrastructure spending; the £400 million Get Britain Building fund to ensure funding for projects shelved due to financing issues; a mortgage indemnity scheme to reduce the barriers for first time buyers and a reinvigorated Right-to-Buy with the promise of one-for-one replacement with affordable homes.
This hurried script re-write may not win any Oscars, but it might just become a box office success if Osborne manages to get enough ‘bums on seats’ – specifically the well-padded derrières of our bankers. For without their financial lubrication his hopes for the construction industry to lead Britain out of recession are likely to seize up and stall.
While the announcement of a National Loan Guarantee scheme to back up to £20 billion of bank loans to small business is very welcome, the banks must be encouraged to back the industry as well.
As Julie Evans, Chief Executive of the NFB states, “The real question is whether this facility will simply enable SMEs already at the front of the queue to get cheaper loans (welcome as this is), or whether it will also support otherwise perfectly viable SMEs in sectors like construction, deemed toxic by the banks. Lending to the construction sector remains depressed and construction SMEs find themselves at the back even of the SME queue.”
It remains to be seen if the National Loan Guarantee bucks the trend and becomes the successful sequel to earlier failed mechanisms such as Project Merlin and the Enterprise Finance Guarantee scheme – designed to encourage the banks to lend to viable businesses.
I shall leave you with Empire magazine’s review of the movie 2012, a film that trades on any lingering fears that by ending their calendar on December 21st 2012 the Mayan’s have in fact predicted the end of the world.
2012: “Fundamentally terrible, but almost irresistibly entertaining. Its horrors get a tad monotonous in the mid-section, but it’s still a value-for-money hoot.”