§ Mr. Sydney Chapman (Chipping Barnet)I am grateful for this opportunity to raise before we adjourn for the short Whitsun Recess-although, looking around, I think that many of us seem to have adjourned already-the problems of the construction industry.
I very much appreciate the presence of my hon. Friend the Under-Secretary of State for the Environment, the Member for Hampstead (Mr. Finsberg), who 946 has specific responsibility for the industry, among his many interests.
The construction industry is the greatest industry in the country, whether measured by manpower or output. Before I remind the House of some basic statistics, it may be prudent for me to declare an interest as an architect, a planning consultant and a non-executive director of a property company. About 1¼ million people are directly engaged in this huge industry. If we add the hundreds of thousands who produce materials or who provide services or manufacture equipment for the industry, we see that it is no exaggeration to say that we are talking about the livelihoods of almost one in 10 of the working population.
It may be appropriate to make a simple comparison. The 1¼ million compare with about ⅓ million full-time agricultural workers. One-third of a million is also the total number of people engaged in the vital industry of mining and quarrying. Even in the manufacture of all vehicles the figure is only about ¾ million.
Last year, the value of the construction industry's output was about £19,000 million-well over 10 per cent, of the gross domestic product, and well over twice the total gross output of agriculture, which was about £7,500 million.
What happened to this great industry during the 1970s must be a cause of deep concern to the whole House. While I shall be critical of both the Government and the industry, my criticisms of the Government could be levelled equally at successive Administrations.
In the past decade the number of construction workers has fallen from about 1½ million to 1¼ million. The latest figure that I have, received in answer to a question that I put to my right hon. Friend the Secretary of State for Employment earlier this week, is 1,225,000 in Great Britain. This decrease of well over 250,000 in the last decade, put another way, means that construction workers have fallen in proportion from 6 per cent, to 4.8 per cent, of the total working population.
On the less happy note of unemployment, it is worth recording that unemployment in the industry has fluctuated wildly during the decade. It was only— 947 I use the word "only" advisedly-about 100,000 in 1973. In less than three years it grew to over 200,000 by 1976. The latest figure of which I am aware is 192,000, or about 13½ per cent, of the total jobless in Britain—and at a time when it is a very high figure. The figure of almost 200,000 is the highest of any industry. It has been persistently and consistently so and remains about three to four times the national average.
The value of the output, in historic figures, of this industry has risen considerably in the last 10 years, from about £5,200 million to an estimated £19,000 million last year. But these figures, at historic prices, conceal what was a modest increase in the real output of the industry up to about 1973, now regarded as a golden year. They conceal a massive fall in the industry's real output since then.
The simplest and easiest illustration is that in the first four years of the 1970s the difference between the increased value of the output of the construction industry, less inflation, was about plus 30 per cent. In the last six years, the figure, sadly, was about minus 30 per cent. It is obvious that the construction industry is a high-risk, insecure sector in which to earn a living. I call in aid the vast number of bankruptcies that take place among building and construction firms.
The Government are the largest client of the construction industry. The industry suffers when Governments find it necessary to cut back on their public sector capital expenditure programmes. It saddens me to have to say that public sector construction work has declined by about 15½ per cent, since 1973. Because there was a modest rise in the two years after 1973,1 reckon that the decline amounts to about 25 per cent, in the last four years. Under the Government's plans the programme will decline by another 3 per cent, this year, or by over 8 per cent, if the nationalised industries are excluded. These figures are taken from the most recent Government White Paper, "The Government's Expenditure Plans 1980–81 to 1983–84".
If the construction industry is suffering acute problems in its recession, these are magnified in the civil engineering sector, which has been badly hit. The 948 latest report of the Federation of Civil Engineering Contractors, in its work load survey of last month, pinpoints yet again the continuing deterioration, with small firms being particularly badly hit.
The situation is not all doom and gloom, either in the public or the private sector. One buoyant part of the construction industry is the repairs and maintenance sector, which now represents over one-third of total output. Enterprising contracting firms have been looking overseas. There has been an increased contribution by British firms in the world's development programmes, not least in the Middle East. Even in this respect, however, there has been a substantial cutback in orders over the last year.
The best thing for the private sector would be a significant reduction in the record high interest rates. That will, one hopes, come in time. I wish to recognise the Government's achievements during their first year of office, for this vast industry. I refer to the changes made in the most recent Budget, in particular, to development land tax, the introduction of allowances for small workshops and industrial building allowances. Help has been given to many small firms. It should be remembered that the vast majority of building and contracting firms are small businesses—the Len Faircloughs of the industry.
I pay tribute to the Government also for abolishing office development permits, which were an unnecessary addendum to our planning legislation, and the partial abolition of industrial development certificates. I hope that the Government will practise what they preach. I look forward to much more speedy planning decisions. I am not saying that all applications should be passed, but it is clearly either right or wrong that a certain development should take place on a certain site. If it is wrong, the applicant should get a refusal. If it is right, he should get an acceptance. It makes the determination of an application no less right or wrong if the decision is delayed for months on end.
I welcome the Government's resolve to speed up the appeal procedures. I welcome especially some of the specific measures that have been put forward. I have less confidence that the Secretary of State will be successful in achieving a simplification of the building regulations. 949 As an architect with 20 years experience, I believe that the building regulations are unnecessarily cumbersome and comprehensive and that, in a sense, they have become self-defeating. They could be simplified without prejudicing safety on the site, the safety of materials or the security of people.
I welcome the initiative that the Government propose to take with regard to enterprise zones. I applaud all these attempts to try to minimise the bureaucracy of the construction industry. Compared with other countries, however, we take too long between the concept of a development project and the actual construction starting on site. I refer the Minister to a recent speech by Mr. Nigel Mobbs, chairman of Slough Estates, one of the leading development companies, who is also president of the British Property Federation. The research carried out by his company is worth close examination.
I understand fully that this great industry has far too little political clout in the corridors of power. In one sense, that is not its fault. In another, it is. Unfortunately, workers in the construction industry are evenly spread throughout the United Kingdom. There are no construction seats, as there are farming, car manufacturing and mining seats, waiting to be won or lost at the drop of an electoral threat or promise. Nevertheless, I believe that the construction industry has failed to promote itself as a political pressure group. Its disparate parts lack unity.
One is always making the comparison-perhaps now boring-between the political influence of the construction industry and the political influence of the farmers, under the umbrella of the National Farmers Union. I frequently make the point to the industry that farmers are different, unlike construction workers. There is a greater difference between the hill farmer in Cumbria, the crop-sprayer in Cambridgeshire and the dairy farmer in Cheshire than there is between an architect, a builder, a concreter and an engineer. Yet the farmers seem to unite under the umbrella of the NFU, which is a political force to be reckoned with, whereas those in the construction industry seem unable to unite to present a single voice in the corridors of power. 950 They can do much to promote themselves.
Another problem is that development is generally not popular. I have only to mention the recent developments in our countryside: the way that the town always seems to be encroaching on our green and pleasant land. Many people—I count myself a conservationist—rightly object to the replacement of some of our old buildings with modern ones that we do not like or which seem to be out of scale with their surroundings. Of course development disturbs the environment. We are all concerned about that.
Although I am a strong supporter of the conservation movement, I see a difference between protecting and conserving our great architectural heritage and preserving a mediocrity. We cannot accept that all parts of all our towns should be fixed in aspic and that there should be no new developments. The construction industry should do much more to promote this image.
If development is unpopular because of the noise of building and the disturbance to the environment, anyone operating a development should display a board on the site saying, for example. "This job is providing so many jobs for construction workers ", or "This building, when completed, will provide better working or living conditions for so many people ". Not least, such a board could say that the building would provide so many hundreds or thousands of pounds for the local rates, which will in turn be able to provide necessary services. I put those suggestions particularly, through the Minister, to the industry.
The Government have a crucial role to play in this great industry. I have said that the Government and their agencies are the largest clients of construction. The industry is a long-term investment sector and needs to plan well ahead. With the deepening recession that is embracing this industry, there has been a steady drift of skilled craftsmen from construction. Too few apprentices are being attracted into the industry.
Although one appreciates the reasons for not publishing the detailed analysis of capital expenditure on construction work beyond this year in the White Paper, "The Government's Expenditure Plans 1980–81 to 1983–84", the Government 951 should publish and stand by a reasonable minimum level of public sector construction work in the coming quinquennium.
I appreciate the political problem for successive Governments. With our recurring stop-go economic crises, it is politically much easier for Governments to cut capital programmes than to cut many current expenditure programmes. It is much easier to delay the building of a road by a year or two, or the building of a sewage works by three or four years, or to build fewer schools this year with the promise to build them next year, than it is to cut the maximum increase that the Government might want to give to retirement pensioners. So there is a political problem, but the Government must be courageous about capital investment programmes.
This hard-pressed industry wants to be reassured by the Minister that, in addition to a minimum level of guaranteed public sector work, in a smooth flow, so that they can plan ahead, there will be minimum bureaucracy—the Government have made a good start on that—speedier decisions on applications, whether relating to planning, building or fire regulations, and a plentiful supply of appropriate land for development.
In the last decade, urban developments have been eating far too much into our valuable agricultural land, while thousands of acres have been rotting, derelict, in our urban areas. I am glad of the new emphasis on promoting development in our inner city areas.
We need, above all, fair fiscal policies and a recognition that our economic regeneration depends upon adequate supplies of modern factories and other commercial buildings and an adequate infrastructure for those buildings, whether it be roads or public utilities.
To have such things is to make the best investment in the economy and therefore in Britain's future. It will also be the best vote of confidence that the House can give to our greatest industry.
§ 12.6 pm
§ The Under-Secretary of State for the Environment (Mr. Geoffrey Finsberg)I am sure that the House is grateful to my hon. Friend the Member for Chipping Barnet (Mr. Chapman) for raising this 952 issue. I congratulate him on his luck in the ballot. I was never so lucky in 10 years of trying. However, I hope that he does not use his luck too often on the day that we adjourn for the recess.
It is to my hon. Friend's credit that he chose to introduce a debate about the construction industry, which, as he rightly says, does not get as much attention as it should in this House. There is no denying the importance of the construction industry to the national economy. The industry had a total output of £19 billion in 1979, which represents about 11 per cent, of GDP and 20 per cent, of industrial output and is the largest employer of male labour in the country. It is an industry on which we all depend in one way or another.
My hon. Friend raised a number of points of concern to the industry and I will try to cover as many of them as I can in the time available. The main point on which he concentrated attention is the falling work load of the industry, which he says is occasioned by the Government through cuts in public expenditure.
Of course I entirely appreciate the fears my hon. Friend expresses about the prospects for the industry, but the Government must have regard above all to establishing a sound basis for national prosperity. This, as we all know, means halting the rate of inflation. To this end the Government have embarked on a policy of controlling the money supply. An essential and painful element of this is the need to rein in public expenditure. Only by reducing public borrowing will we get interest rates down and stimulate development.
Construction is, after all, the most pervasive industrial activity in the economy and, indeed, in most public spending programmes, and there is no way in which it can be insulated from these effects.
The alternative is more public expenditure, more inflation and, in the end, more State control—the inevitable results of Socialism. I am sure this is not the road down which the industry or my hon. Friend would want us to lead it. The only guarantee of the long-term prosperity and freedom of the construction industry is a sound economy.
The burden of my hon. Friend's criticism has been that in the process of 953 cutting public expenditure capital has borne a heavier share than current. He argues that successive Governments, in looking to reduce public expenditure, appear always to take the easy way out.
In this respect the Government are not behaving differently from any other body in similar circumstances. There are always continuing commitments to be met while capital investment can be postponed or cut back. Businesses operate in this fashion and households, too, are no different. One will occasionally put off buying a new washing machine. One cannot always put off repairing a pane of glass.
No one, therefore, should underestimate the difficulty of cutting expenditure in current terms. It is not easy, but we are grasping the nettle. My right hon. Friend the Prime Minister announced only last week plans to reduce the size of the Civil Service by 75,000 over the next four years. In addition to the substantial start already made in my own Department we are giving positive encouragement to local authorities to root out waste and inefficiency and thereby cut back on their use of manpower wherever possible. It would therefore be to misunderstand our purpose if anyone were to claim that we have avoided the difficult questions.
We are of course aware that there are many areas that might benefit from additional spending on infrastructure either for expansion or replacement. We cannot at this stage afford to spend on these areas what we do not have. Only when the economy is on a sounder footing shall we be in a position to consider devoting a higher proportion of our resources to public expenditure in these areas.
As to my hon. Friend's plea for more information about the Government's forward spending plans, I cannot add anything to what my hon. Friend the Minister for Housing and Construction told him in reply to a question earlier this week. We cannot tell him any more than we said in the White Paper. Decisions have not yet been taken on allocations within the main programmes for the forward years. In any event, I wonder whether the figures are really as valuable as is often claimed. It is widely accepted that all Governments' forward spending plans are frequently subject to change. If I were taking decisions about the future of my company I should certainly 954 view them with caution.
It would be a mistake to paint quite such a gloomy picture for civil engineering as my hon. Friend has done. The figures certainly show that there has been a decline in recent years in some of the traditional areas such as road building—about which my hon. Friend knows a lot—as a major proportion of the motorway programme has reached completion. Also, there have been fewer schools to build as the country's population no longer grows at the previous pace.
I think, however, that it would be a mistake to concentrate solely on the decline in these areas and to ignore large programmes elsewhere in the public sector undertaken primarily by the nationalised industries—electricity, coal, gas and railways—which this year are likely to show an increase on construction spending over the previous year.
I was a little surprised at what my hon. Friend had to say about the falling number of apprentices coming into the industry. My information is that more new apprentices registered with the National Council for the Building Industry last year than in any year since 1975 and that this trend continued into the first quarter of this year. Nevertheless there is a decline taking place in the overall work load of the industry-a point on which my hon. Friend concentrated. The Government fully understand this and are concerned about the need to maintain an industry capable of responding to the nation's needs when the economy picks up.
Too often in the past we have seen that when that happens overheating takes place, because the industry is not ready. We are, therefore, determined to take whatever measures we consider necessary to facilitate development elsewhere in the economy. I would like to remind the House of some of the measures that we have taken to assist the construction industry in the 12 months since we assumed office.
We have taken steps to speed up the release of land for development. One cannot build unless the land is available, and the supply of land has been one of our first priorities. We have abolished the nonsensical arrangement whereby Crown and public land had first to be offered to public agencies. That is a 955 grossly irresponsible waste of time and a method of shuffling bits of bureaucratic paper from one Department to another and to local government as well.
We have put an end to the Community Land Act, along with the red tape, uncertainty, delay and high costs involved. We are taking powers to designate districts where land registers are to be compiled. On the housing front, we have asked all local authorities to co-operate with the house building organisations in taking the necesary steps to ensure that five years' supply of land for housing is always available.
We have taken action on several fronts to streamline and simplify the planning system and to speed the handling of applications, structure plans and so on. We cannot do without planning altogether, as my hon. Friend rightly said. Neither should we have to suffer a planning system that stifles initiative and prevents investment. I wish that planning committees would remember that the longer a planning application remains in the "In" tray someone else's money is being tied up, and not theirs.
§ Mr. ChapmanI am glad to hear my hon. Friend say that. Some major planning applications cannot be compared with minor applications, and I understand that the Government have plans to exclude more minor developments from the need for planning application. I support that. Does my hon. Friend agree that since Parliament has laid down a statutory period for determining planning applications, namely, two months, it is incumbent upon all planning committees and staffs to see that a determination is given within the statutory two months' period in the vast majority of planning applications?
§ Mr. FinsbergI certainly hope so. I also hope that developers were not under the impression that if they demanded a response in two months, and thereby forfeited deemed refusal, it would stand them in bad stead with that authority on another occasion. There is a feeling in the industry that a certain amount of blackmail is used occasionally. Where there is delay, and where developers feel that they are being subjected to delay unfairly, I hope, as my right hon. Friend 956 the Secretary of State said, that they will let us know. That is important. I would have thought from my experience in local government that in the bulk of cases there is no reason why decisions cannot be made within two months.
We have set in motion a review of the building control system, and the views of my hon. Friend are welcome and interesting. Office development permits have been abolished altogether and outside the assisted areas the threshold for industrial development certificates has been raised to 50,000 sq ft.
We are taking powers to regulate local authority direct labour organisations. The case for legislation on direct labour is overwhelming, and action is long overdue. There are endless examples of overspending and abuses within direct labour organisations—all at the ratepayers' expense. Those abuses are also at the expense of the private contractor, who often has to pick up the tabs in his extra share of the rates. Conractors also suffer because they are denied work by some councils merely to protect their direct labour organisations from competition.
Our proposals will ensure that DLOs have to win most of their work in fair competition and that they bear their proper share of overheads and earn a rate of return on capital employed. The days of phoney accounting, which we have seen too often, are over. We are determined to cut waste and inefficiency and to ensure that local authorities use contractors unless DLOs achieve the targets that we set them.
We are setting up enterprise zones in inner city areas. Surely that is one of the most exciting oportunities for development ever introduced by Government. We are stripping away bureaucracy and giving the private sector the opportunity to show what they can do when left to get on with the job.
In this context we are, of course, also establishing urban development corporations in London and on Merseyside. They will also provide a focus to attract investment from private sources and will take the lead in land reclamation and the provision of infrastructure to get things moving.
957 There are other measures that are of direct or indirect benefit to the industry. There are the 100 per cent, capital building allowance for small workshops, special measures to assist small firms, the encouragement of low-cost home ownership, and so on.
If anybody doubts our earnest of intent towards the construction industry, I suggest that he examines what we have achieved in 12 months. We have taken all the steps to facilitate development. Nobody can say that they are inconsiderable. I cannot offer an immediate prospect of an increase in public spending but we are creating an environment in which private in vestment will be encouraged and initiative rewarded, and in which there will be an opportunity for incentives to work.
It is not all grief and sorrow. I am sure that my hon. Friend accepts that. We are creating the climate of opportunity. It is up to all concerned to grasp the opportunities and help to get the economy moving again.
I repeat that there are only two roads to follow. The first, to the left, drops ever more sharply until we fall into economic chaos and disaster. On the road that we, have chosen—to the right—opportunity is given a chance, initiative is encouraged, and money is again worth having and earning. The construction industry will have an opportunity to prove to the nation that its reputation is well deserved.