Construction Industry

HC Deb 16 January 2003 vol 397 cc807-9

6. Mr. Hugo Swire (East Devon)

If she will make a statement on the Government's policy on the construction industry. [90937]

The Parliamentary Under-Secretary of State for Trade and Industry (Nigel Griffiths)

The construction industry makes a significant contribution to our economy, comprising 8 per cent. of gross domestic product worth £83 billion, and it employs more than 2 million people. It secures some of the most prestigious contracts worldwide. We are working closely with the industry through the strategic forum for construction to improve industry productivity. I know that the hon. Gentleman will join me in congratulating Mid-Devon, which is the only district council listed for beacon status in the rethinking construction category.

Mr. Swire

I most certainly wish to join the Minister in congratulating Mid-Devon council on anything that it does. However, it does not fall within my constituency.

When it comes to formulating construction policy, will the Minister bear in mind the very real problems faced by many smaller companies in the construction industry as they seek to obtain employee and public liability insurance? When those companies can obtain insurance, they are often faced with premiums that have risen by anything between 100 and 400 per cent. To date, the Government have promised an inquiry, but the construction industry requires action. When can it expect it?

Nigel Griffiths

The hon. Gentleman is slightly out of date. I have had discussions with the Federation of Small Businesses, the CBI's council for small and medium-sized enterprises and others. We at the Department of Trade and Industry are working with our Treasury colleagues and are being led by the Department for Work and Pensions to help companies to resolve the problem. The Office of Fair Trading will also report on part of this matter in the spring.

Mr. Michael Connarty (Falkirk, East)

My hon. Friend will know that a subset of the construction industry is the chemical engineering construction industry, which brings in several million pounds to the Exchequer from the work that it does overseas. Does he share the concern of the employers and the British Chemical Engineering Contractors Association that there is a substantial skills shortage in the industry? The fact that the Engineering Construction Industry Training Board has been abolished means that there will be a further problem. What efforts will be made to put in place a system to encourage employers in the construction industry to train people for the future of the industry?

Nigel Griffiths

I want to make it clear—I know that my hon. Friend will accept this—that there is not a proposal to abolish that board. The Construction Industry Training Board is a separate body and, according to its latest figures, 40,000 people are now starting construction courses. That is an increase of 14 per cent. over the decade. The board received more than £30 million last year to fund modern apprenticeships. We accept that this is a serious issue and serious measures are being taken to address it.

Mr. Henry Bellingham (North-West Norfolk)

A crisis is obviously facing smaller firms. What does the Minister say to a small specialist construction firm on the south coast that requires cover of £5 million to secure contracts from its regular customers? This year, that business was able to secure cover of only £1 million at a cost of £8,000 whereas, last year, £12,000 bought cover of £10 million. Such firms do not want reports in the spring; they want action now. Can he guarantee that the reports will be acted upon?

Nigel Griffiths

The House will note that there is not one suggestion from the Conservative party on how to resolve the problem. That is why the industry, representatives of small business and others in business have welcomed the fact that the Government are addressing the issue, both through the Office of Fair Trading and in working with the Association of British Insurers and the British Insurance Brokers Association to find a solution to a problem that is caused not by the Government but by long-term structural changes in the insurance industry and the propensity of lawyers to litigate more readily than in the past. All those factors are causing problems and forcing up premiums. We recognise that this is a serious issue and are addressing it in the most serious manner.

Mr. Gareth Thomas (Harrow, West)

Does my hon. Friend accept that the British construction industry would benefit enormously from the Olympic games being staged in Britain? If he does, may I encourage him to lobby the Secretary of State vigorously to support a London Olympic bid?

Nigel Griffiths

Of course we welcome anything that helps the construction industry and is affordable. I know that discussions are taking place with the London mayor who has a scheme that he believes is low-cost—my Treasury colleagues will be interested to have the details. We know that the construction industry played a tremendous part in revitalising and showcasing Manchester. That is a great lesson, and I hope that the Olympic bid committee will learn from it.

Bob Spink (Castle Point)

Since the Minister quite rightly accepts the importance of the construction industry to our economy, will he have discussions with his Treasury colleagues about removing some of the taxes that are holding some of the industry back, such as the construction industry tax, IR35, the aggregates levy and the landfill tax?

Nigel Griffiths

That is not what I heard from representatives of the construction industry in Nottingham yesterday when I presented an Investors in People award to TBL Construction. Obviously the construction industry has benefited from one of the best tax regimes in the world, with corporation tax at lower rates. It also benefits from the fastest growing economy in the world, which is perhaps why last year's output in construction marked the biggest annual increase in 12 years and why there are strong order figures this year too. We have addressed the industry's concerns—that is why it is thriving.