The Construction Products Association has written to the chancellor in advance of his Budget statement next month, with a construction industry wish list. Items on the list include a VAT cut for domestic improvements that improve energy efficiency of homes and more money for export promotion.
Another idea is for the government to buy bonds in housing companies and use them as a conduit for quantitative easing.
CPA chief executive Michael Ankers said of the proposals: “Public sector capital investment will still fall 26% between 2010/11 and 2013/14 despite the announcement made last year for additional capital spending in housing, education and infrastructure. To ensure the UK economy is given the best possible chance for recovery, it is essential that government focuses on sustainable investment for growth.
“The 2012 Budget provides the Chancellor with the opportunity to introduce a package of measures to stimulate the economy and deliver growth. This should include a further rebalancing of public spending away from current expenditure and into capital investment, as this will not only generate economic activity and employment but will increase long term productivity as a result of improving the infrastructure of this country.
“However, key to delivering the infrastructure that the country needs is the attraction of additional private finance to compensate for the shortfall in public capital investment and the use of additional quantitative easing to raise levels of housing supply.”
The CPA suggests that by purchasing bonds through its asset purchase scheme in a company that provides homes, government could increase housing provision. This would also ensure that the quantitative easing is used in a manner that fully benefits the UK economy, the CPA argues, and that the Bank of England has another method for quickly withdrawing the finance associated with quantitative easing without distorting one particular market.
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