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[May 2006]
Energy Increases in UK Add £1.3 Billion a Year to Price of Construction Projects
The new President of the Construction Products Association (CPA), John Colley, recently told an audience of industry leaders, senior politicians and Government officials that the increases and volatility in the price of energy were having an enormous impact on construction costs in the UK. As a result he said he was expecting the cost of construction projects to increase by £1.3 billion a year, including an extra £500 million on the cost of public sector projects over and above what has been budgeted for.
Speaking to more than 400 industry guests at the Annual CPA Lunch, John Colley said: "I still don’t believe the Government fully understands the dramatic impact the increase in the price of energy is having. Companies have reported increases of up to 300% over the last three years and these far outstrip the increases they face in their European operations, leaving UK companies at a considerable competitive disadvantage".
Mr Colley told his audience that the industry would continue to press Government about the consequences to the UK’s economy of the cost of energy and the difficulty faced by companies that have to take future investment decisions within the current energy climate. "We have responded to the Energy Review with a number of ideas," he went on, "but I am not sure how willing Government is to listen."
Mr Colley also highlighted other key issues in his speech, including sustainability and improving the quality of the built environment. About sustainability he said: "Over the last few months I have detected a dramatic shift in public opinion towards the problems of climate change and the need to be more efficient in the use of water and other natural resources. I am encouraged by recognition that our industry needs to be at the heart of the debate; we are not so much part of the problem, but have the potential to offer solutions to the problem".
He called on the Government to set a clear long-term framework of what needed to be achieved, but insisted that once set the Government should "get out of the way and let the industry deliver". He challenged the Government to hold the industry to account for delivering these targets on condition that they did not tell the industry how to do it, where to innovate, or which products offered the best solutions. He urged the Government to: "Let the market decide. Just as the Monetary Policy Committee has delivered far better interest rates than Government could, so our industry would deliver the right solutions if the Government stopped trying to micro-manage us".
Mr Colley also stressed the importance that Government should deliver on its commitment to improve the quality of the built environment and that by missing so many of their own targets, Government was allowing the UK to slip down the international table of business competitiveness, especially because of its poor transport infrastructure. He said it would be crucial to ensure a very strong case was made between now and the next Comprehensive Spending Review in 12 months time, if we are to reverse this unfortunate decline.
In contrast, he saw the Olympic Games as "a glorious opportunity to showcase the UK construction industry". He was confident that "the industry has the ability to deliver schemes that provide long-term value and a lasting legacy for the Thames Gateway and other parts of the country. It is an exciting challenge which I am sure will prove to be a great success".
www.constprod.org.uk
ENDS