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The UK economy would have grown three times faster over the last year if the government had stopped the decline of the UK construction industry, according to new analysis of official figures published by the TUC today (Friday).

date: 29 May 2013

embargo: 00:01 hours Friday 31 May 2013

The UK economy would have grown three times faster over the last year if the government had stopped the decline of the UK construction industry, according to new analysis of official figures published by the TUC today (Friday).

The analysis shows that had construction output remained the same over the past five quarters economic growth would have increased by 1.2 per cent instead of just 0.4 per cent.

The UK construction industry has shrunk, overall, by ten per cent since the government came to power, the study reveals. Construction output is now at its lowest level since 1998.

The main reason for this fall has been recent cuts to publicly-funded construction projects, which account for a fifth of total construction output, says the TUC.

Since the election the government has slashed Treasury support for public construction works by over a quarter (27.3 per cent). During this period public money for house building has been cut by a fifth (20 per cent) and spending on school, hospital and transport building projects cut by over a third (37.8 per cent).

The fall in public sector construction projects has not been made up by the private sector, the study shows. Private sector funded construction works have declined by 4.5 per cent since the government took office.

The government's failure to support the construction industry has also resulted in huge job losses, says the TUC. The research highlights how construction employment has fallen by 70,000 over the last year and by 89,000 since the coalition took office.

In addition, wages for those workers who have managed to survive the cull have shrunk in real terms by over £3,000 a year over the course of this parliament.

Unless the government provides more public funding the construction industry will continue to be a drag on economic growth, says the TUC.

The TUC wants the government to kick-start an ambitious programme of affordable house building and investment in infrastructure projects. The government's refusal to borrow to invest, and instead wait for private money that isn't arriving, is preventing projects getting off the ground, says the TUC.

Research carried out for the TUC by the National Institute for Economic and Social Research (NIESR) shows that a £30bn investment in infrastructure would boost growth immediately and increase economic output by 0.5 per cent a year on a permanent basis. It would also pay for itself in the long run, if implemented in 'crisis' times.

TUC General Secretary Frances O'Grady: 'The government's failure to support our construction industry has been terrible for jobs, growth and wages.

'This research shows what happens to the economy when you cut back on vital state funding and why we need urgent investment in new affordable housing and infrastructure projects.

'Without this stimulus the construction sector will continue to struggle and slow down our recovery.'

NOTES TO EDITORS:

Impact of construction industry output on growth

2012 Q1

2012 Q2

2012 Q3

2012 Q4

2013 Q1

Total

Production

0

-0.1

0.1

-0.3

0

-0.3

Construction

-0.4

-0.2

-0.1

0

-0.1

-0.8

Services

0.2

-0.1

0.9

-0.1

0.4

1.3

Total (Does not sum due to rounding)

-0.1

-0.4

0.9

-0.3

0.3

0.4

GDP If construction flat

0.3

-0.2

1

-0.3

0.4

1.2

Source: Office for National Statistics

Construction output at its lowest point, when the government took office and in the latest quarter

1998 Q3

2009 Q4

2010 Q2

2013 Q1

Construction output

84.6

100.0

93.9

84.7

Source: Office for National Statistics

Public spending on construction projects (£million)

New Homes

Other new work (schools, hospitals, transport)

Repair and maintenance

All Public works

All Private works

All work

2010 Q2

1,063

3,367

1,620

6,050

20,160

26,209

2010 Q3

1,175

3,464

1,607

6,246

20,714

26,961

2010 Q4

1,173

3,399

1,609

6,181

20,291

26,473

2011 Q1

1,146

3,317

1,530

5,993

20,483

26,475

2011 Q2

1,149

3,177

1,484

5,810

21,006

26,817

2011 Q3

1,086

3,068

1,460

5,614

21,220

26,835

2011 Q4

1,056

2,792

1,460

5,308

21,306

26,613

2012 Q1 (R)

949

2,590

1,483

5,022

20,249

25,273

2012 Q2 (R)

905

2,473

1,475

4,853

19,744

24,596

2012 Q3 (R)

908

2,411

1,517

4,836

19,236

24,072

2012 Q4 (R)

885

2,263

1,501

4,649

19,568

24,218

2013 Q1

849

2,094

1,453

4,396

19,244

23,639

Since election

-214

-1,273

-167

-1,654

- 916

-2,570

Since election (%)

-20.1

- 37.8

-10.3%

- 27.3

-4.5

-9.8%

Source: Office for National Statistics

Job losses in construction industry (000s)

2010 Q2

2012 Q4

Total

Jobs

2,078

1989

-89

Source: Office for National Statistics

Wage losses in construction industry

May 2010

March 2013

Weekly loss

Annual loss (£)

Annual loss (%)

Average weekly wage

£536

£522

£14

-£728

-2.6

Real terms average weekly wage

£536

£469

-£67

-£3,468

-12.4

Source: Office for National Statistics

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