FOR Scotland’s battered construction industry, hope clings to those “shovel-ready” projects to stimulate activity and get the economy moving forward. But hope is wearing thin.
Problems with funding, uncertainty over long-term government commitment and planning red-tape and delays continue to bedevil projects where the shovels ought to have been picked up and swinging many months ago.
The construction sector well knows the time it can take from a commitment to build to seeing action on site. Everyone knows there are planning and protocol, politics and process to work through. But this pipeline of paperwork today seems longer than ever.
This matters because building firms are running out of time. They can hang on only so long before the banks throw in the towel and the administrators move in.
It is the length of this downturn, more than its depth, that is killing business.
In recent presentations I have used a simple but dramatic chart to illustrate this point. It shows the number of quarters it took in previous recessions for output to recover to the level it was at before the downturn began.
In the 1980-81 and the 1990-92 recessions it took 13 quarters. In the 1930s Great Depression it took 17 quarters. In the current downturn it is going to take, on the basis of latest Office for Budget Responsibility forecasts, 27 quarters.
A normal business might have the resources to endure a downturn for six months. A downturn lasting 18 months or more will cause most to sweat. A downturn lasting three years will see many businesses failing. A downturn set to last more than six years will put whole sectors to waste.
Today it is retail where the towel is being thrown in. Before long, I fear major casualties in the construction sector. The report last week from the Construction Skills Network bluntly warned of what lies ahead over the next five years: the sector would continue to shrink until at least 2017, having fallen by 13 per cent last year alone. And around 2,000 jobs are set to be lost every year over the next five years.
The need for swift action is obvious. Politicians can declare an impressive list of shovel-ready projects. But the reality is a slow, grinding and cumbersome planning process.
In a Holyrood debate last week on the planning system, Scottish Conservative housing spokesman Alex Johnstone spoke of a system in “meltdown”. He highlighted research showing that it is currently taking more than 80 weeks for a major planning application to make its way through complex council systems.
He added that a proposed 20 per cent hike in planning fees would do little to address the overall funding crisis within councils across Scotland.
Instead, he added, the issues would be better addressed by looking at the number of wind-farm applications which besiege local authorities across the country on a weekly basis. “That is not good enough when we have a construction industry shedding jobs all the time and in desperate need of new work,” he said.
His words will have resonance, not just for construction firms hanging on desperately for that “shovel-ready” work, but also for many households whose building applications can still take ages to grind through a local authority system marked by petty bureaucracy, staff absences, illnesses and holidays and shuffling of responsibility from one desk to another.
Last week a reader wrote to me regarding the astonishing delays over his family’s planning application. He applied to his local council in May 2012 for permission for a three-bedroom single-storey house to enable the family to continue to care for their 27-year-old disabled son. The application was refused last September by a single planning officer under delegated powers. An appeal was submitted to the council’s local review body in October. As we entered the new year the family was still waiting to hear whether it would be considered or not. A date has at last been set for the appeal hearing.
Just to get to this stage, however, the family had to employ a planning consultant and a planning lawyer to help with the appeal. Even then, the family does not have the option of its appeal being decided by a reporter acting for the Scottish ministers.
How on earth could it take so long to appraise this application and to arrange an appeal hearing? Why should the family have been exposed to such delay, worry and expense? And as this is an application involving a clear humanitarian need, is not the council’s treatment of this case simply unforgivable?
Finally, there is dexterous card-shuffling over explanations for project delays and neat conjuring tricks over shovel-ready funding statistics. Last week First Minister Alex Salmond was called to account over explanations for the delay to construction projects worth £480 million.
The First Minister told the Scottish Parliament just before Christmas he had failed to spend the money on big building projects between 2011 and 2013 because of legal delays to the Aberdeen bypass. However, it seems that Barry White, head of the Scottish Futures Trust, had come up with a quite different explanation. The unspent millions, he told Holyrood’s finance committee, had nothing to do with the Aberdeen bypass as it was planned “more for 2013-14 and onwards”.
In addition questions were raised as to why pledges to spend £350m this financial year on the Non-Profit Distributing (NPD) programme had so far seen delivery of just £20m.
As for the trumpeted transfer of money from the government’s revenue spending to capital to help finance shovel-ready projects, how much has in fact been transferred?
A year ago the Scottish Government said that the enterprise agencies would transfer £95.9m from revenue to capital budgets in 2012-13 and £107m in 2013-14 – a total over two years of £202.9m.
But the actual figures are sharply lower, with a transfer of just £30.9m in 2012-13 and £68.7m in 2013-14 – a £100m shrinkage. The latest figures were confirmed in a letter from Cabinet secretary John Swinney to the Scottish Government’s finance committee on 29 November.
The major downward revision of the planned shift to capital spending within the enterprise agencies came as Holyrood ministers were berating the Westminster government for cuts to Scotland’s capital budget and urging more money to fund shovel-ready projects. No explanation has been given as to why the reduction has happened.
With housebuilding activity in Scotland at its lowest level since the Second World War and firms desperate for work, what we need in Scotland is not more red tape and dodgy excuses. It’s a Ministry of Get A Move On.