Holyrood 'must back ailing Scottish construction sector'

PRESSURE on the Scottish Government to support the ailing construction sector heated up yesterday after new figures showed that the industry continued to be hit by the recent big freeze.

Construction activity contracted across Britain for the first time since February 2010, according to the Markit/Chartered Institute of Purchasing and Supply's construction index.

The fall in activity, from 51.8 points to 49.1, surprised economists who had expected the figures to remain in positive territory. Readings below 50 indicate a contraction.

The survey compilers said poor weather had contributed to the decline, but the fall in activity prompted industry figures to call on the Scottish Government to shift its priorities and bring in new policies to strengthen construction firms and house builders.

Mike Peasland, chief executive of UK construction for Balfour Beatty, warned that 2011 would bring further construction company failures, such as those of Connaught, Highland Quality Construction and Rok, which together caused the loss of over 1,200 jobs in Scotland.

He criticised the Scottish Futures Trust (SFT), the body in charge of funding public infrastructure development in Scotland, and called for a new way of allowing the government to tap private sector investment.

"Scottish Futures Trust has not worked," said Peasland. "It is crazy that there is private sector money there ready to invest and they have to find some way of unlocking that."

A Scottish government spokesman defended the SFT, claiming that it had achieved 111 million worth of benefits and savings in its first full year of operation. The spokesman added: "It is now supporting or managing projects across Scotland during this financial year that are anticipated to have a value in excess of 7.3 billion."

Peasland called on the Scottish Government to keep investing in schools, rail and road projects.

He said he feared that the new Forth road bridge and repairs on the existing bridge will take up most of the money available for infrastructure projects in Scotland in coming years.

Jonathan Fair, chief executive of industry body Homes for Scotland, said the housebuilding industry was in a "serious position" and called on government to introduce mortgage support schemes and boost the rented housing sector through a National Housing Trust initiative to "increase the number of homes available within mid-market rented tenure".David Sutherland, chief executive of Tulloch Homes, brushed off the effects of bad weather on his firm and said Tulloch planned to expand as long as banks started lending to homeowners again.

He added: "Every innovation from Scottish and UK government to help increase the flow of affordable housing would be very welcome to families desperate to get on the housing ladder," he added.

According to the index, house building saw its sharpest contraction since April 2009 and civil engineering activity also declined.

Only commercial construction activity managed to expand, although the rate of growth was the slowest in almost a year.

A Scottish Government spokesman admitted strong growth in the construction sector last year was "put at risk" by the 800m reduction in its capital budget imposed by Westminster.

But he said the government would take forward a 2.5bn pipeline of transport, education and health infrastructure projects through its Non-Profit Distributing (NPD) model.