Construction cutbacks threaten 20,000 jobs

The construction industry yesterday warned of thousands more job losses as official figures pointed to a continuing slowdown in the sector. New UK construction orders fell 2 per cent in the three months to August compared to the previous three months - prompting an attack on the government's private finance initiative for delaying recovery.

The figure was an 8 per cent decline on the June-August period in 1994, according to provisional, seasonally adjusted figures from the Department of Environment. The figures show that orders for private housing in the third quarter of 1995 fell by 19 per cent against the same period in 1994. New orders for public housing fell by 8 per cent, while other public building works dropped by 12 per cent compared with a year ago.

"Confidence in the level of construction work for the future has reached a new low," said Richard Houghton of the Royal Institution of Chartered Surveyors. "These figures are bad news for those employed in the construction industry, but also have serious implications for the economy as a whole.

"If, as we predict, 100,000 jobs are to be lost from the industry over the next 2-3 years, the Exchequer stands to lose as much as pounds 1bn in increased social security payments and lost revenue."

The Building Employers' Confederation warned yesterday that up to 20,000 jobs could be lost over the next six months as the industry slumps into a new recession. The organisation estimates that 480,000 building jobs have gone since 1990.

Paul Shepherd, chairman, attacked the government's private finance initiative (PFI) which requires all public sector projects to be market-tested. He said the PFI had delayed and reduced investment.

The gloom was underlined by the National Council of Building Material Producers, whose survey published yesterday showed that members had put back expectations of recovery to 1997. The BMP - with around 2,000 members - said 78 per cent of respondents were not working at satisfactory levels. In the spring, over half had reported satisfactory volumes .

The BMP forecasts a two per cent drop in UK construction output this year, with a 0.5 per cent decline in 1996 compared with 2.5 percent growth forecast previously. The survey revealed a "picture of disaster" in the industry and blamed government failure to help the housing market, "dithering" on interest rate policy and confusion over the PFI.

The three employers' groups called for action in next months budget to stimulate construction activity. Mr Houghton said: "The government could afford to spend an extra pounds 500m on urgently needed social housing, creating jobs without inflationary pressure."