How will recent government plans impact on the electrical contracting industry? ECA Group CEO Steve Bratt shares his views with Electrical Engineering
Following a busy period for government business legislation, now is a good opportunity to look at what it all could mean for the electrical contracting industry. Times are still tough, clients are still cautious spenders, and electrical contractors are still feeling the effects – notably as April saw us enter a double dip recession.
Overall, recent economic indicators have been mixed. There have been some positive signs in the general economy, such as a slowdown in the rate of unemployment and a downward trend in inflation. The Office for Budget Responsibility (OBR) has also slightly revised up its forecast for GDP growth in 2012, from 0.7% to 0.8%, with growth in 2013 expected to rise to two percent, and in 2014, to 2.7%.
However, underlying forecasts for the construction sector remain gloomy – the Construction Products Association expects to see output declining by more than five percent in 2012, with no significant increase until 2014.
Ahead of the Budget, the ECA actively engaged with government over a number of policies, including promoting increased spending on infrastructure. And, in general, we were not too dissatisfied as far as infrastructure spend was concerned. There are still some questions remaining though, about how this funding arrangement is going to work.
Stepping up with skills
The perennial challenge our industry has to deal with is getting the right skilled people into the sector, and to this end there have been positive steps. The government has already made a commitment to fund additional adult apprenticeships. And crucially, we’ve also seen steps to avoid the dilution of apprenticeships as a brand – now, a funded apprenticeship must run for at least 12 months. While this doesn’t entirely reflect what we, in the electrical contracting sector, believe to be an ‘apprenticeship’, it is a step in the right direction.
However, funding arrangements for the provision of apprenticeships remain a critical area of concern. What still needs to be addressed is an equalising of spend on apprenticeships – up until the age of 18 there is a significant spend, but then it reduces. This makes it difficult for small and medium sized businesses to train people when funding is structured in such a way. Our sector is at a particular disadvantage given under 18s can’t go on-site.
New projects
The number of projects is another area of concern for the industry, but there has been some promising news. The ‘Get Britain Building’ initiative has been allotted an extra £150m on top of the £420m already allocated, which will support the delivery of up to 16,000 new homes.
Also, we hope the National Planning Policy will help simplify planning and cut red tape, making it easier for developers to commission projects vital to kick-start our economy. We also welcome the support from the pension funding strategy announced by the government, which will help fund infrastructure development.
The introduction of the National Loan Guarantee Scheme and the Enterprise Guarantee Scheme is also important – at two levels. First, by providing funding for clients, giving them the opportunity to invest in projects. And second, by helping smaller businesses, in particular, to invest in new areas.
Going green
Meanwhile, back on the all too familiar territory of sustainability, we are getting some clarity now that the Supreme Court has quashed the government’s Feed-in-Tariff (FiTs) appeal. DECC has outlined a more predictable approach to managing FiTs, which should help contractors plan more accurately for the future.
However, there are still issues that need resolving over other green initiatives. There are many questions still revolving around the implementation of the Green Deal. In particular, we are working to encourage DECC to support ‘active’ energy saving measures as well as ‘passive’ ones.
We’d also like to see a coherent strategy that links the Green Deal and FiTs together. With every positive step forward, there are more questions that need to be resolved, and the government must ensure that it has the answers if it wants to support growth and jobs.
