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Hard evidence is what the industry needs

May 21st, 2013

Working out the ‘multiplier effect’ of construction’s benefit to the wider economy was one of the best decisions the industry has taken in recent years – but politicians and the industry alike need to have the confidence that the numbers remain applicable.

Great news then that new research commissioned by the Civil Engineering Contractors Association and carried out by the well-respected Centre for Economics and Business Research has concluded, among other things, that for every £1 spent on construction, the benefit to the wider economy is £2.84.

Indeed, it seems such a coincidence that the figure is exactly the same as the one that similarly well-respected economists LEK came up on behalf of the UK Contractors Group four years ago, that the CEBR has specifically referred to the fact that the multiplier has been reached independently.

It’s a powerful statistic that has been very well deployed by the industry and is therefore already well-known to politicians. An update verifying its validity in 2013 is most useful.

What’s more, the convergence lends additional weight to the report’s wealth of other data on the specific benefits that investment in infrastructure brings, including the calculations that for each £1bn increase in infrastructure investment, UK-wide GDP increases by £1.3bn and that with every 1,000 jobs that are directly created in infrastructure construction, employment overall rises by 3,053 jobs.

With the government’s spending review only seven weeks away, these figures are timely. The chancellor knows how important construction is – which is why he’s taken the time to tell Construction News twice so far this year about his plans to move away from what he describes as the cyclical ‘feast to famine’ approach of the past.

The data contained in CECA’s report suggest there’s little that’s cyclical about it – it’s straightforward decline. What matters now is to reverse the trend.

CECA’s report doesn’t just highlight the benefits of huge infrastructure projects such as High Speed 2 or Crossrail; it also quantifies the benefits of allowing local authorities to borrow money to spend on roads repairs and maintenance.

This large and small, national and local focus, combined with the stark reality of how far the UK lags behind other countries, is a warning shot across the bows.

The benefits of investment are clear, and the risks of not doing so are too.

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