As the chancellor, George Osborne, announced the long-awaited spending review today, which he said takes the country “back from the brink of bankruptcy”, industry representatives were assessing what it could mean for the timber industry.
While the detail of the announcements is still being digested, Timber Trade Federation chief executive John White said one of the big questions was how the review, and the resulting public sector job losses, would affect public confidence.
“If people feel it’s too harsh, they won’t spend,” said Mr White.
It was also unknown whether the private sector could “take up the slack” of the spending cuts, as the government anticipated.
Mr White welcomed the expansion of adult apprenticeships, which Mr Osborne said would help an extra 75,000 people by the end of the spending review period.
“Anything that encourages people to learn is a good thing and the work we are doing with Proskills is about getting people into the wood products sector,” said Mr White.
The good news for the construction industry is that cuts to public sector capital spending will be £3.5bn less than was announced in the emergency budget but the 60% reduction in the social housing budget is likely to affect the timber industry and is a particular concern for British Woodworking Federation chief executive Richard Lambert.
“Reining back on social housing now misses a trick because it’s a way of targeting investment in a much-needed asset that would also provide jobs and activity in the construction industry at a time when it’s essential. It could be very shortsighted,” he said.
The government has committed to building 150,000 social houses over the next four years, but this compares with the 250,000 dwellings needed across the whole housebuilding sector, said Mr Lambert.
Non-housing public sector work, such as schools and hospitals, had provided joinery work during the recession and some of this budget is still protected, but Mr Lambert was concerned at the impact of 500,000 civil service job losses that will result from the spending review. In addition, The Federation of Small Businesses said recently that one in 10 smaller companies expects to lay-off people.
“People will have less money to spend on their properties and you’ll see an impact in the RMI market,” said Mr Lambert.
He is also concerned that the spending cuts have been rushed through.
“There’s a certain amount of political prejudice driving the decisions and a lot of it comes down to the perception of the government that cutting the deficit is more important than anything else. They’ve allowed themselves to become blinkered by that view and I think there’s a bigger strategic issue to be considered,” said Mr Lambert.
