The construction industry looks perky, and this time it’s not building state-funded follies
Not exactly Flaming June so far, is it? Up north, we’ve had one day of blazing sunshine — and being northerners, we complained it was too hot. Down south, you’ve had a continuous drizzle of dismal economic indicators. Inflation is up; growth forecasts have been slashed, in the IMF’s case by a whole percentage point to 1.5 per cent for 2011. Manufacturing output has fallen back for the first time in two years. New car registrations were down 1.7 per cent year on year in May and retail sales were 0.3 per cent worse than in April — when mortgage approvals were at their lowest level since 1993.
John Lipsky, the moustachioed man from the IMF, says the setback is temporary, driven by higher fuel and commodity prices, and George Osborne’s policies are on the right track. But the absence of economic momentum weighs heavy on the national mood. As ever, therefore, I feel impelled to seek out a relatively bright spot, which turns out to be the construction industry, where orders and job prospects have recently perked up.
Even that, admittedly, is a rebound from a horrific first quarter, when orders showed their sharpest fall since 1987 and 1,000 building companies went bust. For infrastructure projects, orders were down by almost half compared to the last quarter of 2010. But these swings are easy to interpret. A final spate of public sector contract work has now petered out, following a period in which it was barely possible to set foot on a college campus without falling over the scaffolding and every journey was impeded by roadworks. Now the impetus is back with the private sector. Banks are lending selectively to developers again — and though the margins and the small print are punitive, the underlying interest cost is still low.
‘The big boys have no trouble funding themselves these days,’ says my man in the West End from the back of his chauffeured Mercedes. ‘And there’s sovereign wealth out there looking to invest in prime developments. We’re ready to roll.’ He’s talking about pre-let office blocks rather than big retail — fear still stalks the malls — but ‘housebuilders are quite bullish too, because there’s still a long-term shortage of houses’.
So the tower cranes have shifted from the cancelled hospitals to the big commercial holes in the ground that were boarded up during the credit crunch. Look closely and you’ll see lots of small-scale schemes coming back to life, like shrubs you thought had been killed by the frost. In my Yorkshire town of Helmsley, ever-reliable micro- indicator of the bigger picture, the number of active building sites has at last overtaken the number of vacant shops.
It’s a modest trend so far — and given the propensity of the construction sector to lurch from famine to feast and back again, it’s a lot less welcome than the manufacturing-led recovery we thought we were watching a few months ago. But it’s a shaft of light in the stormy June sky, and at least the buildings going up this year and next will not be state-funded follies we could never afford in the first place.
Reflections on the Tyne
Coming out of a sublime Opera North performance of Fidelio at the Sage Gateshead — in a heightened emotional state induced by the ecstatic finale, no doubt — I was moved by the sight of the Tyne at dusk. The Sage, the Baltic Centre for Contemporary Art and the Millennium Bridge (lit in changing colours at night) were all opened in the early years of the last decade, completing a transformation of Newcastle and Gateshead that can be traced from the opening of the Metro Centre retail park in 1986 via the revival of Newcastle United football club in the mid-1990s — both the work of Sir John Hall — to the erection of Anthony Gormley’s ‘Angel of the North’ in 1998.
Sceptics will say much of the regeneration was ‘state-funded follies’ as referred to above, or morally worse, paid for by National Lottery scratchcards, and that it barely touched the deprivation beyond the showpieces. But that ignores a widespread revival of Geordie joie de vivre — on a Saturday night you can hear waves of it drifting across the river — and the importance to the process of what Hall himself (a miner’s son, now 78 and battling cancer) once called ‘capitalism with a conscience’, rooted in regional pride. The name Sage has become so inseparable from the Foster-designed concert hall that most people have forgotten it belongs to a local software company, founded by Sunderland printer David Goldman and Newcastle student Graham Wyllie, that became a global success and donated £6 million to complete the project.
These days — as I observed last week, and as seems to be confirmed by tales of the private equity fortunes extracted from Southern Cross, the collapsing care homes group — we have a surfeit of capitalism without a conscience. Which cityscapes of 2030 will bring a tear to the eye as we give thanks to the money-men of today for their generosity and vision?
Form-filling
My item about the diminished state of the Court of the Bank of England (28 May) elicited an explanation of the problem from a distinguished City gent. ‘Some years ago I applied to join the Court,’ he told me. ‘In the modern way, a vacancy had been advertised, and applicants were required to complete a 20-page questionnaire. The process was handled, no doubt at great cost, by a leading headhunter on behalf of the Treasury. As the deadline approached I was told there would be a delay — probably because no suitable grandees could be bothered to fill a form of such length and crassness. Months later I was informed that my application had been unsuccessful, but the message came by an email sent to all losing candidates, accidentally revealing our names to each other. This produced several enjoyable lunches and, we may hope, the sacking of the headhunter.’ In short, the old boys’ network and the traditional tap on the shoulder was a much more reliable recruitment method.
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