Report highlights how improved public investment in construction could support Scotland’s green recovery

SCOTLAND’S Construction Industry Coronavirus (CICV) Forum has published a new report intended to help public bodies make decisions on where funding in construction gives the highest economic returns to help support a green recovery.

The report, carried out by Fraser of Allander Institute at University of Strathclyde, was commissioned by the Forum to improve understanding of how investment in construction activity creates ‘multiplier’ effects across social, economic, and environmental impact measures. The CICV Forum added that it also aims to support understanding the return on investment associated with repair and maintenance activity.

John McKinney, regional manager of the NFRC, said, “The report highlights that investment in construction, including repairs and improvements, can play a vital role in a green recovery, and the important role Scotland’s existing buildings have in that recovery. We will look to highlight this report to the Scottish Government and funding bodies to assist in maximising the economic and carbon benefits of investment in the built environment.”

The report highlights that the construction sector supports almost £16 billion in Scottish GVA and almost 300,000 full-time equivalent jobs across the Scottish economy through both direct and indirect and induced economic activity.

The report also reveals that every million pounds spent on specialised construction activities generates £1.09 million GVA return to the Scottish economy and supports 21 full-time equivalent jobs.

As part of the study, VAT rebate research looked at how such a scheme could stimulate the repair, maintenance and improvement element of construction work. The research found that if VAT is cut from 20% to 5% in the specialised construction sector this could generate between £80 million and £400 million in Scottish GVA and support between 1,500 and 7,500 full-time equivalent Scottish jobs.

Gordon Nelson, Scotland director of the Federation of Master Builders, added, “The FMB has been calling for a VAT cut on home improvement works for many years, and now, such a move would play a vital role in aiding a green recovery. Cutting VAT would stimulate consumer demand for domestic energy efficiency improvements and generate a welcome pipeline of works to help SMEs in the construction industry recover from the impact of Covid-19. Additional benefits are the protection of jobs and enabling the construction industry and SMEs in particular, to help to play their part in delivering a green recovery.”

Mairi Spowage, deputy director of the Fraser of Allander Institute, commented, “The construction sector is a significant contributor to the Scottish economy and will play an important role in Scotland’s green recovery from Covid-19. Our analysis finds that specialised construction activities, which includes retrofitting and home improvements and repairs, has larger economic multipliers than the rest of the construction sector and the Scottish average across all industries.”

The report was commissioned by the CICV Forum with funding by Construction Scotland Innovation Centre (CSIC) though an i-Con Challenge Innovation Grant aimed at helping the sector to recover from the pandemic. The project had input from Historic Environment Scotland and a number of private and public organsations provided insight to the study.

A webinar to present and discuss the findings will take place on March 10. The report can be viewed here.