Construction Industry: Government Influence

Ministerial obedience

In the UK, construction is regulated by the Secretary of State for the Department of Environment, Transport and the Regions (DETR). This is currently deputy prime minister John Prescott and his department. It turns out that the sector that they are supposed to regulate is also the sector they are charged with promoting.

In 1993, the then secretary of state, John Gummer, created a new division in the Department of Environment - the Construction Sponsorship Directorate, which aimed:

'to help all sectors of the UK construction industry, including the building products and materials secotrs. It is the advocate within the government and the EU for these industries.'

Somewhat oddly for the Department of Environment, it was also committed to 'the review of legislation to remove unnecessary regulatory burdens.'105

When John Prescott entered government, the construction industry was quick to inform him what his new role involved. 'It is supposed to be his job to act as advocate for it [the construction industry] in government,' said Graham Watts, chief executive of the Construction Industry Council. 'We have a lot of work to do,' agreed the chief executive of one of Briatin's biggest construction companies, 'to educate Old Labour people like Prescott'.106

Seven weeks later, Prescott told a construction industry conference: 'I want to be a champion for your industry.' He wasn't lying. His Department's 'Rethinking Construction' initiative demonstrated how construction projects could create a 'better and more sustainable environment'. These 'demonstration' projects included a drive-through McDonalds, five giant superstores, a production site for Rugby Cement Works, a new motorway and part of a nuclear power plant.107

In 1999 it was revealed that the timber being used by Balfour Beatty to refurbish the Cabinet Office was illegally imported from Cameroon. Documents and investigation revealed that although Government purchasing policy on timber was explicit, no effort was made to implement it.108

The Export Credit Guarantee Department (ECGD)

The ECGD is the UK's official export credit agency. It is a separate Government department reporting to the Secretary of State for Trade and Industry. It derives its powers from the 1991 Export and Investment Guarantees Act. The EGCD helps UK exporters to win business and UK firms to invest overseas. It does this principally by providing support for export finance, credit insurance and overseas investment insurance.

In the mid 1990s the private sector financed up to 15% of all infrastructure investments in the global south, and the World Bank has predicted that this proportion could rise to as much as 70% in future. Where importers default and ECGD insurance policies are taken up by the UK companies covered, the UK government seeks to recover them from the developing country government concerned.109

The ECGD is heavily influenced by businessmen connected with companies which benefit from its guarantees. In 1997/98, top UK firms benefiting from ECGD guarantees included construction firms Taylor Woodrow, AMEC International and Balfour Beatty. When the government reviewed the department's functions, the World Development Movement, condemned the review as 'a cave in to corporate interests'.110

The ECGD is required to take into account economic and political factors when considering a loan, but has no legal obligation to consider environmental, social or human rights issues (hence Balfour Beatty's involvement in the Ilisu dam). This is despite the Final Communique of the 1997 Denver G7 summit, attended by Prime Minister Tony Blair which committed the UK to:

'help promote sustainable practices by taking environmental factors into account when providing financing support for investment in infrastructure and equipment'.111

References

105'Prescott and the builders,' George Monbiot, New Satesman, 16.10.00. See: www.findarticles.com/cf_0/m0FQP/4508_129/66276494/p1/article.jhtml. Viewed: 26.01.04 106'Prescott and the builders,' George Monbiot, New Satesman, 16.10.00. See: www.findarticles.com/cf_0/m0FQP/4508_129/66276494/p1/article.jhtml. Viewed: 26.01.04 107'Prescott and the builders,' George Monbiot, New Satesman, 16.10.00. See: www.findarticles.com/cf_0/m0FQP/4508_129/66276494/p1/article.jhtml. Viewed: 26.01.04 108'Partners in Crime: the UK and destruction of the Forest of the Great Apes,' Greenpeace, 01.11.02. See: www.greenpeace.org.uk/contentlookup.cfm?CFID=501235&CFTOKEN=64213906&ucidparam=20020415084951. Viewed: 26.01.04 109'Export Credit Agency: least green of the lot!' Friends of the earth press release, 02.08.99. See: www.foe.co.uk/resource/press_releases/19990802120100.html. Viewed: 29.01.04 110'ECGD review is "a cave in to corporate interests",' World Development Movement Press Release, 25.07.00. See: www.wdm.org.uk/presrel/current/ECGD_corpinterests.htm. Viewed: 12.03.04 111'Export Credit Agency: least green of the lot!' Friends of the earth press release, 02.08.99. See: www.foe.co.uk/resource/press_releases/19990802120100.html. Viewed: 29.01.04