Industry leaders want to see a rebalancing of public expenditure in favour of capital investment, a cut in VAT for making homes greener and new models for financing major infrastructure.

The report, Unlocking Growth in UK Construction, highlights how the industry can lead a wider economic recovery.

It also identifies planning delays, burdensome bureaucracy and weak customer confidence as other major barriers to growth in the industry.

The trade bodies also want to see more bank lending to construction firms and wider availability of affordable mortgages for first-time buyers.

The report has been compiled by the Association for Consultancy and Engineering, the Civil Engineering Contractors Association, the Construction Products Association, the Institution of Civil Engineers, the Federation of Master Builders, the National Federation of Builders and the Scottish Building Federation.

The six key recommendations to unlock growth in the UK construction industry:
• Rebalance public expenditure between capital and current spending;
• Reduce VAT for sustainable domestic upgrades to 5 per cent;
• Identify new models of infrastructure finance;
• Ensure banking support to the construction industry;
• Maintain course on planning reform in England;
• Improve the availability of affordable mortgages for first time buyers.

Alasdair Reisner, a spokesman for the industry group, said: “This report shows that there are concrete measures the government can take to unlock growth in the construction sector, which is itself responsible for more than 7% of all UK economic output.

“It is of crucial importance that the government acts now to reduce bureaucracy in our sector, remove blockages in the pipeline, identify new funding models for infrastructure and ensure that banks are lending sufficiently to both businesses and first time buyers.

“This report is an example of what can be achieved through industry co-operation in identifying the barriers to growth.

“It is no surprise that construction firms identify a lack of funding as a barrier to growth in the sector, given the current economic climate.

“However, by canvassing a wide range of industry opinion, Unlocking Growth in UK Construction identifies specific actions that government may take that will enable the construction sector to play its part in returning the UK to sustainable economic growth.”