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Construction Parliamentary Update - 01 October 2010

A round-up of all the construction news from Westminster this week, brought to you by the Madano Partnership

PPP/PFI

Speaking at the Labour party conference during a Socialist Health Association fringe event the new Labour party leader Ed Miliband outlined his support for the use of PFI in building projects, insisting he will continue to use private finance if he wins the next election. He explained that PFI hospitals had delivered improvements to the health estate, but admitted more should be done to tackle costs and “inflexibilities” in contracts (27 September).

CONSTRUCTION

Cabinet Office Minister Francis Maude is considering plans for a streamlined procurement process which will see companies that supply the public sector dealing with central Government as a single customer rather than a range of different departments. The Cabinet Office believes that a cross-government approach to procurement could be more efficient and Mr Maude will invite 30 of the Government’s leading construction suppliers to the Cabinet Office to renegotiate contract terms (30 September).

The Welsh Assembly Government published the latest national statistics on Production and Construction. The Index of Production and the Index of Construction for Wales show short term movements in the output of production and construction industries within Wales (29 September).

Experian released a new report showing that the number of construction businesses falling into insolvency fell to 247 in August, a 6 per cent decrease on the same month last year. The figures showed that while the number of construction firms becoming insolvent fell, construction remained one of the hardest hit by the economic downturn (29 September).

Scottish Finance Secretary, John Swinney, announced that Edinburgh City Council are supporting the first proposal to use Tax Incremental Financing (TIF) with an £84 million investment in the development of Edinburgh’s waterfront. In a speech to the Scottish Futures Trust (SFT) conference in Edinburgh John Swinney revealed that a business case for the scheme had been provisionally approved by the Government. The SFT has developed TIF for use in Scotland and is working with a number of local authorities to develop pilot projects (29 September).

A leaked Cabinet memo listing around 180 public bodies to be scrapped by the coalition Government showed that a number of building, planning and design related quangos are under review, facing consolidation or privatisation. The list included the Building Regulations Advisory Committee (BRAC), the Construction and Skills Training Board (CITB), the Engineering Construction Industry Association (ECIA), Regional Development Agencies (RDA), the Olympic Park Legacy Company, the National Housing and Planning Advice Unit (NHPAU) and the Infrastructure Planning Commission (IPC). The CITB confirmed that they are one of the public bodies to be ‘privatised’ but are “unclear” what the impact will be and plan to meet Government ministers next week to clarify the body’s future (23 September).

REGENERATION

Birmingham City Council Leader Mark Whitby announced ambitious plans for the redevelopment of the city centre over the next 20 years. The £10 billion Big City Plan includes redevelopment of 800 hectares of land in the city centre and covers five key development sites including three sites allocated for tall buildings. Council leaders are talking to the Treasury about the possibility of Birmingham becoming the first UK city to set up Accelerated Development Zones - clearly defined areas where the council would be able to borrow against the rate income paid by new businesses (30 September).

HOUSING

Two developers have launched legal challenges against the government decision to scrap regional spatial strategies, which included house building goals. Catesby Property Group and Colonnade Land say that Communities Secretary Eric Pickles’ move to scrap the strategies was illegal. This follows a challenge by Cala Homes brought in August, to be heard in the High Court on 22 October (29 September).

According to research from the Home Builders Federation (NBF) Leeds City Council reacted to the coalition Government’s removal of central targets by scrapping plans for nearly 33,000 homes. The Council rejected funding of up to £255 million which will now be awarded to other local authorities (29 September).

The New Statesman published a supplement on Government housing policy including an article written by Housing Minister Grant Schapps who explained how the coalition Government is devolving the power to build new homes to local councils and ’ backing the builders’ (27 September).

The Home and Communities Agency appointed its first preferred development partner under a new fast-track procurement system for building on publically-owned land. The former Guest Hospital development in Dudley will be developed by Wates Living Space who will retain the historic buildings and create 218 market sale and affordable homes built to Level 4 of the Code for Sustainable Homes and plans include green open spaces and a community facility. The Delivery Partner Panel (DPP) was established in January 2010 to give access to a pre-qualified list of organisations that can assist with all stages of the development process (27 September).

The Scottish Government announced plans to create 1000 new homes through a funding initiative expected to generate £130 million. Under the National Housing Trust (NHT) developers have been invited to participate in a scheme that will see the purchase of newly-built houses by local authorities with loans underwritten by the Scottish Government. The NHT is designed to kick-start activity on mothballed building sites and create or safeguard around 1,000 jobs in the construction sector. Twelve authorities have signed up, including Glasgow City Council, City of Edinburgh Council, Highland Council and Stirling Council (23 September).

EDUCATION

The Scottish Government published statistics showing that a total of 303 schools have been substantially rebuilt or refurbished since April 2007, exceeding the Scottish Government’s target of 250. The figures also show that 82 per cent of Scottish school children are now being taught in good quality buildings, up from 61 per cent over the same period. More than half the schools - 170 in total - have been delivered through traditional capital funding or Non-Profit Distributing (NPD) schemes (29 September).

Liverpool City Council unveiled a task force to rescue Liverpool’s schools rebuilding programme. The group, led by Liverpool Vision chief executive, Max Steinberg, will attempt to restart the council’s schools building programme and plans being considered include selling off land and assets to raise funds, and identifying vacant sites around the city which would be suitable for schools (29 September).

Speaking at the Labour Party Conference former Education Secretary Ed Balls criticised the coalition Government’s decision to scrap the Building Schools for the Future (BSF) programme. He claimed that there were “millions of children going to one of the 4000 brand new schools built by the Labour Government” and called the free schools initiative “the most socially divisive piece of education policy in the last 60 years” (29 September).

Somerset County Council reached financial close on its Building Schools for the Future (BSF) programme. Following the government’s decision to scrap the BSF scheme, Somerset council is the first to create a local education partnership (LEP) with contractor BAM having the exclusive right to build four sample schools through the LEP. The schools include Chilton Trinity Technology College, Robert Blake Science College and Elmwood School schools (28 September)

HEALTH

A £45 million hospital project will be one of the first procured through the ProCure 21+ framework. The Lancashire Care NHS Foundation Trust will deliver the inpatient mental health facility near Blackpool and the building work contract will be offered to the six contractors awarded places on ProCure 21+ in August (29 September).

Six private-sector consortia have asked to be considered as partners for the £150 million New Papworth Hospital Project in Cambridge. Papworth is the UK’s largest specialist cardiothoracic hospital, and the new facility will be a brand-new 290 bed purpose-built hospital specialising in cardiothoracic medicine and surgery (24 September).

TRANSPORT

Transport Secretary, Philip Hammond reconfirmed the Government’s commitment to the Crossrail scheme. During an LBC radio interview he said that he will present an ‘irrefutable case’ to the Treasury to approve the 16 billion pound cost of the project. Crossrail claimed that it is progressing well with driving down delivery costs, but maintained that it will not be reducing the scope of the project, either by shortening the route or cutting stations. A number of savings were highlighted, including £30 million pounds from the re-design Whitechapel Station and Canary Wharf (28 September).

Network Rail announced that Chief Executive of the Olympic Delivery Authority (ODA) David Higgins will takeover as Network Rail’s new chief executive on 1 February 2011 (28 September).

The Civil Engineering Contractors Association (CECA) in conjunction with the Association for Consultancy and Engineering (ACE) published a report estimating the annual cost to the UK economy of inefficient transport infrastructure to be over 100 billion pounds. The survey revealed that 77% of firms questioned believe they need access to effective and efficient transport links to grow over the coming three years. The report encourages Government to recognize that transport infrastructure plays a vital role in business productivity which should be reflected in the upcoming comprehensive spending review (27 September).

OLYMPICS AND 2012

The Olympic Park Legacy Company announced that the international broadcast and main press centre of the Olympic Park is destined to become prime real estate. The Olympic Park Legacy Company invited “expressions of interest” from companies around the world regarding the “mix-used district” 560-acre area. The legacy company said it has already received interest from a variety of sectors, including creative, retail, education and culture (29 September)

The Olympic Delivery Authority (ODA) announced that Dennis Hone will replace current ODA chief executive David Higgens in February 2011, who will take over as Chief Executive of Network Rail (28 September).

WASTE AND UTILITIES

Yorkshire Water announced the four partners chosen to deliver its 330 million pound water and waste treatment investment program. The consortium will be responsible for upgrading water and waste water treatment works and delivering a £100 million investment along the east coast of Yorkshire to improve the quality of bathing water (27 September).

FLOODING

Environment Secretary Caroline Spelman announced plans for a large-scale emergency flood exercise which will take place across England and Wales to test national and regional responses to severe flooding from rivers, the sea, reservoirs, groundwater and surface water. Exercise Watermark will bring together government bodies, big business, and local communities to trial responses to a range of scenarios which could occur during a flood emergency. A pilot event will take place in November (30 September).

DEFENCE

Former army Chief General Sir Richard Dannatt spoke out about the ‘rundown’ state of existing forces’ training facilities. General Dannatt addressed speculation that the £12bn Defence Training Review PFI scheme could be scrapped as part of the coalition government’s cost-saving measures, saying he expects the existing PFI approach to continue but on a smaller scale. As a result he explained that proposals for a £14 billon defence training academy in the Vale of Glamorgan would be scaled down (26 September).