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Labour's spending policy under attack

CPA and civil engineering contractors voice concern over soaring materials costs

LEADING civil engineering contractors and materials suppliers have slammed the Government for returning to damaging stop-start spending policies.

They also fear soaring materials costs will give Labour an excuse for future infrastructure cuts in spending.

Roy Harrison, president of the Construction Products Association, said: 'Transport seems to be a particular problem area, with virtually all the targets in the much-heralded 10Year Transport Plan now having been abandoned, missed, or with little prospect of being achieved.

'The political hype that accompanied its initial publication contrasts starkly with the lack of information about the plan's demise.'

Speaking in London at the association's annual lunch last week, he said: 'There is, of course, a danger the Government will see recent price increases as threatening the very investment plans that we are encouraging it to take forward.

'What the Government must avoid is a knee-jerk reaction by returning to the old ways of doing things and looking for the cheapest products.'

Paul Sivey, chairman of the southern area of the Civil Engineering Contractors Association, echoed the attack at the association's annual dinner this week.

He said: 'As an industry we have a less clear view of the future than at any time in the past four years.The real issue is not resources but a clearly defined and delivered level of continuous workload.'

Mr Harrison warned that upward cost pressures were unlikely to ease.

Energy costs for many larger materials producers soared 40 per cent year on year.While planned curbs on driving hours coming into force in April will impact on the whole industry.

Mr Harrison said: 'The situation in the steel industry has been widely reported but other sectors have seen sharp rises in raw materials.

'One manufacturer told me last week that the price of his key raw materials had risen from £200 to £900 a tonne this year alone. And that product accounts for 60 per cent of their raw material input costs.'

Already there are signs that falling workloads and rising materials costs have started to squeeze contractors'margins.

A director at a major contractor said: 'It's not just roads spending that is a deep concern - planned investment in water infrastructure looks like it's going to be cut by 30 per cent in the Ofwat regulatory review.

'Prospects for next year look grim and some firms are buying work at the moment. Further cost increases will be very damaging for them.'