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CBI wants roads, housing and major projects push in George Osborne spending review

The CBI has called for infrastructure investment to be in “pole position” through roads, house-building and major project backing in the chancellor’s spending review later this month.

The business powerhouse is calling for short-term action on improving roads; boosting house-building and getting a pipeline of major projects moving as a priority.

To find savings, it proposed measures including a reduction in automatic pay rises across the public sector and warned that “ring-fencing cannot be used as a convenient shield, protecting some departments from essential financial discipline”.

Several departments, including education are expected to be spared the brunt of the cuts to be announced in two weeks as chancellor George Osborne sets out savings to be implemented from 2015, as part of a target of £11.5bn budget cuts.

But the CBI director general John Cridland warned the “government must not flinch from bold public service reform”.

Transport is increasingly coming under the spotlight, with speculation of cuts of up to 20 per cent of Transport for London’s budget and the future of major schemes such as Crossrail 2 causing divisions between the mayor of London Boris Johnson and senior government officials, as revealed by Construction News earlier this month.

The CBI’s focus on the construction industry is a similar refrain to that shown ahead of previous government spending announcements, including in March of this year when the CBI called for a shift of £2.2 billion from current spending to £1.25 billion on capital investment in infrastructure.

While the budget was considered a disappointment in terms of infrastructure investment, Help to Buy was launched and has been praised for helping to stimulate the housing market, though some commentators have warned it could create another housing bubble.

CBI director general John Cridland said: “The message from companies is clear: there is no shortage of capital available to invest in UK infrastructure, but we’re stuck in a catch-22 as investors wait for contractors to start projects, contractors wait for government decisions and ministers try to attract investors.

“The deadlock can only be broken by strong leadership and bold decisions from all sides. We need genuine political and public consensus on what infrastructure we need, who should deliver it and how it should be paid for.

“Politicians outsourced the critical decision on expanding aviation capacity to the Davies Commission, so we need to see cross-party manifesto commitments to accept its independent recommendations in 2015.”

CBI spending review demands:

Among the areas the CBI wants to see prioritised is:

  • The Government to select flagship projects to prioritise – for example, expansion of the A14 connecting Felixstowe Port, the M4 relief road and improving surface access to airports
  • Cross-party manifesto pledges to accept findings of the Davies Commission on aviation capacity in 2015
  • Clarity over the next investment cycle for the Affordable Homes Programme
  • An extension of the duration of government guarantee schemes to boost private sector investment
  • Maintaining focus of Repair, Maintenance and Improvement schemes for roads to bridge the gap before larger projects reach construction.

In October 2012 the CBI called for the Highways Agency to be scrapped and replaced by a regulated asset based model under an independent regulator and called for more spending on repair, maintenance and improvement work ahead of the autumn statement in the same year.

In May 2012 it criticised the lack of private investment finding its way into infrastructure.

Reaction:

Nick Prior, head of infrastructure at Deloitte, said: “The spending review will be a crucial point in the development of the government’s infrastructure plan. A steady pipeline of infrastructure projects, and matching good intentions on infrastructure with cash, are essential to getting shovels in the ground.

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