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Firms 'can place no reliance' on government pipeline after 886 projects disappear

The accuracy of government predictions about the UK’s construction pipeline has been called into question after new analysis found that more than a quarter of projects have disappeared since December 2014.

According to accountancy firm KPMG, 886 construction and infrastructure projects have fallen off the pipeline since its last audit, with the total number of schemes set to be procured by government now standing at 2,262.

KPMG’s UK head of infrastructure Richard Threlfall said contractors would be unable to rely on the pipeline as a guide to future workloads, adding that it “fluctuates so wildly and erratically that the industry can place no detailed reliance on it”.

The vast majority (860) of those projects to have disappeared come from the defence, justice and police sectors, with KPMG putting the decrease down to “potential projects being removed from the pipeline to avoid pre-empting decisions in the forthcoming spending review”.

Mr Threlfall said this may be because government departments were wary of seeing previously costed projects “culled” following November’s review of public spending.

The total value of projects in the pipeline fell by just over £9bn from £127.8bn in December 2014 to £118.7bn in August 2015.

Most of the decrease in value came from transport and housing projects.

There was a £6.7bn decline in the value of transport projects due to spending already being incurred on a number of ongoing programmes, such as Crossrail.

Housing saw a £2.8bn drop in value, relating to the completion of a backlog of projects, including the Decent Homes programme and a number of social housing schemes.

Mr Threlfall said: “It is clear that more needs to be done to improve the consistency and accuracy of the government’s construction pipeline.

“A stable pipeline would give the construction industry good visibility of future demand and the ability to plan and invest for that demand. It would lead to efficiencies for the government and hence for the taxpayer.

“I hope that we will get a clearer picture in November when the spending review is published.

“But in the meantime the huge 28 per cent drop in the number of projects included suggests some government departments are putting projects on hold in the expectation that they get culled.

“I don’t expect we will see anything like the scale of cutback in capital programmes that the industry experienced in 2010, after the last election, but there is clearly cause for nervousness about the potential squeeze in spending.

“I hope the government will recognise that what this industry most needs is long-term certainty and stability in demand, to provide it with the confidence to invest in technology and its workforce.

“Our growing economy is creating a welcome uplift in private sector demand, but the government should not use that as an excuse to cut back its own investments, create another hiatus, and send ripples of uncertainty through the industry.”

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