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Construction industry hits out at lack of detail and delay in George Osborne's capital spending plans

The construction industry has hit out at an announcement by chancellor George Osborne that an increase in infrastructure spending will not take place until 2015.

Mr Osborne announced today that spending will be increased by £3bn a year, but not until after the next election.

The funding will come from permanent reductions in current spending and will mean £18bn in additional capital spending over the next Parliament.

‘Jam Tomorrow’ Budget

CECA director of external affairs Alasdair Reisner said: “While CECA welcomes commitments to an additional £3bn in infrastructure investment post-2014/15, the majority of this period will be after a general election and is therefore hostage to fortune with any change in government.

“It is disappointing that the Budget contains no new details of projects to be funded by Guarantees”

Alasdair Reisner, CECA

“What we really need is activity on the ground now, and our initial view appears to suggest that there has been no new support in the short term for infrastructure construction.”

“Before today’s statement, CECA had called for further details on the UK Guarantees Scheme, which was proposed as a method of unlocking major infrastructure projects. It is disappointing that the Budget contains no new details of projects that are to be funded by this method.

“In more positive news, the Budget document also indicates that the government’s spending review in the summer will offer a long-term view of capital investment.

“If this is genuinely the case and the government is able to provide a detailed vision of long-term spending in our industry, that will be warmly welcomed by contractors who have called for such clarity over many years.

What the construction industry wanted most of all was more assurance that government is focussing on delivery of projects but there is little detail about for example what the Treasury guarantees
Stephen Ratcliffe, UKCG director

Stephen Ratcliffe, UKCG director said: “There is some good news for the industry notably, the increases announced in public sector infrastructure investment, new help and guarantees on mortgages and a commitment to publish a longer term investment pipeline (to 2021) covering the most economically valuable areas of the economy.

“But the extra spending on infrastructure will not start to bite until 2015. What the construction industry wanted most of all was more assurance that government is focussing on delivery of projects but there is little detail about for example what the Treasury guarantees (announced last summer) have achieved and how deal flow in the public sector pipeline will be speeded up.

“The promised review of Whitehall’s capability to deliver projects will bring no immediate changes.”

Lafarge Tarmac Contracting managing director Paul Fleetham: “I welcome the chancellor’s £3 billion a year funding for infrastructure investment from 2015, but this will not provide the catalyst that the economy needs now.  It is also disappointing that we must wait until the 2015/16 spending review to understand how this funding will be allocated.   

“The chancellor has missed an opportunity to use smaller schemes such as highways maintenance to drive immediate economic growth.  Investing in local road maintenance would provide a boost to the national and regional economies, without the protracted planning delays that continue to stall progress on many of the larger infrastructure projects on the Government’s long wish-list.

“Crucially, investment in local roads, which account for 95 per cent of the UK’s network, would also help to renew our deteriorating road asset and tackle the £830 million maintenance shortfall that exists across England.” 

Fraction of the pipeline

EC Harris senior advisor Richard Bowker said: “While £3bn extra for infrastructure capital spending might at first appear welcome, it does not kick in until 2015, the details of the schemes are yet to be explained and it still only represents a fraction of what is identified in the National Infrastructure Plan pipeline.

“It is to be welcomed that someone with the track record of Lord Deighton is to look hard at the mechanisms for delivery of infrastructure projects. We look forward to concrete proposals in June as to how delivery will be transformed.”

Complete lack of clarity

Pinsent Masons infrastructure partner Kate Orviss said: “Today’s announcement by the chancellor yet again started full of promise as he repeated his commitment to the sector.

“However, it ended up being disappointing notwithstanding the announcement of an additional £3bn for the sector.

“The disappointment is that this funding will not be available until 2015/16 and there is a complete lack of clarity over what it will be spent on. This time the real detail will not been revealed until June.

“The reality is it won’t make a significant impact on economic growth”

Richard Abadie, PwC

“The government claims to see infrastructure as a key element of its growth strategy but has singularly and repeatedly failed to deliver Budget after Budget. And time is running out as even announcing new major projects now won’t deliver growth in the short term.

“Now is the time to start delivering before investors and contractors look to exploit other opportunities.

“Major British contractors are already looking elsewhere such as India and sub-Saharan Africa. The drain of experience from the UK will continue if the UK government delays real announcements on infrastructure projects.”

Insignificant relative to the backlog

PwC global head of infrastructure Richard Abadie said: “Every additional pound of investment in infrastructure is to be welcomed in a difficult market where the construction industry is struggling from reduced activity.

“Infrastructure projects are long term and investments made into them also need to be long term and ongoing.

“Regrettably the announced sum is insignificant relative to the infrastructure backlog and while we welcome the announced £3bn of cost savings from various government departments, the reality is it won’t make a significant impact on economic growth, as it comprises less than 0.2 per cent of GDP.”

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