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Civil engineering contractors and consultants pleased with pre-budget report

The Civil Engineering Contractors Association said it was broadly satisfied with chancellor Alistair Darling's pre-budget report, but urged government ro reveal the motorway schemes ear-marked for acceleration.

In what was considered to be the most important pre-budget report for more than a decade, Alistair Darling pledged to invest £20bn in the UK economy, including a cut in VAT to 15% for 13 months and bringing £3bn of key infrastructure projects forward from 2010/11.

"We wanted to see some measures to stimulate the housing market. There is an acceleration in construction. There is rate relief. Whether it adds up to enough we'll have to wait and see," said a CECA spokesman.

Last week CECA set out a ten-point action plan to keep the construction industry out of recession, and Darling's pre-budget report appears to have addressed some of their concerns.

The Association for Consultancy and Engineering (ACE) also welcomed the report, but chief executive Nelson Ogunshakin said that even more could be done to support the sector.

"We welcome the bringing forward of £3 billion of capital spending from 2010/11 to be spent on housing and road projects though we had hoped for more. We look forward to seeing the detail of the construction and infrastructure projects being fast-tracked," he said.

"The setting up of a lending panel to monitor loans to businesses and individuals is a welcome step but it does not go far enough. Much more needs to be done to get the banks lending again. ACE wants the government to commit to encourage the recapitalised financial institutions to use part of their bail-out funds to support SME firms and large professional consultancy, engineering and contracting firms during this difficult time to ease the pressure on cash flow and mitigate potential insolvency within the sector. They are feeling the pain now and we need action now."

"Government should also commit to guaranteeing funding for projects that have already been given the go-ahead, such as Crossrail, Building Schools for the Future, Olympics-related developments M25 motorway widening and other strategic infrastructure and institutional building investment projects across the country," said Ogunshakin. "They should also consider bringing forward projects that have already reached an advanced stage of design. An example is the Manchester Metrolink extensions programme, Birmingham western orbital route and other highways improvement projects," he said.

"In particular we hope that the bringing forward of £3 billion of capital spending will include the examination and revision of the Building Schools for the Future programme," Ogunshakin continued. This should involve shortening the procurement process, increasing the number of suppliers to enable small firms to take part, increasing the size of the programme, reducing the capital spend per school and refurbishing more schools as apposed to complete new build," he said.

The Institution of Civil Engineers (ICE) also welcomed the investment commitments, but stressed the importance of honouring commitments to long-term infrastructure spending.

ICE director general, Tom Foulkes said: “There is a lot in this report to be pleased about – including plans to bring forward public spending on a number of infrastructure projects, such as transport and housing. However, the government must ensure other longer-term projects don’t get delayed.

"Economically viable infrastructure projects shown to be capable of producing a return over the medium and long term should be pursued as speedily as possible in order to counteract the worst effects of the current downturn.

"The Crossrail project for example, costs £16bn, whilst the returns are calculated to be up to £66bn - and there are other projects which could produce similar returns. As well as combating the effects of the current downturn, the fast-tracking of such projects would also provide invaluable assistance to British industry, securing jobs and putting it in a position to take advantage of a period of renewed growth.”

Surveyors also welcomed the move to bring forward capital spending and echoed calls for more to be done.

Royal Institution of Chartered Surveyors chief economist Simon Rubinsohn said: "We welcome today's measures to bring forward capital spending which may inject some much needed stimulus into the rapidly weakening construction sector. Within the planned areas for capital spending, the social house building package to support only an additional 2000 homes (equal to one month’s output) is regrettably lacking in clout and will do little to offset a pronounced decline in residential investment in the coming year. At less than 1% of the required house building rates, construction workers will take little comfort from these plans.

"Recognising that a large proportion of smaller construction firms operate in the repair and maintenance sector we welcome additional moves to improve infrastructure. Upgrading flood defences for 27,000 homes to the tune of £20million and modernising school infrastructure using £800 million should be seen as a first step in preventing a widespread deskilling in the sector. The reduction in activity over the next year is looking dire and could lead to over 300,000 jobs being lost."

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