For months now the spending review has been hyped as a halloween horror story, but for contractors there was some comfort to be found in the transport-related announcements, says Rosemary Beales.
Crossrail is to go ahead as will the new Mersey Gateway crossing. Proposals for high speed rail will be refined over the next four years and there was an autumn flurry of road schemes, which is good news even if some of the projects are already underway.
But, and there is always a ‘but’ when it comes to government, we are to expect a further announcement from the Department for Transport in the days ahead and already eight road schemes have fallen victim to the 50% cut in the Highways Agency capital budget. More transport cuts may follow.
Capital spending in Scotland will fall by 38% and in Wales by 35% over the next four years. This is not good news, particularly in Wales, which has not enjoyed significant investment for some time and was already reeling from the decision to abandon construction of the Severn Barrage.
Infrastructure was a recurring theme in George Osborne’s statement and there was an explicit acknowledgement of the role it plays in economic recovery. In the recent ACE-CECA survey of business end users, access to efficient and effective road and rail networks was highlighted as a crucial enabler for growth and productivity in the next three years. With the private sector expected to be the major force behind the economic recovery it is a simple message – cut back infrastructure and hold back growth.
We knew that infrastructure, transport especially, would play a part in the reduction of Government spending. The question now is how to move on from the cuts to enable infrastructure, transport especially, to play a part in the recovery. There are now two challenges for the Government and the infrastructure sector– how will we fund the major projects of the future and can we reach a point where contractors and clients will see the efficiencies to be gained from long term planning in investment in infrastructure?
The Green Investment Bank will channel £1bn of Government money, draw in more in private funds with a boost from further asset sales. It is a start, but finding even some of the estimated £200bn shortfall in investment needed to plug the infrastructure gap in a post PFI world is going to take more than this.
The National Infrastructure Plan will provide a 5-50 year horizon of the UK’s infrastructure needs. CECA has provided input to Infrastructure UK and the Plan will, we hope, be a solid foundation for forward planning in infrastructure investment, based on the demands created by the anticipated growth in our population and economy.
But are these very welcome steps enough? On their own, no. But the general feeling is that Government is open to fresh thinking. Now that ‘infrastructure’ is apparently on its mind, CECA will push for bolder steps from Government in securing funding and setting out long term plans for investment.
Rosemary Beales is the Civil Engineering Contractors Association’s national director