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Contractors make case for infrastructure spend

Infrastructure spending can generate £2.84 for every £1 invested, and will produce economic benefits within the first year, according to a report published this week.

The Civil Engineering Contractors Association (Ceca) this week published research which, it claims, proves the economic case for infrastructure projects.

The report, by Centre for Economics & Business Research (CEBR) economist Daniel Solomon, shows that spending £1bn on infrastructure increases GDP by £1.3bn within one year.

This in turn leads to a long-term £2.84bn increase in economic activity, as it trickles down through the economy. The upturn would come from, for example, construction workers spending their wages and from time savings resulting from infrastructure improvements.

The research shows that investment in construction projects  yields the second highest economic benefit per pound spent.

 Only the energy sector has a higher “gross value added” return, with manufacturing in third place and agriculture fourth, says the CEBR report.

The report adds that sub-standard infrastructure, which had suffered from underinvestment, had cost the UK £78bn every year from 2000 to 2010.

Ceca was due to present the findings to MPs, peers, senior civil servants and industry figures this week.

“It is not acceptable to pass our infrastructure deficit on to the next generation,” said Ceca external affairs director Alasdair Reisner. “We must act now to address this problem, ensuring that construction activity aimed at improving our transport and utility networks never again falls below the 0.8% of GDP threshold at which serious detrimental impacts are felt by the economy.”

Infrastructure investment dipped below 0.8% of GDP between 2003 and 2008 . In 2009 it  rose to just above 0.8%increasing slowly to 0.9%  of GDP in 2012.

Reisner urged  the government to invest 1% of GDP on infrastructure development for each of the next five years.

Ceca also called for creation of an independent body to identify how infrastructure can help resolve problems facing the UK.

It said it wanted the government to develop a new model for ownership of the strategic roads network, focusing on long-term investment certainty.

Ceca also recommended a prompt commitment to start work on London’s Crossrail 2.

 

Economic boost received from £1bn investment on infrastructure

 

Construction industry: £657M

Manufacturing industry: £111M

Wholesale and retail sector: £79M

Professional and scientific sector: £75M

Admin and support services: £69M

Finance and insurance industries: £57M

Mining and quarrying: £25M

Other: £222M

Total: £1.3bn

Readers' comments (1)

  • Bet we don't get 2.84/1.00 when large contracts for steel supply (like Forth Crossing) are awarded to the Chinese - there should be local/UK economic benefit factors in these sort of contract awards - esp in these economic times

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