Civil engineering projects are facing the axe after chief secretary to the Treasury David Laws ordered that spending decisions made earlier this year be reviewed and resubmitted to the Treasury.
Contractors said cash announced by former chancellor Alistair Darling in the Budget in March was most vulnerable. Darling set aside £285M for the Managed Motorways programme and £100M to tackle damage to roads caused by last winter’s harsh weather.
“It’s fair say this is an obvious target,” said one contractor. Laws ’ move to reassess spending decisions is part of the new coalition government’s stated intention to make £6bn of spending cuts this year. The details of which will be set out next Monday.
The Civil Engineering Contractors Association(CECA) said there were no surprises in the announcement, but stressed the need to continue to invest in infrastructure.
“There is a need to balance reducing the deficit with investing in infrastructure, which will play a key role in the delivery of a sustainable, low carbon economic recovery,” said CECA national director Rosemary Beales.
“There is a need to balance reducing the deficit with investing in infrastructure.”
Laws has ordered secretaries of state to re-examine all spending approvals since 1 January this year and all pilot schemes under development. Proposals that required Treasury approvals will have to be resubmitted.
Where projects are good value for money and consistent with the government’s priorities, they will go ahead, he said. Where they are not, it would be irresponsible to waste money on them. There is no point in continuing pilot schemes where they are too costly to implement, he added.
Laws claimed that the £6bn savings can be taken out of budgets this year without affecting the quality of priority frontline services to the public. Savings will be made from cutting back on lower priority programmes.
Wales, Scotland and Northern Ireland will be given the option of deferring their fair contributions to this year’s savings until next year, in recognition of the fact that the devolved legislatures have already approved spending plans for the current year. But these savings will still be made.
Chancellor George Osborne has also announced that a new Office for Budget Responsibility (OBR) is to be set up to assess the state of the public finances.
The OBR will make an independent assessment of the public finances and the economy for the emergency Budget, to be announced on 22 June.
The OBR has also been instructed to assess the cost of outstanding PFI contracts.