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Funding cuts ‘will lead to two tier infrastructure system’

Contractors fear soon to be announced government spending cuts will hit local, rather than national infrastructure.

Civil Engineering Contractors Association chief executive Alasdair Reisner also said cutting departmental revenue budgets could reduce spending on vital maintenance work.

Chancellor George Osborne last week revealed that he was slashing the “day-to-day” spending power of four departments - including the Department for Transport (DfT) - by an average of 30% for the next four years.

This came just days after he committed to spending £100bn on infrastructure over the next five years.

“We are pleased to see previous commitments made on capital investment being adhered to, but we have concerns about what a decrease in revenue spending will mean for infrastructure, in particular for local roads and flood defences,” said Reisner.

“We do not want a two-phase economy - as well as the huge strategic projects. The economy needs working local roads and protection from local flooding.”

Reisner said it was important for departments to work even more efficiently after budget cuts.

“The government has a deficit reduction strategy, it has to find savings from somewhere,” he said. “We would like to see the money spent as efficiently as possible, not wasted in duplication or procurement.”

With the Comprehensive Spending Review next week, civils firms are keen to see Crossrail 2 backed alongside schemes in the north of England.

“It would be damaging for Crossrail 2 not to get backed in the Spending Review, as it needs something to move it to the next stage,” said Reisner.

“It would also be damaging for the industry as a whole, as the future pipeline runs from Crossrail to Thames Tideway Tunnel to High Speed 2 then Crossrail 2.

“Cutting that out would leave a gap - although there is significant spending lined up for the Northern Powerhouse.”

Richard Robinson, chief executive of civil infrastructure across Europe, the Middle East, India and Africa at Aecom, said the revenue cuts seemed at odds with capital spending plans.

“There appears to be a tension between the £100bn of infrastructure investment announced last month and the expected cuts,” he said.

“It is still too early to tell what this means in terms of funding for major programmes, so all eyes will be on the detail of the Spending Review for greater clarity.”

Turner & Townsend global head of infrastructure Murray Rowden said he was hoping for two main things in the Spending Review.

“I’ll be looking for commitment and further detail on how the National Infrastructure Commission will execute the National Infrastructure Plan, and for where the departmental revenue savings could be made,” he said.

“This could be new procurement models, less labour, fewer levels of assurance and an increased use of technology.”

Rowden said the government should reexamine at how its departments worked together, to make them more efficient.

“If you look at the departmental structure we have, you would not start with that system if you had a blank piece of paper, unless you came from Mars,” he said.

“Cross departmental working would lead to more efficiency.”

Osborne’s revenue cuts will affect the DfT, the Department for Environment, Food and Rural Affairs, the Department for Communities and Local Government, and the Treasury.

The chancellor insisted the latest budget cuts would not impact on the £100bn infrastructure spend promised last week.

“I can report to you that - with the support of my brilliant colleague Greg Hands, the chief secretary to the Treasury - we have reached provisional agreement on the spending plans of four government departments,” said Osborne.

“The resource spending - that is the day-to-day spending of those four departments - will be cut by 30% on average in total over the next four years.

“These savings will be achieved by a combination of further efficiencies in departments, closing low value programmes, and focusing on our priorities as a country.”

He added: “We will spend £100bn on our infrastructure over the parliament - updating our roads and railways; investing in flood defences to protect our homes and businesses; and delivering superfast broadband.”

 

 

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