GOVERNMENT FAILURE to reach ambitious capital spending targets will call into question its whole economic policy, says
Construction Confederation chairman Alan Crane.
Speaking after the launch of the CC's pre-Budget submission, Crane said the increased public spending announced in last year's Comprehensive Spending Review was vital to the Government's overall economic plans.
Last summer Chancellor Gordon Brown announced a doubling of public sector capital spending from £7bn to £13bn over the next three years.
Failure to deliver on the CSR targets 'would be a big loss of face for the Government', said Crane. 'Capital expenditure of that extent is the cornerstone of its policy. You don't play with it willy-nilly.'
However, Crane said that following a recent meeting with construction minister Nick Raynsford he believed the Government would honour its commitments.
'On half a dozen occasions over the last few months spending on capital projects has come up [in discussions] with ministers. They have given commitment to the review and if they stay on target we will be OK,' he said.
Crane confirmed predictions of a slowdown in private sector work over the next two years. Public sector spending, especially on work procured through the Private Finance Initiative or partnering, could cushion the industry from all-out recession, he said.
In the CC Budget representation Crane also pressed the Treasury for a commitment to Sir John Egan's initiative on best value for money through partnering.
The representation calls for a statement from the Treasury and/or the European Commission that Egan's concept of best value for money 'is consistent with the language of 'economically advantageous' used in the EU Procurement Directive'.