Government infrastructure plans look promising to contractors
The Comprehensive Spending Review appeared to give some comfort to contractors.
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, a further announcement by the Department for Transport confirmed that the list of road schemes falling victim to the 50% cut in the Highways Agency capital budget is growing as potential workload over the next four years diminished.
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. Wales was already reeling from the decision to abandon construction of the Severn Barrage.
Infrastructure was a recurring theme in chancellor George Osborne’s statement and there was an explicit acknowledgement of the role it plays in economic recovery. The recent Association for Consultancy and Engineering/Civil Engineering Contractors Association (CECA) survey of business end users highlighted access to efficient and effective road and rail networks as a crucial enabler for growth and productivity over 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.
“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. Wales was already reeling from the decision to abandon construction of the Severn Barrage”
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 (GIB) will channel £1bn of government money and 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, to which CECA provided input, has been published by Infrastructure UK and could be a solid foundation for longer term planning in infrastructure investment. The interim report of the inquiry into the cost of civil engineering has identified stop/start investment as one of the primary reasons for inefficient delivery. Combined with the GIB, this is all encouraging news for contractors.
These are developments that CECA has had an active role in shaping after years of industry lobbying but they are not going to ease the ongoing workload crisis. But the government is open to fresh thinking and now that infrastructure is apparently on its mind, CECA will push it to take bolder steps in securing funding and setting out long term plans for investment.
- Rosemary Beales is CECA’s national director