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Spending review 2013: full industry reaction

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The construction industry responds to George Osborne’s spending review speech today.

Institution of Civil Engineers director general Nick Baveystock:

“The increase in capital expenditure and funding certainty for key programmes appears to be positive news and could provide a platform for the industry to deliver on national needs more effectively.

“It is, however, not all good news for infrastructure. Departmental cuts will inevitably place further pressure on local authority budgets, with road maintenance likely to suffer the brunt. 

“Local authorities must increase efficiency and make the transition to cost-efficient, planned maintenance going forward. But first and foremost, we need a focused, joint central and local government programme to finally clear the backlog.”

CECA director of external affairs Alasdair Reisner:

“Today’s spending round constitutes a welcome recognition of the case made by CECA that infrastructure spending is the most cost-effective means available to government to drive growth in the wider economy.

“While we are keen to see the details of these projects, and recognise that this return will only occur through their actual delivery, industry should welcome today’s announcements as evidence that the Treasury has recognised the substantial multiplying factor infrastructure investment will return to the British public.”

CBI director-general John Cridland:

“It is critical we see a real pipeline of projects announced tomorrow [Thursday], so investors know what schemes are going ahead, where and when.

“Other pro-growth areas including science, innovation, skills and exports have also been shielded from cuts. The £185m boost for the Technology Strategy Board - a crucial anchor for innovation - is particularly welcome.

“With stretched government finances it is tough but necessary to target automatic progression pay in the public sector. It is encouraging to see that Government will have greater control of the welfare budget through the new cap.

“The next big challenge to address is the issue of ring-fencing to ensure that efficiency flows across all parts of the public sector.”

KPMG head of infrastructure, building and construction:

“The headline number of £300bn of infrastructure investment up to 2020 will no doubt come under a lot of scrutiny over the next few days.

“We all await with interest details of the £100bn of schemes that the Chancellor said would follow. It is inevitable that much of that money will take years to convert to spades in the ground, but a green light to go and buy the spades is at least a good start.

“The Chancellor today confirmed the loss of a further 144,000 public sector jobs. If infrastructure investment is going to help replace those jobs, significant investment needs to be in central and northern England and in Wales, the regions which will be most hard-hit by those job losses.”

Turner & Townsend public sector director Jon Poore:

“Two and half years after the chancellor pledged to do something very similar with the National Infrastructure Plan, cynics will be queuing up to say they’ve heard it all before.

“That sense of deja vu extends to the numbers being quoted: £50.4bn of capital investment in 2015/16 is exactly the same as that previously announced for 2014/15.

“Maintaining that level of government spending is admirable, but still fails to address the elephant in the room: the private sector’s continued reluctance to heed the chancellor’s calls for it to invest in infrastructure too.”

RICS director of UK external affairs Jeremy Blackburn:

“Targeted investment in road, rail and homes could finally generate sustained growth in the British economy, so it is heartening to see the additional investment put aside for 2015/16.

“However, tomorrow, chief secretary to the Treasury Danny Alexander’s announcement must ensure that this funding goes where it is so desperately needed. The repair and maintenance of the transport and energy network and building of new homes should be government’s first priority.

“Recovery is still incredibly fragile. Well-planned infrastructure projects commissioned in the right places and at the right time must deliver growth, homes and jobs in the next 18 months, providing immediate economic returns and much needed work for the construction sector.”

FMB chief executive Brian Berry:

“The government clearly now recognises the importance of investing in Britain’s infrastructure. Our housing stock is a vital part of that infrastructure; it is ageing and inefficient, yet the refurbishment sector remains a Cinderella in terms of public investment.

“The right package of direct investment and fiscal incentives could unleash the huge potential of this market.

“This would offer greater certainty and hope to the thousands of firms who work in this market, support jobs and growth for years to come and help futureproof Britain against the ever-rising price of energy. This should be a key plank of the government’s long-term economic plan, but at present there is no sign that it is.”

EC Harris head of education Mark Fagent and head of government Bill Green:

“The announcement of funding to create 180 new free schools is well received, yet will still only create about 50,000 new school places – just 20 per cent of the number of places which will be needed in 2015.

“It will cost a further £4bn on top of this, which is more than twice as much as has been announced so far. The cost of delivering new school places will have to be reduced significantly if they are to be introduced swiftly and efficiently.

“Everyone was expecting the 10 per cent revenue budget cut for local authorities, but it is very encouraging to see the communities budget agenda backed in both words and commitments to funding change.

“The £50m fund for innovation to prevent crime and encourage safety offers a further route to invest in transformation between councils and police, while the £30m fund to transfer fire through joint emergency centres with police and ambulance is another practical tool backed by £45m fund for fire and rescue service efficiency and transformation.”

PwC engineering and construction partner Chris Temple:

“We will need to see more stimulus and encouragement for the industry as part of the government’s spending plans around investment for infrastructure and construction for this situation to change.

“In the past 12 months alone we have seen the UK construction sector lose 53,000 UK jobs. This is amid the context of a workforce that, on the whole, is working for longer and retiring later.

“If we then factor in the reality of a growing skills shortage in the construction, manufacturing and engineering sectors then we must also see additional support for businesses in the forms of apprenticeship and training schemes.”

Pinsent Masons infrastructure partner Jon Hart:

“The Treasury appears to suggest that there may be further good news – in relation to the Department of Energy and Climate Change (DECC) there seems to be an announcement of (unspecified levels of) investment in “innovative projects” and “£5.3bn in relation to other schemes – apparently to be funded out of our own energy bills. 

“There was no big news about settling the energy strike price, which so many see as fundamental to encouragement of private investment, and no news about impact on the underlying regulated asset base. 

“Maybe we’ll get further news tomorrow from Danny Alexander. Let’s hope that the suspense of the next 24 hours provides greater clarity.”

Pinsent Masons infrastructure partner Patrick Twist: 

“The chancellor’s speech on infrastructure announcement is yet another wishlist.

“Our economy might be out of intensive care but the infrastructure sector is on the verge of flatlining.

“We welcome the commitment to increase infrastructure spending but there’s no certainty that these projects will be delivered. Additional funds for rail infrastructure would be very welcome and Network Rail undoubtedly would be able to ensure those funds are spent on capital projects.”

CIOB chief executive Chris Blythe:

“We know that government has pledged £3bn to the aerospace industry, which is laudable, but at the same time we are seeing huge losses in the construction workforce with a fall of 65,000 construction personnel between September 2011 and September 2012.”

“As an industry we need to be looking at new ways that we can work with the government to build the foundations for competitiveness, investment and growth.

“With the right kind of support for our industry, I believe the UK economy could have grown up to three times faster in recent years.”

WSP head of infrastructure Duncan Symonds:

“Government appears to be recognising and addressing two fundamental issues that have long plagued this vital sector. One, that effective and efficient infrastructure is key to economic growth and the UK’s is below par; and two, that we can’t afford to lose specialist skills, confidence and momentum through long periods of inactivity between projects.

“However, we must not forget the smaller less sexy projects like flood defences and maintenance programmes are equally important and in some case can have more immediate impact on the economy, creating jobs and building asset value.”

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