Budget 2015: industry response – more on infrastructure, more on skills please

The Budget was low key on infrastructure – business leaders give their views on the challenges ahead.

Announcement of billions of pounds of planned investment in transport schemes in the Transport for the North TransVision report today will have allayed some concerns after the Budget that Government had gone off the boil in terms of enthusiasm for infrastructure.

But as ACE chief executive Nelson Ogunsakin pointed out in his post Budget response lack of major infrastructure announcements in the 2015 Budget was to be expected.

“The Budget has become increasingly less relevant to the infrastructure sector in recent years. The Autumn Statement is now become the traditional event that our sector looks to, as the end of the year has marked the release of updated National Infrastructure Plans,” he said.

“This Budget also came mere weeks before the General Election, and it is obvious that, short of some tinkering around the edges, the announcements the Chancellor made would focus on other areas of the national finances and policy.”

“We need cross-party support not only for more housing and infrastructure but also for developing the UK workforce with the skills to build these projects." - Naysmith, WSP

Ogunshakin highlighted several measures in the Osborne Budget as good news.  “Several measures unveiled are broadly welcomed, however, including a new Help to Buy ISA, that a Swansea Tidal Lagoon could be a step closer to a reality, as well as the new Northern Transport Strategy to help drive the Northern Powerhouse forward. These will benefit the whole country as access to homes is increased, much-needed power generation could be provided, and better transport connections to our economic centres are developed. “The engineering and consultancy sector stands ready to assist in the delivery of these.”

Ogunshakin’s views were echoed by WSP | Parsons Brinckerhoff managing director  Mark Naysmith who saw the Budget as a beginning of new challenges, particularly in finding the skills to deliver new plans.

“Any measures to support house building and infrastructure are of course welcome, and while the Budget announcement mentioned important new regional initiatives, most notably in the South West and the North, these must be seen only as a starting point for further investment,” he said.

“The real issue this country faces is delivery, specifically the capacity of the construction industry and its supply chain to deliver on projects. Unless we attract increasing numbers of the best and the brightest people to the construction industry and built environment then supply will always struggle to match demand.

“We need cross-party support not only for more housing and infrastructure but also for developing the UK workforce with the skills to build these projects. The increased focus on apprenticeships was welcome, and business, as well as politicians, needs to continue to find creative ways to build on this momentum whatever the outcome of the election.”

EC Harris global head of rail Mark Cowlard was disappointed that the chancellor in his speech had not hung is hat on HS3 – the high speed rail link from Leeds to Manchester but had left an news on better rail links to the TfN report.

“It is well recognised that investment in Britain’s infrastructure provides the greatest benefit to economic growth, but the chancellor failed to recognise this with no new announcements of investment plans.

"There is an emerging awareness of the UK’s productivity gap has the real potential to stifle continued growth; a low-cost economy alone is not sufficient" - John Hicks, AECOM

“Recent investment has contributed to an economy that has ‘grown faster than any other major economy in the world’ but where next? We expected to hear confirmation of plans to progress HS3, supporting the Northern Powerhouse, instead we heard of plans to provide for a comprehensive transport strategy for the north and Manchester retaining business rates (presumably to invest itself in transport infrastructure).

“Is it the start of devolution of investment, or instead are the ‘expansion of links with other faster growing economies’ the start of encouraging investment in our transport infrastructure?” he asked.

AECOM’s head of government and public John Hicks also wanted more.

“Britain’s biggest challenge today remains productivity growth. Without a long-term plan to grow productivity, accompanied by greater investment in infrastructure and skills, the country will slip further down the international league tables for competitiveness.

“In what was essentially a pre-election budget, it is perhaps not surprising that there are few targeted measures to create longer-term recovery. There is an emerging awareness of the UK’s productivity gap has the real potential to stifle continued growth; a low-cost economy alone is not sufficient,” he said.

“We urge the government to encourage UK businesses to lead on delivering UK infrastructure projects, equipping them to take advantage of the huge export potential around the world. Ring-fencing delivery plans to speed skills development and mapping required skills against the planned pipeline of projects would enable UK business to better compete on the global stage. Otherwise British firms may lose out to international consortia and be reduced to taking tier-two roles.”

"Plans for a tidal lagoon in Swansea Bay shows the government is committed to investing in cleaner energy with a steady move away from fossil fuels" - Jon White, Turner & Townsend

“There was little mention of government spending, nor the conditions that support the National Infrastructure Plan. With the presumption of the Plan intact, additional work needs to be done to attract private sector investment. In contrast to the announcement about support for a fledgling Asian Infrastructure Investment Bank, there was no mention of attracting private sector investment in the UK.

“The Chancellor said Britain was ‘walking tall again’. I would urge Britain to mind the gaps – in productivity, of skills and of spending,” Hicks concluded

For Turner & Townsend UK managing director Jon White: “This budget was never going to set pulses racing, however, we can take some comfort from plans to invest in regeneration and transport projects in London. But it was not just about the world’s global capital, there was also a £7bn cash injection for airfields, rail and better roads in the south west and 20 new housing zones across the UK.

“The raft of measures for the North Sea was welcome news and will provide a much-needed pipeline of support for exploration, production and capital investment. The swingeing cuts in the supplementary and petroleum revenue taxes are also a boost. However, in the face of cripplingly low oil prices it will always be hard for the Chancellor to stem the flow of job losses.

“Moreover, plans for a tidal lagoon in Swansea Bay shows the government is committed to investing in cleaner energy with a steady move away from fossil fuels. If Swansea is successful, then with potentially more tidal projects coming on stream in the future, 10% of the UK’s electricity needs could be met.”

CBI director general Jon Cridland summed up the business response. “Stability and consistency are what businesses need to grow and prosper. This Budget sets the tone, providing a clear plan for fiscal health and growth.

“This Budget has some encouraging measures to help businesses create jobs for the benefit of all.

“The brighter fiscal picture has allowed the Chancellor to recalibrate his deficit reduction plans. In the next Parliament this fiscal breathing space should be used to achieve intelligent reductions in public spending, together with much-needed infrastructure and innovation.

"With business investment a crucial driver of growth, the Chancellor has signalled his intention to continue the Annual Investment Allowance. We want it to be made permanent in the Autumn Statement at £250,000 - this will fire the UK's economic kiln by spurring smaller firms to invest in plant and machinery. 

“The reduction of the headline rate of Corporation Tax to 20% next month, is a meaningful step in making the UK the most competitive tax regime in the G20 and will help to attract investment.”



If you would like to contact Jackie Whitelaw about this, or any other story, please email jackie.whitelaw@infrastructure-intelligence.com.