Industry calls on chancellor to spend big on infrastructure

On the eve of the chancellor’s Autumn Statement, a number of industry leaders have called on the government to commit to its infrastructure promises, or risk a £2bn hit to UK economy.

Suggestions ahead of the statement that new fiscal measures will be focused on boosting road and rail networks have been welcomed by the industry, but according to construction consultancy Arcadis, the government needs to go much further and ensure words translate into action.

Chris Pike, development director for infrastructure at Arcadis, said: “We need to see the positive commitments that the government has made to infrastructure projects over the past weeks - and will make going forward - progressed without delay. Some of our most ambitious projects, from energy to state-of-the-art transportation, have huge potential to bolster the national economy. The risk is that as little as a one-month average delay in implementing projects within the transport infrastructure pipeline could see the UK economy missing out on around £2bn of investment-related GDP over the next five years.”

Pike said that the government needed to send a clear message to the world that Britain is open for business by progressing vital infrastructure projects at the earliest opportunity. “Clearly, there are a number of reasons for projects not going ahead on schedule but, all too often, stalling could potentially be avoided or, if the impacts were clearly understood, decisions may be taken differently,” he said. “Infrastructure owners, government and industry need to work together in partnership to deliver on these commitments, allowing post-Brexit Britain to reap the full benefit, along with the inevitable bounce effect that will result,” said Pike.

Mark Naysmith, UK managing director of WSP | Parsons Brinckerhoff, also urged the government to renew its focus on the major infrastructure projects it has recently committed to building. “For the Autumn Statement and beyond I would like to see a clear emphasis on the four H’s: Heathrow, Hinkley, HS2 and highways,” he said. 

“Recent government announcements in these areas have been encouraging for the construction industry, and we need to build on this momentum to make sure we get spades in the ground as quickly as possible. Public sector infrastructure investment not only boosts growth and productivity, it also helps the 5th H: housing,” said Naysmith. 

“There are significant opportunities from HS2, Heathrow and highways to stimulate the level of house building the country needs in areas that would benefit the most from further development. However, the private property sector is currently suffering from a lack of confidence, rather than liquidity. The biggest confidence boost UK plc could receive is the certainty that these projects are going ahead, now. If government gets started on infrastructure, housing will surely follow,” Naysmith claimed.

Richard Threlfall, head of infrastructure, building and construction at KPMG, also made a plea for the chancellor to spend big on infrastructure. “If the government is confident about Britain’s Brexit future it needs to back its conviction by unlocking a spending programme that invests for the next 100 years of prosperity,” he said. 

Threlfall said that the chancellor should consider announcing a range of measures to boost the economy. Calling on the chancellor to herald a new era of direct public sector provision of housing, he said: “Housing is now the biggest infrastructure crisis facing the country and there is no prospect of Britain building the 300,000 houses a year that we need unless the government does something radical. Either central government should raise a £100bn+ housebuilding fund and initiate new garden cities, or they should allow local authorities to borrow and build,” said Threlfall.

Threlfall also said that the chancellor should announce a fundamental fiscal devolution that would give the Greater London Authority and combined authorities across the country spending power equivalent to the 10% of GDP which is the OECD average. He also wanted to see Transport for the North and other proposed statutory regional authorities gain direct control over road and rail investment priorities in their regions.

Addressing the skills issue was a key priority, Threlfall said. “A major area of uncertainty for the construction industry is access to labour. 70% of the workforce on Battersea Nine Elms is from overseas. The government is already besieged with special interest pleading from different sectors so if the voice of construction is to be heard it requires a different message from “we need an exemption”. Far better and more effective for the industry to commit to say a doubling of investment in training, and apprenticeships at twice the numbers implied by the apprenticeship levy, and then ask the government in return to secure transitional arrangements for labour from Europe,” said Threlfall. 

“The prosperity of the construction industry over the next few years now depends almost entirely on government policy,” concluded Threlfall.