A positive move towards the certainty the industry needs

Industry leaders from the infrastructure sector have given a largely positive response to the chancellor’s Autumn Statement.

Andy Walker
23 November 2016

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Autumn Statement

Patricia Moore, UK head of infrastructure for Turner & Townsend, said: “Infrastructure is clearly still a priority, with Philip Hammond reaffirming that it’s a powerful way of driving broad-based economic growth. We were never expecting a blank cheque, given the huge pressures of Britain’s debt, but to have an outline of funding for specific projects together with the establishment of a working assumption of 1-1.2% GDP for investment planning is a positive move to provide the longer term certainty that our industry craves.”

Moore also welcomed the chancellor’s focus on the regions. “The Autumn Statement is also a sure sign that the new chancellor will continue the devolution agenda and sees infrastructure as a critical enabler to that. Funding of better rail links and transport projects is a strong sign that the government is fully committed to this. Furthermore, the ability of the mayoral authorities to raise finance is an interesting step in the right direction to fiscal devolution,” she said.

“We also welcome the announcement that more funding is to be allocated to research and development, a driver of innovation to UK businesses. As infrastructure programmes increase in scale and become more complex, innovative management of programmes and advancement of project delivery through big data needs advancing at an unprecedented rate. The infrastructure sector must benefit from the announced R&D funding in the future and we look forward to working with our clients to develop their responses to this as well as seeing further details on the government’s industrial strategy,” said Moore.

Mouchel managing director, Miles Barnard, said: “Many of the key roads announcements were trailed prior to the statement, so there were no real surprises. Nonetheless it is reassuring that this extra money is going to be deliberately targeted in the most important areas. I’d also like to see the significant new funding in science and technology targeted in areas that most influence the modernisation of infrastructure including driverless vehicles and big data.”

"Many of the key roads announcements were trailed prior to the Autumn Statement, so there were no real surprises. Nevertheless it is reassuring that extra money is going to be deliberately targeted in the most important areas."
Miles Barnard, managing director, Mouchel

Barnard also said that a renewed government commitment to infrastructure would also help the industry’s skills challenge. “Committing to mega-projects, and getting them ‘shovel-ready’ quickly, will help make our industry an attractive destination for graduates and apprenticeships and retain existing talent,” he said.

Nick Roberts, Atkins’ UK and Europe chief executive officer, said: “The chancellor has placed economic growth and quality of life at the heart of his infrastructure decisions. Being clear on these outcomes means that our most pressing needs around housing, roads, railways and digital networks feature at the top of the priority list and the government can borrow a sensible amount of money to fund the improvements with a high degree of confidence that they will get a good return on their investments.”

Roberts was also pleased with the chancellor adopting a more joined up approach to development. “I welcome the Autumn Statement recognising the interdependencies between different types of infrastructure,” he said. “The new £2.3bn fund focusing on the link between housing and local infrastructure will help unlock valuable public land whilst ensuring local communities can cope with growing populations. And the commitment to become a world leader in fibre and 5G digital networks will not only make a difference to businesses and consumers in their everyday lives, it will also help enable the more technology-enabled infrastructure, such as a digital signalling and connected and autonomous vehicles, which will form a key part of our future,” said Roberts.

Chris Pike, development director for Infrastructure at Arcadis, said: “Investing £450m in the digital railway programme will take our country out of the Victorian era. It will totally revolutionise our railways, increasing capacity, improving the much maligned experience of passengers and improving punctuality and safety. Recognising the benefit that rail digitalisation has had across Europe, it is our belief that the digital railway programme will keep the UK at the leading edge of the rail industry and will contribute substantially to increasing growth and productivity across the country.”

David Bennett, business manager at construction IT and instrumentation specialists Topcon GB & Ireland, said: “The new £23bn National Productivity Investment Fund, to be spent on innovation and infrastructure, along with the £2.3bn Housing Infrastructure Fund and smaller funds to improve local transport networks and traffic congestion announced today show a decisive step from the government towards rectifying the issue of the nation’s aging infrastructure. However, the question we now need to ask is how can we achieve real value for money with this investment?

“It’s widely acknowledged across the built environment that 20% of construction expense can be avoided. For smaller projects, like the shovel-ready schemes outlined in today’s statement, avoiding this expense is even more critical. When localised infrastructure projects overrun on time and cost targets this causes major disruption to residents and often leaves people asking is it really worth it? 

“We need to ensure we’re doing all we can to maximise efficiency on these vital projects by using the most cutting-edge ways of working, thus making project completion quicker, easier, safer and ultimately, cheaper,” Bennett said. 

"We need to ensure that we are doing all that we can to maximise efficiency on these vital projects by using the most cutting-edge ways of working, thus making project completion quicker, easier, safer and ultimately cheaper."
David Bennett, business manager, Topcon

Alan Pauling, group market director at Ramboll, said: “It’s not all about grand projects. Smaller, well planned, quickly delivered local projects provide visible solutions to long standing problems. Improving the efficiency of commuter routes will directly and immediately benefit productivity. The Chancellor’s commitment to dealing with pinch-points is good news but if this only relates to the strategic road network then only covers 2% of England’s total road network. There are far more pinch-points off the strategic road network than on it.”

Mary Anne Roff, partner at Eversheds, said: “There was a welcome acknowledgement from the chancellor on the importance of “reliable transport networks” as well as specific reference to the Northern Powerhouse. But many will question whether the £1.1bn will be enough and be appropriately targeted to be transformational for infrastructure,” said Roff.

John Hicks, director and head of government and public at AECOM, said: “As a man renowned for both detail and caution in delivery, the lack of fanfare in chancellor Hammond’s final Autumn Statement comes as no surprise. In many ways it was more a prelude to the next Budget. Examination of the detail will be necessary to see what can be done to enhance productivity and economic gain. 

“The missing component in today’s Autumn Statement was a new pipeline of transparent, viable projects for much heralded high-value investment, which the chancellor wants linked to productivity in order to secure public funding. Without this investors will not make the all-important final move. But the chancellor’s call for the National Infrastructure Commission to make recommendations on the UK’s future infrastructure needs could effectively hold up the publication of such a list. An intent to publicise falls short of being an actionable pipeline, which we hope would not delay much-needed private sector investment,” said Hicks.

Neil Broadhead, Head of UK Infrastructure, PwC said: “It’s clear that we now have an administration that’s serious about tackling the UK’s long-standing infrastructure challenges and recognises the link to increased productivity and economic growth. However, if the government’s laudable ambitions for the UK’s infrastructure base are to be realised, the real hard work may be only just be beginning, particularly in respect of the skills agenda and creating a stable policy environment allowing those involved in infrastructure to invest for the future,” said Broadhead.

Richard Threlfall, head of infrastructure, building and construction at KPMG UK, said: “One number matters more than any other in what the chancellor said on infrastructure investment - 1.2%. It is, as a percentage of GDP, the guidance to the National Infrastructure Commission on UK spending on economic infrastructure from 2020 to 2050. 

“The chancellor was proud to explain that it represents an increase on the current 0.8%. Whilst that may be true, it is still low by international standards, and the continued focus on economic infrastructure in isolation, ignoring both social infrastructure and housing, is another missed opportunity to grasp the bigger picture. Overall, the UK spends about 2.7% of GDP on infrastructure today. Canada spends more than 4% and China at least double that. Today’s Autumn Statement felt fairly business-as-usual with lots of small initiatives, all welcome, but nothing transformational,” said Threlfall.

"By international standards, investment in UK infrastructure is still low. The UK spends about 2.7% of GDP, Canada spends more than 4% and China spends at least double that."
Richard Threlfall, head of infrastructure, building and construction, KPMG

Commenting on the chancellor’s announcements on road spending, Nelson Ogunshakin, chief executive of the Association for Consultancy and Engineering, said: “While an extra £1.3bn sounds a lot, and will be welcome by local authorities, it still only represents 0.08% of GDP, while estimates suggest there is a backlog of almost £12bn in road maintenance. We need a step change in how our roads are funded and maintained, and the government must recognise this if our network is to go anyway towards addressing the productivity gap from which the UK suffers.”

Dan Harvey, executive director at Ramboll, said: “Infrastructure spending is crucial in supporting wealth distribution, promoting economic development and environmental performance, and improving the livelihoods of people across the UK. Its prioritisation in the Autumn Statement will provide a boost for the industry, but must be backed up by an effort to ensure such spending is done efficiently and effectively.”

“The focus needs to be on smaller projects and shorter delivery times, which ensure a faster boost to the economy and support further infrastructure improvements across the country, while involving more tangible benefits for the population,” said Harvey.