Cautious welcome from industry to chancellor’s spending review

Chancellor Sajid Javid delivering his one-year spending review to parliament.

Delivering a one-year spending review to parliament today, the chancellor, Sajid Javid, promised “a decade of renewal” as he outlined the government’s spending plans to cover the first year outside the EU. Javid said there would be an extra £13.4bn in public spending for 2020-21 and that no government department will have its budget cut next year in real terms. “This is what I mean by the end of austerity,” said Javid.

The chancellor was keen to signal an increase in spending across a number of areas. These included £432m in additional funds for the Department for Environment, Food and Rural Affairs to tackle climate issues and more for infrastructure generally when the government publishes its infrastructure strategy review later this year.

Voter-friendly areas of policing, education and health were all singled out by Javid for extra cash. Although his statement was light on detailed pledges for the construction sector, the mood music might seem to suggest a new approach to infrastructure investment in the budget in November – provided this government lasts that long, given current speculation about an impending general election.

The industry and business organisations gave a cautious welcome to the chancellor’s statement. Hannah Vickers, chief executive of the Association for Consultancy and Engineering, said: “ACE welcomes the chancellor’s announcement that he is committed to an infrastructure revolution that will see greater investments made to our existing and much needed new infrastructure networks. We also welcome his announcement that the government will accept the new public value framework which will see spending decisions based on outcomes not just costs, which we have campaigned for. As an industry we’re ready and relish this shift towards a more productive relationship - preparing our value-based business models to launch in the autumn. 

"We do, however, note that the real details of the type of investment will be made later in the year in the National Infrastructure Strategy and so we will reserve our judgment till then. With all the political uncertainty that exists in Westminster, it is important that all parties understand that long-term infrastructure investment decision must be made in the national interest and not just for short term political gain.”

Chair of the National Infrastructure Commission, Sir John Armitt, said: “The chancellor is right to recognise the UK must up its game on infrastructure, but any revolutionary plans for digital connectivity, improvements to failing urban transport networks and expanding clean energy must be translated into effective actions. The government must therefore ensure its forthcoming National Infrastructure Strategy is truly long-term in outlook, backed by clear goals and stable and ambitious funding and genuinely committed to a change in approach. 

“Such a transformative shift is essential if our country is to thrive and cope with the challenges of a growing population and the impacts of climate change. Fortunately, the chancellor has in our National Infrastructure Assessment a costed, strategic and deliverable blueprint for how that can be achieved. We hope he is true to his word and accepts our expert advice.”

Jasmine Whitbread, chief executive of London First, said: “This is a missed opportunity at a time of great uncertainty for the economy. Instead of ploughing even more money into no-deal planning – an outcome that must be avoided at all costs – the government should have helped shore up business confidence and galvanise growth through a long-term commitment to investing in critical infrastructure. 

“When it publishes its infrastructure strategy later this year, the government must urgently implement the recommendations of the independent National Infrastructure Commission and commit to investing a minimum 1.2% of GDP in vital projects across the country, to deliver Northern Powerhouse Rail and Crossrail 2, alongside vital tube upgrades.”

Mark Robinson, Scape Group chief executive, said: “It's promising to see the chancellor recognise the UK has fallen behind its competitors thanks to our underinvestment in infrastructure. However, today’s announcement lacked clarity on any fresh funding or detailed plans to rectify the problem.  Crossrail is still falling behind, yesterday fresh industry data reignited fears that the construction sector is falling into recession – and HS2 could now be delayed by up to seven years.  Stronger transport links between UK cities is vital for the economy to prosper nationwide. The “infrastructure revolution” can’t wait.  We need action now.”

Jason Millett, Mace's chief operating officer for consultancy, said: “The chancellor’s commitment to prioritise infrastructure spending is a welcome development today. Investing in regions will be key to rebalancing Britain’s economy so that it is fit for purpose post-Brexit. The funding announced for the Manchester to Leeds section of Northern Powerhouse Rail is an example of how this economic rebalance could be achieved. What is now needed – and will hopefully come from the vision outlined in the chancellor’s proposed infrastructure strategy, due to be announced in more detail this autumn – is a firm commitment to delivering both Northern Powerhouse Rail and HS2.”

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