Industry concern at £100 billion loss in capital programme
WHILE acknowledging the need for a tough emergency Budget to establish a credible path to restore the country’s public finances, the Construction Products Association has expressed concern that the reduction in capital spending, which will fall to just 1.25% of GDP, will hold back the pace of the economic recovery.
Like the Chancellor, the construction industry is pinning its hopes on the revival of the private sector as the Budget outlines up to £100 billion of cuts in capital investment over the next five years.
Commenting on the Chancellor’s statement, Michael Ankers, chief executive of the Construction Products Association, said: ‘While there may be some relief that the Chancellor did not make further cuts in capital spending from those already announced by the last government, the impact of what is set out in this Budget should not be underestimated.
‘In 2014/15, capital spending will have fallen by a third since 2009/10. At this level it will be very difficult to maintain the built environment of this country in its current condition. As the Chancellor acknowledges, the Government will need to be very careful in making choices as to how this capital is spent in order to make sure that it is focused on those projects, such as transport and energy, that will most effectively contribute to the economic recovery.’
Andrew Minson, executive director of The Concrete Centre, added: ‘This is a tough budget that goes much further than expected. The public sector, which has been an essential source of work for the construction industry during the recession, faces significant cuts. The gamble is whether the Chancellor has created the necessary business environment to encourage the revival of the private sector.
‘Although there have been some indications of a nascent recovery in private sector construction, notably in the South East, to hope that the private sector can pick up from a shrunken public sector is a big ‘if’,’ said Mr Minson. ‘Large-scale public sector cuts and pay freezes and a significant rise in VAT may derail this revival.’
Tarmac’s response to the Emergency Budget came from Paul Fleetham, executive director of Tarmac National Contracting. He said: ‘It is all too easy for people to claim that their particular sector should escape the Chancellor’s cuts. However, road maintenance has a compelling case. Decent roads are at the heart of a healthy economy and I would urge the coalition government, in its National Infrastructure Plan due later this year, not to lose sight of pre-election pledges to maintain investment in our transport network.
‘We are realistic and know that there is little money to go round. But taking a ‘salami-slicing’ approach to cut local road budgets is not the answer. Many of our roads are already critically under-funded and we risk adding years to the already formidable 11-year road maintenance backlog. What’s needed is for local road funding to go further via greater partnership between local authorities and the private sector, together with a renewed focus on ‘right-first-time’ maintenance and good asset management.’