Infrastructure boost welcomed by construction sector

Chancellor’s Autumn Statement announces commitment to increased investment in infrastructure projects

THE Construction sector has welcomed the Chancellor’s recent announcement confirming an increase in investment in infrastructure projects around the UK. Major schemes previously mothballed will now go ahead thanks to both government spending and private cash from pension funds and overseas investment.

Commenting on this week’s Autumn Statement, the Mineral Products Association’s director of economics, Jerry McLaughlin, welcomed the Government’s commitment to infrastructure investment and boosting the housing market as key elements of economic recovery, but added that, as always, the headlines needed to be put into perspective.

‘The key infrastructure numbers are an additional £5 billion of public money by 2015, £5 billion more after 2015, potentially £20 billion of private investment in the medium term and a longer-term list of over 500 projects worth over £250 billion identified in Government’s new National Infrastructure Plan,’ said Mr McLaughlin.

‘The  initial £5 billion of infrastructure investment includes about £1 billion of road improvements, but this spending is largely backloaded to 2013/4 and 2014/15, and the much larger sums to be generated from pension funds and private sector investors for infrastructure investment through more creative financial mechanisms will take longer to emerge.'

Michael Ankers, chief executive of the Construction Products Association, said it was encouraging that the Government had recognized that improving the quality of the country’s infrastructure had a key part to play in raising business competitiveness and stimulating economic growth.

‘At a time when construction output is falling and forecast to continue to do so for the next couple of years, the additional investment on infrastructure will help create new jobs and generate as much as £75 billion of economic activity across the economy as a whole,’ he said.

Mr Ankers added that the most important step for the long term would be to underpin the investment in infrastructure with private finance, and therefore the announcement of an additional £20 billion of funding from pension funds and capital markets was particularly welcome.

‘Funding of this kind will help create a long term sustainable framework for investment in our infrastructure which is set apart from the vagaries of government spending cycles,’ he said.

Turning to other proposals in the Chancellor’s statement, Mr Ankers welcomed the initial measures that the Chancellor has announced to help electro-intensive industries. 'The Government has recognized that it has to balance retaining key industries in the UK with the measures it needs to take to ensure long-term security of energy supply', he said.

‘Companies in our sector will benefit from the additional rebate on the Climate Change Levy, as well as measures to reduce the cost of the EUETS and the Carbon Price Floor. But these are only the first steps and we want to see help for companies that use gas as their major source of energy.’

The Mineral Products Association also welcomed the measures to help compensate energy-intensive industries from increasing costs arising from government measures, but said it remained unclear how these funds will be distributed. The Association also welcomed the Chancellor’s commitment to the review and modernizing of the planning system and some environmental regulation.