Spending Review Summary
While the Spending Review saw the Government declare that further savings of £11.5bn are required and announce that further cuts will be made across many departments there was some news of spending amongst all the saving. For some departments cuts have been staved off in favor of ring-fencing current budgets or a modest increase. More optimistically for the construction sector, however, was the general theme of operational or ‘resource’ cuts in preference to cuts in capital spending. Indeed, there were numerous commitments to invest in new development and infrastructure projects, amongst them pledges for a £3bn capital spending programme on new housing, a commitment to provide the money for 180 new ‘free schools’ and ‘guarantees’ for new nuclear plants.
With a sense of dramatic tension worthy of Shakespeare we were made to wait an extra 24 hours for the bulk of the good news. It was left to Treasury Minister, Danny Alexander, to announce a £100bn programme to improve the UK’s infrastructure with new homes, flood defenses, energy projects and a series of transport schemes. But there were a few stings in the tail – not least that the spending will come in two tranches and that even the first of these will only see projects start to get off the ground in 2015-16, with the remainder following during 2016-2020.
The pledges were made with great fanfare but little detail of where the money will come from and an angst-ridden wait for the sector to find out whether they will happen at all, given that there will be a general election in the interim.
Despite the delays and distractions surrounding the infrastructure spending, however, there remain some positive messages from the Spending Review.
- There will be projects and the positive impact of those projects will have a trickle down effect throughout the construction sector
- There is a recognition that capital expenditure is a catalyst for growth
- There is a clear commitment to driving forward projects in some areas, including housing, education and energy, offering the sector tangible strategic signposts
It would be naive for anyone to suggest that the Spending Review will wave a magic wand over the construction sector but it’s clear that the Government puts construction at the heart of its vision for a healthier economy: we must hope that where there’s a political will there is a viable way forward and be ready to throw our cap into the ring when the promised spending actually starts.