Autumn Statement: Chancellor puts finishing touches to construction plan
The government is gearing up to make a raft of announcements it hopes will have a radical impact on the health of the construction industry.
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The Chancellor George Osborne will deliver his autumn statement on Tuesday, laying the foundations for a series of related policy announcements from several departments.
At the heart of Mr Osborne’s speech will be details of how the government intends to unlock £50 billion of private sector investment to be spent on construction and infrastructure.
Together with an updated Plan for Growth, to be published jointly by the Department for Business Innovation and Skills and the Treasury - in which infrastructure will be a central theme - the Chancellor will attempt to present a coherent approach to stimulating economic growth.
He will promise to reduce barriers to investment such as planning and attract large institutional investors to take the place of declining government spending and bank lending. The government has pledged to unveil a list of 40 infrastructure projects that will be given priority status.
Speaking at the CBI annual conference this week, Prime Minister David Cameron said the Chancellor would focus on projects that “will genuinely lift the productive output of the country” such as roads, broadband, rail, power and ports.
He said: “Next week the Chancellor will be setting out the next stage of our plan to transform the nation’s infrastructure not with more government borrowing, but by using all the other tools at the government’s disposal to take a more strategic and proactive approach to infrastructure.
“That’s something this country has long lacked. We are putting in the money, leveraging the power of the private sector and reshaping the rules to break decades of failure and build world-class infrastructure to support a world-beating economy.”
The projects - selected for their potential to provide growth - will not be given extra funding but will be fast-tracked by the government.
Mr Cameron said the “link between infrastructure and Enterprise Zones” (see analysis p18-19) would be “increasingly important” in helping deliver the priority projects.
Contractors have put forward more than 70 projects for the government to consider via seven of the industry’s largest trade bodies.
In a report published ahead of the autumn statement, the seven trade bodies polled contractors to identify six barriers to growth in the construction sector (see box below).
The Chancellor is expected to address some of their concerns, such as the lack of access to finance. Meanwhile, Infrastructure UK will publish its second National Infrastructure Plan, which will detail the government’s approach to breaking down the political, regulatory and investment barriers to support UK infrastructure.
The IUK’s report will come in the same week as announcements from the Cabinet Office, highlighted this week by its minister Francis Maude, who said the department would publish the first detailed pipeline of public sector construction and infrastructure projects due to begin in the next two years.
He said the six-monthly updates would include confidence ratings for each project so contractors could plan accordingly.
The Cabinet Office is also expected to provide an update on the work of the Government Construction Board and the Government Construction Strategy.
The Cabinet Office confirmed the GCB has agreed to work on producing evidence of the business case for collaborative team working and to publish details of the governance structure for projects and programmes on departmental websites (see box below).
Health and safety is also expected to be given greater recognition in the construction strategy’s action plan and the IUK draft charter for infrastructure.
At a meeting of the GCB in September chaired by chief construction adviser Paul Morrell, it was agreed project bank accounts would be widely introduced on public sector construction projects to help ensure payments reach subcontractors more rapidly.
Mr Morrell confirmed at the Construction News and Construction Products Association annual forecasting conference last week that the government would introduce a “significant increase” in their use.
Highways Agency commercial director for major projects Tim Eaton said his department was conducting a pilot scheme on the M62 upgrade at junctions 25-30.
He said the project would use PBAs from tier one down through the supply chain.”It’s part of our intention that all our contracts this spending review period will have as a matter of course a PBA unless there is a significant reason not to.
“It should be a significant step forward in our commercial development.”
The first report of the Major Projects Authority is also expected before the end of the month.
For all the news on government announcements around the Autumn Statement, see CN’s dedicated webpage.
Unlocking growth in UK construction
A survey of the members of seven of the largest trade bodies in the construction industry has identified six recommendations ahead of the Chancellor’s autumn statement. The recommendations are:
Rebalance public expenditure between capital and current spending
Reduction in VAT for sustainable domestic upgrades to 5 per cent
Identify new models for infrastructure finance
Ensure banking support to construction industry
Maintain course on planning reform in England
Improve availability of affordable mortgages for first-time buyers.
Government construction board agreed actions
“Significantly increase” the use of project bank accounts
Produce evidence to support the business case for cultural change towards collaborative working within the construction supply chain
Publish details of governance structure for projects and programmes on departmental websites
Consider clearer recognition of health and safety within the construction strategy’s action plan and the IUK draft charter for infrastructure
Consider local government involvement in trial projects and local government involvement in general