A promise in the Budget yesterday of £18Bn of increased capital investment in infrastructure from 2015 was welcomed by industry and business. But there was concern that the extra investment was not soon enough and that road maintenance in particular had not received an early extra boost. 

The Chancellor George Osborne admitted that cuts to infrastructure spending in the Comprehensive Spending Review had been too deep. “We need to provide the economy with the infrastructure it needs. On existing plans capital spending is still due to fall back in 2015/16. I don’t think that is sensible. So by using extra savings from Government departments we will boost our infrastructure plans by £3Bn a year.”

A further £3.5Bn is being invested in kick starting mortgage lending and boosting house building.

“This was recognition it was a mistake to cut capital spending so sharply and that other growth boosting measures were taking too long,” said CBI director general John Cridland. “But by shifting £6Bn to housing and infrastructure the Government has sowed the seeds for growth and jobs.”

CIHT chief executive Sue Percy said: “CIHT welcomes the Budget’s recognition that infrastructure investment is a driver of economic growth. The additional investment will create jobs and support economic recovery. The Chancellor should continue to seek opportunities for more infrastructure investment to generate even greater benefits.”

But Lafarge Tarmac Contracting managing director Paul Fleetham said the money “will not provide the catalyst that the economy needs now. The Chancellor has missed an opportunity to use smaller schemes such as highways maintenance to drive immediate economic growth. Investing in local road maintenance would provide a boost to the national and regional economies.” And head of infrastructure, building and construction at KPMG Richard Threlfall concluded that the extra £3Bn a year “will make little difference in solving the UK’s infrastructure challenge”.

According to the full Budget Report the extra infrastructure investment will “lock in recent increases in capital spending over the Spending Review 2010 period ….and will mean £18Bn of additional capital spending over the next Parliament”.

Government departments are expected to underspend by £11Bn in the year to March. Those figures include £900M not spent by Department for Transport - £200M from capital spending and £700M from resource spending.  For the 2015/16 spending round due to be announced on 26 June departments will be expected to find £11.5Bn of further savings.  “The spending round will require a continued focus on delivering higher quality services and better outcomes at lower cost,” the Budget Report said.

The Chancellor also announced that former London 2012 chief executive Paul Deighton will be looking to improve the capacity of Whitehall to deliver big projects and will be making greater use of independent advice. Since last summer he has been commercial secretary to the Treasury in charge of delivery of UK infrastructure.

CIHT’s Sue Percy found this encouraging. “We have consistently called for a cross party long term strategy for the development of the UK’s infrastructure,” she said. “We welcome the Chancellor’s announcement that more independent expertise will be used to shape infrastructure strategy and would welcome the opportunity to represent our industry.”

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