Capital investment essential

Published:  18 June, 2009

LONDON: The UK's economic recovery and long term prosperity will be severely delayed if the government cuts back on its capital investment programme after the next election.  This is the stark warning from the Construction Products Association, whose annual report Achievable Targets; is government delivering? has been released.

The report, which monitors delivery of the government's plans for investment in the built environment in six key areas (education, health, social housing, road, rail and water infrastructure), welcomes the dramatic increase in capital spending on the built environment that has occurred over the past decade, but is concerned that too many of the government targets have been missed, abandoned or replaced.   Most notably the Ten Year Transport Plan was abandoned but others included the target to eradicate fire safety backlog in the health estate. The Building Schools for the Future programme also proved to be enormously optimistic and the programme has already been revised three times.

Commenting on the report, Michael Ankers, chief executive of the Construction Products Association, said: ‘Overall, capital spending per annum over the last decade has increased from £19.4bn to £48.3bn today, with particularly large increases in spending on education and health. This funding has delivered significant improvements in some key areas but as we approach and pass the general election, short-term expedience must not be used as a substitute for long term vision.'

‘At any point in the economic cycle, capital investment is essential in ensuring the services society needs are provided both effectively and efficiently.  This in itself brings significant savings to the running costs of our health and education services and is critical in delivering decent housing, so reducing the call on health and social services.  Improving buildings and water infrastructure will also help meet the ambitious targets government has set for reducing carbon emissions as well as addressing wider environmental concerns.'

‘Given the dramatic economic events of the last 18 months, cutting capital spending could be seen as the ‘easy' option when it comes to trying to rebalance the public finances. But remember, this has been tried before following previous recessions and the apparent short term benefits have resulted in long term problems that have cost the country dearly, both socially and economically.'

‘The construction industry is fundamental in helping the UK restore its economic health but it is also facing its worst downturn in living memory. The health of both the economy and the construction industry are inextricably linked and re-establishing the country's economic prosperity is paramount.  Therefore failure to invest in education facilities, transport infrastructure and homes will only serve to delay our recovery longer and will undermine the skills and ability of the construction industry for many years to come.'   

Significant findings from the report are:

  • Despite social housing being a key priority, the government is unlikely to meet its national target of delivering 45 000 new social homes per year by 2011.
  • It  is looking increasing unlikely that the government will meet its target of ensuring 95% of homes meet the Decent Homes standard by 2010.
  • Despite recent progress, the Building Schools for the Future programme is running considerably behind schedule.
  • Proposals for investment in the health sub-sector beyond 2010 are very patchy and there is considerable concern that the enormous improvements achieved recently will be undermined unless there is a clear future output and delivery programme.
  • An efficient transport network brings considerable economic benefits and is essential for a successful economy.  The government should reintroduce a long-term vision for developing the road network and make an urgent decision on the proposed high speed line, HS2.

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