George Osborne: construction to provide private sector-led recovery.
Spending Review: transport investment maintained
Published: 20 October, 2010
LONDON: There was some relief for the construction industry following the Chancellor's Comprehensive Spending Review today.
The decision was made to maintain transport investment over the next four years. Public sector capital spending which had been expected to fall by 35% over the period of the Review will now fall by just over 30%.
As a result, the cuts to public sector construction spend are expected to be £3.5bn less than was announced at the time of the Emergency Budget.
Michael Ankers, chief executive of the Construction Products Association, said: "We knew this was going to be a difficult Review as far as construction was concerned.
"However, the Chancellor has acknowledged the important role that capital spending on construction can play in helping to provide for a private sector-led economic recovery.
"In particular, by maintaining transport investment at £30bn over the next four years, he will sustain employment and help encourage private sector investment."
Mr Ankers pointed out that public sector investment in construction over the next four years will be over £20bn less than that received in the last four years. This will, of course, have significant consequences for the construction industry.
The sector is hoping that following today's announcement there will be a recovery in confidence in the private sector. A commitment to Crossrail ends speculation about the long-term prospects for that scheme.
The CPA also warmly welcomed the support for the Renewable Heat Incentive as a contribution to improving the energy-efficiency of existing building stock.
"Where we urgently need greater clarity," said mr Ankers, "is the mechanism to encourage investment in private housing and this will not happen until we have agreement over the New Homes Bonus incentive and reforms to the planning system."
Today's key announcements:
* About 490 000 public sector jobs likely to be lost.
* Average 19% four-year cut in departmental budgets.
* Structural deficit to be eliminated by 2015.
* £7bn in additional welfare budget cuts.
* Police funding cut by 4% a year.
* Retirement age to rise from 65 to 66 by 2020.
* English schools budget protected – £2bn extra for social care.
* NHS budget in England to rise every year until 2015.
* Regulated rail fares to rise 3% above inflation.
* Bank levy to be made permanent.