Business Reaction to Spending Review
Following on from the Chancellor of the Exchequer’s, Rishi Sunak’s spending review yesterday, November 25th, 2020, where he announced spending in infrastructure, housing and levelling up the nation, here are some business reactions:
Steve Radley, CITB Policy Director, said: “The Chancellor’s commitment to a large increase in infrastructure spending next year and publication of the National Infrastructure Strategy give the construction industry greater confidence about the future work pipeline. It is now critical that the right skills and training interventions are put in place to help people benefit as a result of this investment and give the industry the skills it needs.
“A new route from FE into industry, through the expanded construction Traineeship, reform of the Apprenticeship Levy and the prioritisation of construction skills in the Government’s National Skills Fund and new Levelling Up Fund will be essential in doing this.”
Donald Morrison, People & Places Solutions Senior Vice President Europe at Jacobs said:
“It’s good to see a long-term, sustainable, infrastructure strategy – not just for our industry, but for rebalancing the economy as a whole. Creating social value is vital for levelling up. We must attach outcome-focused goals to all infrastructure funding promises. Now is the time to ‘think think think’ before we ‘build build build’ to make sure we’re designing infrastructure that will be of long-term benefit to all of us all economically, environmentally and socially.”
Debbie Dore chief executive of APM said: “We hope this announcement will provide the long-term pipeline of infrastructure and other strategic projects needed to turbo-charge recovery and a sustained future pathway for successful delivery.
“As the Chancellor said, “projects must have real impact.” We agree, but this commitment must be backed by investment in the skillsets and training essential to underpin this. Greater investment as well as focus on project professionalism will be required to support the proper inception, delivery and completion of projects both now and in the future.”
Jamie Johnson, CEO, FJP Investment said: “With spending cuts and tax reforms on the horizon, investors will be retreating to assets that are secure, resilient and have the potential for long-term capital growth. This partly explains why the property market is alive with activity.
“We are seeing many people eager to take advantage of the stamp duty holiday by investing in bricks and mortar. As a result, house prices have been rising at an impressive rate – a reflection of an asset high in demand and limited in supply. I expect this to remain the case well into 2021.
“Importantly, infrastructure spending remains a core policy commitment, with billions pledged for upgrades and the construction of new-build homes. The government knows that any attempt to bring about the UK’s post-pandemic recovery needs to include measures that promote investment into property and infrastructure. As well as being a key election pledge that Boris Johnson will be keen to honour, putting public funds into such developments will also promote economic growth and productivity.”
Rain Newton-Smith, CBI Chief Economist said: “Stark forecasts point to tough times ahead. But through his statement, the Chancellor has made some bold autumn decisions to power a Spring recovery.
“The Spending Review lays the foundations for a brighter economic future. A new National Infrastructure Bank, long-term funding for innovation, and a comprehensive plan for creating jobs and renewing skills are just some of the building blocks needed to deliver on this vision. It’s right to take this opportunity to plan for tomorrow.
“But ambition must be matched by action on the ground. The Government’s commitment to build, build, build must be delivered now. This means a clear strategy to upgrade the UK’s infrastructure and publishing the Energy White Paper.
“And there can be no let-up in the support for firms facing new COVID restrictions. Firms need help to survive, then thrive. Business investment and confidence can be the engine of UK growth, creating jobs around the UK.” s
On infrastructure Rain Newton-Smith, CBI Chief Economist said:
“We know just how vital refreshing our ageing infrastructure is to repower the economy, connect more people and create job opportunities across the UK. Putting money into roads, broadband and clean energy will help do just that.
“Most importantly of all, the Government has set out its stall for the long-term by creating a National Infrastructure Bank. With the right remit, the bank has the potential, to crowd in the private finance that will be crucial to delivering these new projects.”
On levelling up Rain Newton-Smith, CBI Chief Economist said: “Local authorities and businesses have been waiting a long time to hear how EU structural funding will be replaced from 1 January. They will be encouraged to see pilot programmes launched for the UK Shared Prosperity Fund alongside the Levelling Up Fund. Both will help deliver improvements in communities across the country.”
Alex Vaughan, Chief executive officer said: “Infrastructure investment needs effective and agile governance, structure, and processes to ensure it can realise the desired economic, environmental, and social return behind the Government’s vision announced in the spending review. At Costain we believe that exceptional programme leadership is critical to the safer, better, greener, faster and more efficient delivery of infrastructure projects and key to achieving the sustainable operational performance required to not only bounce back from COVID-19, but thrive.
“However, no two areas of the UK are the same. Careful consideration of local as well as national aspirations will ensure the social, environmental and economic value of infrastructure projects delivers the Government’s vision to level up, decarbonise and meaningfully improve the lives of local communities. Costain has been improving people’s lives for more than 155 years and we look forward to continuing our support to the Government in strengthening the UK’s place in the world.”
Peter Tooher, Executive Director, Nexus Planning Manchester said: “The Chancellor’s emphasis on the importance of place in driving the economic recovery is to be welcomed. The Levelling Up Fund, alongside changes to the Green Book, will create new opportunities for the North and Midlands to capture a larger slice of infrastructure and regeneration investment. However, it will be important that these place-based programmes are joined up by the National Infrastructure Plan and underpinned by a balanced, national approach to managed housing growth.”
Sean Keyes, managing director of civil & structural engineering firm, Sutcliffe, which has offices in Liverpool, Manchester, North Wales and London, said: “I absolutely welcome this commitment from the Government. The way big spending projects have traditionally been assessed has been a longstanding issue in this country that has facilitated a north-south divide. I have always said that the social value of these projects should be taken into more consideration – not just monetary. Then and only then will we see the areas that need these projects the most get a bigger share of the pie.
“Again, I am pleased to see a spending pledge for the NHS. As healthcare specialists, we see first hand the need in this country for good quality healthcare facilities – hospitals are underfunded, there is no getting away from that fact. We need bigger, better hospitals, with more staff, especially as the country faces a health crisis once the effects of the pandemic subside. All I would ask is that hospital spending is done in a strategic way so we avoid other PFI disasters.
“With regards to the £4.6bn package to help hundreds of thousands of jobless back to work – all I would ask is that this is targeted towards SMEs. The majority of companies in this country are SMEs and it is they who will react the quickest, creating quality, skilled, professional jobs for the unemployed.”
Darren Caplan, Chief Executive, Railway Industry Association, said: “It is positive to see the continued commitment by Government to transport infrastructure, with the announcement of a new infrastructure bank, the publication of a National Infrastructure Strategy, the commitment to publish an updated infrastructure pipeline, and a £4 billion fund for local improvements. In the coming years, investing in rail will be vital and, as outlined in our recently published ’10 reasons to invest’ report, we should be confident that following the Coronavirus pandemic, passenger and freight numbers will return to the network.
“We look forward to seeing the National Infrastructure Commission’s Integrated Rail Plan on HS2, Northern Powerhouse Rail, Trans Pennine Route Upgrade and Midlands Rail Hub, and the outcomes of the Williams Review into the structure of the industry. In this time of such uncertainty, clarity and visibility from Government is essential, so publishing these plans and updates on key projects will ensure the rail industry is able to prepare and deliver, ultimately supporting the ‘Build Back Better’ agenda and the economic growth and investment the UK needs right now.
“However, the Railway Industry Association and its members will be concerned that the Spending Review didn’t provide an update on specific rail schemes, particularly those in the Rail Network Enhancements Pipeline. We have been campaigning for Government to ‘Speed Up Rail Enhancements’ as part of our SURE initiative, but we have now been waiting over a year to hear news about what enhancements projects are going to be taken forward and when. Despite supposedly around 80 schemes on this list, we are still no nearer knowing which ones are to be progressed. We urge the Government to publish its update on the RNEP as soon as possible.”
Bill Zuurbier, chairman of specialist risk management consultancy, Equib, said: “Details of the long-awaited National Infrastructure Strategy have come at a critical time for the industry and the entire UK economy. Pandemic-related disruption and financial pressures have accentuated the slowdown in construction activity in recent months, and this injection of public money will be essential for stemming the flow of business failures. There is also an urgent need to get on with it – to start delivering large-scale infrastructure projects and realising the economic benefits the stimulus will bring.
“The launch of a new National Infrastructure Bank will play a vital role in getting the Government’s much vaunted ‘levelling up’ agenda back on track. With the north long complaining that infrastructure spending is biased in favour of the south east, the Chancellor’s pledge to take a fresh approach to the ‘green book’ will be essential for rebalancing investment. Directing billions of pounds into major capital projects will help to revitalise deprived regions of the UK, while ensuring that much-needed public infrastructure is sustainable and fit-for-purpose.
“While this raft of measures will provide a ray of hope for construction leaders, the sector must still wait with bated breath for further details of the ‘Project Speed’ initiative. This will include specifics about the list of projects the Government plans to fast track and build at pace. However, given the ongoing economic shock and the shorter outlook of this review, the sector may need to stay patient for a while longer.”
Commenting on the Comprehensive Spending Review and launch of the National Infrastructure Strategy, Patricia Moore, UK Managing Director at Turner & Townsend said: “The message from Government is that infrastructure is to take a central role in narrowing the north-south divide. However, investment must be made in the right way if we are to successfully build back better from Covid-19.
“The National Infrastructure Strategy focuses on connectivity – we now need central and devolved governments to align this plan with improved social and economic infrastructure too.
“The aim should be to ‘level up’ by ‘linking up’ – connecting communities in a way that supports jobs. In many regions there is not enough joined-up planning across highways, rail, energy and residential development. Recognising housing as a key part of our national infrastructure is paramount to achieving more balanced economic growth.
“Government has placed its faith in infrastructure, but the industry is fragile. Investment needs to be made in a way that delivers economic, social and environmental value for communities, at the same time as building capacity and skills capability within the sector itself.”
Simon Rowland, Partner and Head of Construction and Engineering, at law firm Womble Bond Dickinson said: “The Construction industry is responding better than expected to the difficulties caused by the pandemic, as well as having to deal with the challenges of preparing for the end of the Brexit Transition Period next month.”
“Looking at the Chancellor’s Spending Review, we are pleased see his promises of continued and growing investment in some of the key sectors in which our clients operate, particularly in education – by increasing the schools’ budget next year by £2.2bn – and the housing sector with a new £7.1bn National Home Building Fund.”
“One of the keys to unlocking the potential from these investments will be the need for all parties in the construction process to collaborate and innovate.”
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