Billions promised for investment in infrastructure, but will it make any difference?
As was to be expected in the wake of much criticised cuts in public sector investment over the last two years, the Spending Review at the end of June saw a great deal of hype surrounding promised increases. The reality is that only a fraction of what has been cut, will be restored. Yet while improvements to Britain's creaking infrastructure are long overdue and money recently made available following the Budget in March, was too little and too late for many in the construction industry, there is still reason for a least a little cautious optimism.
The Government's plans for infrastructure spending, along with the Â£2bn per year for five years promised for local enterprise partnerships, is welcome news and will certainly play its part in the construction industry's recovery. Following what was dubbed by the Royal Institution of Chartered Surveyors as a "horrendous" 2012, this investment is absolutely vital to get Britain building again. But it is also something that is crucial to wider economic recovery - construction contributes around 7% to Britain's economy.
The urgent priority now is for regionally focused capital spending, carefully targeted through the LEP's, to create jobs and ensure economic recovery while additional investment in smaller projects and Enterprise Zones will lead to further capital investment in these areas and help to get the economy moving.
In fact, economic conditions could hardly be more auspicious for the investment required. When one considers the combination of low interest rates - the lowest in fact that we can borrow against in the UK's recorded economic history - along with high unemployment, spare capacity and a shortage of housing not to mention our ailing infrastructure, the road we must travel seems clear.
Meanwhile, there is a backlog of work that continues to build and it will take time for investment promised in the spending review to filter through the system. Only then will those clients we know are waiting now, have the cash and the confidence to go ahead. Currently, projects can take four or five years from enquiry to decision, very much longer than in the boom times.
Research conducted by the National Institute of Economic and Social Research (NIESR), suggests that spending more on infrastructure would boost growth - critically, not just in the short term. It is a view shared by Chalcroft Æ³ further investment now would help to release the current bottleneck in building projects and enable the construction industry to play a full part in the economic recovery.