Construction industry leaders welcome budget

Leeds, the location of the government's new national infrastructure bank.

Leading industry figures have welcomed chancellor Rishi Sunak’s budget speech today, (3/2/21), with the new national infrastructure bank in Leeds, eight new freeports across the UK, extra help with apprenticeships, a new treasury campus in Darlington, a two-year delay before a rise in corporation tax and a ‘super deduction’ for business investment amongst the announcements to receive a positive response.

Elsewhere though, concerns were raised about a perceived lack of clarity on both sustainability and future rail industry work pipelines, while Heathrow CEO John Holland-Kaye claimed that aviation had once again been ignored by the chancellor.

A broad selection of industry reaction includes:

Association for Consultancy and Engineering (ACE) CEO Hannah Vickers said: “The chancellor today rightly combined ongoing support for business with steps to ensure we ‘build back better’. The built environment sector is the engine room of the economy and the freeports and city deals announcements are exactly the sort of holistic, low carbon regeneration programmes we need to simultaneously create jobs, level up opportunities and hit net zero. But the infrastructure bank must also play its part. 

“The Treasury’s scoping document setting out how the bank will operate is encouraging, taking on board the Construction Leadership Council’s regeneration proposals. The trick for the bank will be to use its powers to enable ambitious integrated regeneration investments across the UK, whilst avoid getting fixated on individual project deals.” 

National Infrastructure Commissioner Julia Prescot said: “We welcome the progress towards establishing an infrastructure bank, as recommended by the commission. The bank can play a key role in catalysing the investment needed for projects to support economic recovery, net zero and enabling all parts of the UK to meet their long term growth potential.

“It is encouraging to see more details of how the bank will operate and the solid initial amount of funding available to it, which we hope can make an early start to unlock the new levels of investment we need in UK infrastructure. The commission looks forward to working with the government to build an effective relationship with the Bank and help ensure it meets its objectives.”

Richard Robinson, CEO, Atkins UK and Europe, said: “This budget has struck a sensible balance between protecting employment as we begin to come out of the pandemic and, looking further ahead, as the government begins to set out its plan for economic recovery. I’m particularly interested in how the national infrastructure bank will contribute to the UK’s net zero efforts while helping to address regional inequality, and welcome the role that private capital is poised to play as we look to secure the investment needed to build back better and greener.”

Patricia Moore, UK managing director at Turner & Townsend, said: "This was not a budget for infrastructure - and the government will argue that it has done the hard work on that already. However, the commissioning of the new UK infrastructure bank in Leeds (city pictured above) will grab attention from investors and puts the country ahead of many nations mulling similar measures. The unveiling of eight new freeports, including the East Midlands and Teesside, will help support the levelling up agenda through jobs and inward investment - with benefits to a long supply chain beyond the confines of a physical port zone. So too will the new government economic campus planned for Darlington.”

Mark Robinson, group chief executive at public sector procurement specialists SCAPE, said: “Local authorities and contractors alike will be most interested in the detail around the government’s new national infrastructure bank. It will no doubt play a central role in supporting the levelling up agenda and unlock potentially transformative projects. However, there is a pressing need for it to move at speed to generate momentum and create the best conditions for local economic growth and sustainable inward investment.”

Donald Morrison, Jacobs People & Places Solutions senior vice president Europe and digital strategies, said: “The creation of a new national infrastructure bank will play an important role in supporting new infrastructure technologies, help to reduce uncertainty and has the potential to accelerate financing to free up large-scale investment across the UK. However, we also need to carefully consider how to design and integrate infrastructure that will be of long-term benefit to all – environmentally, socially and economically. 

“The government must follow through on its commitments to take into consideration not only how best to invest, but where the structural support will result in the most benefit. An ‘outcome-based’ model for infrastructure planning, one that has social value embedded at its heart, will be essential in ensuring the UK can build back better in a way that is truly committed to “levelling up” and the transition to net zero.”

Costain CEO Alex Vaughan commented: “This budget is good news for infrastructure investment as an enabler for levelling up the economy, connecting communities, achieving the nation’s net zero goals, driving digital innovation and for enabling growth for businesses. The chancellor talked about delivering on promises. To realise the full potential of such investment, exceptional programme leadership with a growth mindset will be critical to facilitate the safer, faster, greener, better and more efficient delivery of infrastructure programmes and key to achieving the sustainable operational performance required to not only bounce back from Covid-19, but to thrive. At Costain, this is our promise and we are already working with government and our clients to achieve this.”

Colin Wood, regional chief executive - Europe, AECOM, said: "Today’s budget was always going to focus heavily on the government’s short-term support package for people and businesses affected by the pandemic and quite rightly so. Announcements on the national infrastructure bank, freeports and further investment in the new towns deal are welcome, and I look forward to reading into the detail of the accompanying ‘build back better: our plan for growth’ strategy that was also published today.”

Association for Consultancy and Engineering chairman Paul Reilly said: “Our members are at the heart of the digital transformation that will make the ‘better greener faster’ built environment investment the government aspires to a reality. The ‘super-deduction’ for business investment will support the investment in digital capability our firms needs to make. The increase in the apprentice fee will enable us to invest in the skills of young people so that they can be part of this revolution.”

ACE’s north-west chair Sean Keyes, said: “I expect taxes to stay static for now and although they will rise in the future it is light relief for us now that there won’t be any extra expenditure during a time when cashflow is tight for thousands of businesses and employees. Financial support to encourage apprentices is also fantastic and with the Kickstart Scheme (see above) and other programmes now well underway thanks to the extra £126m boost for traineeships, the future generation now has the perfect platform to strive.”

Jamie Gordon, director of infrastructure and energy at communications specialists BECG, said: “We are pleased to see green growth high on the budget agenda with the launch of the UK’s first infrastructure bank located in Leeds to accelerate progress to net zero. Critics will say this goes nowhere near as far enough and point to the fact that fuel duty remains frozen, but the statement today indicates the importance of green growth as a popular post-pandemic strategy.”

Lucy Wood, director at Barton Willmore, said: “Sunak’s £12bn initial capitalisation for the national infrastructure bank is a welcome step to accelerate the green recovery and levelling up agenda. Together with the Net Zero Innovation Fund and announcement of eight freeports across the country – both of which demonstrate that Britain is open for business after Brexit – this budget sends some key signals to investors and markets in favour of a greener economy. The success of this will, as ever, be in the detail – and which projects might unlock private sector finance and partnerships for delivery.”

Alasdair Reisner, chief executive of the Civil Engineering Contractors Association said: “The creation of the new UK infrastructure bank will help to level up the UK by investing in local authority and private sector projects, as well as providing an advisory function to help with the delivery of schemes on the ground. Similarly we were pleased to see greater incentivisation for employers to take on apprentices, which will help to tackle the skills shortages our sector faces.”

Rohan Malik, EY’s UK managing partner for government and infrastructure, said: “The chancellor’s infrastructure announcements are a strong signal of confidence that the UK economy is ready for post-pandemic recovery. The UK infrastructure bank is a first step in making that happen while also helping to tackle climate change. Announcements around the city deals, freeports and opening the first round of the levelling up fund suggests infrastructure policy makers are rightly thinking ‘hyperlocal’ – how can we get jobs-for-now across the regions while also aligning these investments to long-term value and social needs.”

Tom Williams, head of energy and infrastructure at Downing LLP and investment manager of Downing Renewables & Infrastructure Trust plc, said: “A new UK infrastructure bank is a welcome statement of intent and can significantly increase public investment in renewable assets. While some may consider £22bn to be insufficient, the government is right that the private sector, which is already heavily invested in green initiatives and renewable infrastructure, is ready and willing to provide the bulk of the capital required to meet our net zero targets. A stable and consistent regulatory environment is also key to encouraging new levels of private investment and we ask the government to ensure the necessary framework is in place to allow investors to achieve these ambitious goals.”

Michael Watson, partner at law firm Pinsent Masons, said: “The national infrastructure bank will act as both investor, encouraging emerging technologies to accelerate net zero, and finance provider, to replace the role of the European Investment Bank by looking to “crowd in” commercial debt. Whilst this is a tall order it signals an important step change in the UK’s ‘levelling up’ agenda and heralds a new exciting chapter for the infrastructure sector – but the length of time it will take to establish and develop should not be underestimated. There may be questions asked over the level of initial capitalisation at £12bn and the role that the green retail savings bond may play and how and where this capital is going to be deployed. In this respect; the significant role that the Infrastructure Projects Authority will need to play in the treasury guarantee scheme is going to be particularly important.”  

Maria Machancoses, director of Midlands Connect, said: "It's fantastic news that East Midlands Airport has been confirmed as the location of one of eight UK freeports, as well as the Humber freeport (above), which contains Immingham Port in Lincolnshire. We will now work in earnest with local authorities to make sure these site are well-connected and that businesses have the road and rail infrastructure needed to trade with local, national and international partners."

Chris Richards, director of policy for the Institution of Civil Engineers, said: “If the government wants to make real headway on their levelling up agenda, they will need to take a radical approach to fixing the problems that hold back parts of the country from realising their economic potential. The UK infrastructure bank will move us closer to addressing those problems, but only if it is given the mandate to take a trial-and-error approach to ideas from local and regional leaders. As the government develops the scope of the bank, prioritising the delivery of outcomes from day one, not prudent financial management, should be the main effort.”

Richard Ballantyne, chief executive of the British Ports Association, said: “We welcome this as a first tranche of freeports in England but there will be regions that are disappointed not to have been recognised. We hope that government will keep an open mind on further bids in England and perhaps reconsider proposals for those ports not successful today, which still play a foundational role in supporting a number of growing sectors from logistics to offshore wind to tourism. This would also help ease fears from sections of the industry about the government’s intervention and perception of ‘picking winners’.

Paul Tremble, chief strategy officer at WSP, said: “The Office for Budget Responsibility’s improved economic outlook is certainly encouraging and should spur the government on to pursue a recovery which is green, creates jobs and boosts prosperity in all regions of the UK. The chancellor’s continued support for transformative infrastructure projects as part of our economic recovery provides confidence to many. The £12bn commitment for the Leeds-based UK infrastructure bank is a timely investment in advance of COP26 and will play a key role in further helping to steer business and community decisions on renewable energy, low carbon transport and carbon capture projects.”

Debbie Francis, city executive for the north at Arcadis, said: "This is a vote of confidence in the north. I hope moving parts of government to our great northern towns and cities acts as an incentive for other organisations and businesses to follow suit, in part or in full. It will have a greater impact on stimulating economic growth than the direct employment of any government jobs themselves. We must still ensure real powers and funding are devolved to metro mayors and local leaders to deliver the government’s levelling up agenda but this is certainly a step in the right direction."

Cathy Travers, managing director UK and Europe at Mott MacDonald, said: “The UK hosting COP26 in November, the launch of the UK’s first sovereign green bond and the creation of a UK infrastructure bank reaffirms the commitment to incentivise more environmentally friendly behaviour among the public and businesses. We wholeheartedly support this commitment and want to play our part in making it a great success.

“We believe the government’s decision to move forward with eight new freeports and the Global Centre of Rail Excellence project in Neath will provide significant opportunities to support regeneration, job creation and investment. These have the potential to boost the ambition to ‘level up’, and act as a cornerstone for an innovative, productive, resilient and low carbon society.”

The Tees Valley was a double-winner, with Tees Valley mayor Ben Houchen (pictured above right) welcoming the announcements of a new Teesside freeport and the treasury’s new Northern Economic Campus being based in Darlington. Houchen said: “Future generations will look back on today and say this was the day Teesside, Darlington and Hartlepool was reborn as an industrial powerhouse. The Teesside freeport marks the start of us returning to our rightful place on the world stage as a global player in advanced manufacturing and engineering.”

Praising the new treasury campus at Darlington, saying it gives Teesside, Darlington and Hartlepool a “seat at the top table of government,” Houchen said: “The most powerful department in government will soon beat with a Darlington heart. For too long areas like Teesside, Darlington and Hartlepool have been left behind and local people could be forgiven for thinking that we were often an afterthought. Well, that ends today.”

Darren Caplan, chief executive of the Railway Industry Association, said: “It is good to see the chancellor clarify a number of the government’s plans for infrastructure, including the establishment of a UK infrastructure bank based in Leeds and the £4.8bn ‘levelling up’ fund opening for infrastructure around the UK. However the chancellor himself said in his speech that “for business, certainty matters”, and with today marking 500 days since the Rail Network Enhancement Pipeline was last published, we would once again urge the government to provide the rail sector with visibility of upcoming rail schemes, so crucial to the UK developing a world-class network for the future.”

James MacGregor, senior environmental economist, Ramboll, said: “Today’s budget feels light on the promised content to augment a sustainable recovery for the UK post-pandemic, particularly given the UK’s presidency of the COP26 later this year. There is a danger that the opportunity to firmly set the Covid recovery around green growth will be missed. While of course there are competing priorities and the announcements of investments aimed at levelling up are to be applauded, overall the concern is that the UK will end up with a ‘green blush’ of embarrassment on the world stage as sustainability targets are missed, including net zero targets, in the run-up to COP26.”

IPPR North research fellow Marcus Johns said: “The National Infrastructure Strategy, published four months ago, should have been a catalyst for change, but it needed the chancellor to take it forward and he has neglected to do so. The announcement of a Leeds-based UK infrastructure bank to invest in green infrastructure and levelling up is good news. Specific access for local authorities is very welcome too. But new investment here with cuts to transport elsewhere demonstrates a lack of strategic infrastructure planning”. 

Heathrow CEO John Holland-Kaye said: “The chancellor talks about protecting jobs and livelihoods, fixing the public finances and laying the foundations for the future economy and yet he continues to ignore the UK's aviation sector. He clearly doesn’t understand that all three depend on a strong aviation sector delivering the trade, tourism and investment that power vast parts of the British economy. Failing to even mention aviation, let alone provide full business rates relief for airports in today’s budget, is a missed opportunity to ensure the sector can play a key role in the country’s economic recovery. The absence of any meaningful support from the government in the face of tough restrictions which have ground travel to a halt will weaken the sector and limit UK growth at the time it is needed most.”

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