A lot to interest the infrastructure sector

Chancellor of the exchequer Philip Hammond made infrastructure investment a central part of a relatively low-key Autumn Statement, which he delivered in the House of Commons today.

Pledging more “high-value investment in infrastructure to boost UK productivity,” the chancellor announced a new National Productivity Investment Fund of £23bn to be spent on innovation and infrastructure over the next five years and said that by 2020, infrastructure investment would rise from 1.1% to 1.2% of GDP. 

“Economically productive infrastructure benefits business,” said Hammond as he announced a £2.3bn housing infrastructure fund to help provide 100,000 new homes in high-demand areas. An additional £1.4bn would also be made available to deliver 40,000 extra affordable homes and in total £6.7bn for housing was announced by the chancellor.

Transport infrastructure will benefit to the tune of £1.1bn for extra investment in English local transport networks, with an extra £220m to reduce traffic pinch points. More than £1bn will also be spent on digital infrastructure and there will be 100% business rates relief on new fibre infrastructure.

The main highlights for transport, infrastructure and the regions were: 

  • £1.1bn extra investment in English local transport networks
  • £220m to reduce traffic pinch points
  • £23bn to be spent on innovation and infrastructure over five years
  • £2bn per year by 2020 for research and development funding
  • £110m for East West Rail and commitment to deliver Oxford to Cambridge Expressway 
  • More than £1bn for digital infrastructure and 100% business rates relief on new fibre infrastructure
  • £1.8bn from Local Growth Fund to English regions

Confirming his desire to rebalance the economy away from London and the south-east, the chancellor pledged to give the go ahead to a programme of major roads schemes in the north. He also announced funds for local enterprise partnerships between local authorities and businesses. "We are investing in local infrastructure in every region of England,” said Hammond. £556m will go to local enterprise partnerships in the North of England, £542m to the Midlands and east of England, and £683m to LEPs in the South West, South East and London, said Hammond.

Hammond also announced a new “City Deal” for Stirling, and said that London will receive £3.15bn as its share of national affordable housing funding to deliver over 90,000 homes.

The construction and infrastructure sector gave a cautious welcome to the Autumn Statement. Nelson Ogunshakin, chief executive of the Association for Consultancy and Engineering, said: “The chancellor’s statement today was made in the context of some difficult economic headwinds, so this must be borne in mind when looking at the announcements. That being said though, there was still a lot to interest the infrastructure sector, which did better than other areas. We must now await the detail and small print that will emerge over the coming days and will give a better picture of exactly what the chancellor announced.”

Commenting on the chancellor’s infrastructure announcements, Miles Barnard, Mouchel managing director, said: “Many of the key roads announcements were trailed prior to the statement, so there were no real surprises. Nonetheless it is reassuring that this extra money is going to be deliberately targeted in the most important areas. I’d also like to see the significant new funding in science and technology targeted in areas that most influence the modernisation of infrastructure including driverless vehicles and big data.”

Atkins’ UK and Europe chief executive officer, Nick Roberts, said: “The chancellor has placed economic growth and quality of life at the heart of his infrastructure decisions. Being clear on these outcomes means that our most pressing needs around housing, roads, railways and digital networks feature at the top of the priority list and the government can borrow a sensible amount of money to fund the improvements with a high degree of confidence that they will get a good return on their investments.”

Chris Pike, development director for infrastructure at Arcadis, said: “We welcome the government’s commitment in the Autumn Statement to both housing and infrastructure. These two priorities must be intrinsically linked to close the productivity gap in the Midlands Engine and the Northern Powerhouse and provide affordable housing to safeguard productivity in London and the South East.”

Neil Broadhead, Head of UK Infrastructure, PwC said: "The Chancellor’s commitment to allocate £1bn to small ‘shovel-ready’ schemes like local road improvements is a much-needed and welcome move. Today's statement recognises the need for a variety of projects going forward – not only a handful of high profile, multi-billion pound mega projects that will deliver benefits in years and decades to come, but also a plethora of smaller schemes dispersed around the country which can be completed and deliver benefits to the general public much more quickly.”

Click here to read more industry reaction to the Autumn Statement

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