Chancellor's spending review gives infrastructure sector much to welcome

Chancellor of the exchequer, Rishi Sunak, delivering his spending review in parliament on 25 November 2020.

The chancellor of the exchequer’s spending review announcement which he delivered today in the House of Commons looks to offer much for the infrastructure sector to be happy about. More funding, much of it already announced, for transport, housing, broadband, net zero commitments, local infrastructure together with the unveiling of a new UK infrastructure bank based in the north and also the launch of the much-anticipated National Infrastructure Strategy will all be welcomed.

The new National Infrastructure Strategy (NIS) promises to deliver “fairer, faster and greener” and sets out the government’s long-term infrastructure ambitions to provide a long-term perspective without ignoring the short term. The strategy highlights clear goals and plans to achieve them, with more detail yet to come over the coming weeks and months, unveils multi-year funding commitments for many key infrastructure programmes and confirms the government’s commitment to fundamentally change the way it considers and delivers infrastructure across the whole of the UK through a review of the ‘green book’.

The government says the NIS is not the final word on its infrastructure plans. It is only the first step of a multi-year process to transform the UK’s infrastructure networks. The strategy will be followed by a series of detailed publications setting out further details on key areas of infrastructure policy, including the Construction Playbook, Energy White Paper, English Devolution and Local Recovery White Paper, a refreshed Industrial Strategy, Union Connectivity Review and an updated National Infrastructure and Construction Pipeline.

The industry will particularly welcome the positive commitments in the strategy to increase the emphasis on the quality of design in infrastructure projects and specifically the commitment to support the National Infrastructure Commission’s recommendation for all major national infrastructure projects to have a board-level design champion supported by a design panel, to help ensure schemes are built sustainably to a high standard, looking beyond their core function to add value to communities and the natural environment.

Commenting on the chancellor’s statement and the publication of the National Infrastructure Strategy, Hannah Vickers, chief executive of the Association for Consultancy and Engineering, said: “Our industry will be broadly happy with today’s announcements. Despite much of it being previewed over the last week, we still had the surprise of a £7.1bn National Home Building Fund, which will be warmly received.

“There were important strategic moves too. The intra-city transport settlement will give local bodies more control over transport decisions and their own budgets, but we still would have liked to have seen more progress on Northern Powerhouse Rail – a missed opportunity for a clear and demonstrable commitment to levelling-up.”

The chancellor gave no extra details of the government’s much vaunted ‘Project Speed’ initiative, with those hoping for a list of projects to be announced that were in line for fast tracking coming away disappointed, for now. Hannah Vickers said that the focus had to be on delivery to power much-needed growth. “I’d like to see all energies focused on delivering a strong pipeline of projects across the country, so our industry can kickstart growth, act as the catalyst for post-pandemic recovery, and meet ambitions on levelling-up,” she said.

On levelling-up, Rishi Sunak is clearly placing much store on a new £4bn cross-departmental Levelling Up Fund that will invest in local infrastructure in England. The chancellor says any local area will be able to bid directly to fund local projects - but they must be delivered within this parliament and they must command local support.

Announcing the new fund, which will be managed jointly between the Treasury, the Department for Transport and the Ministry of Housing, Communities and Local Government, Sunak said: “The fund will take a new, holistic, place-based approach to the needs of local areas. Projects must have real impact. They must be delivered within this parliament. And they must command local support, including from their member of Parliament. This is about funding the infrastructure of everyday life: A new bypass. Upgraded railway stations. Less traffic. More libraries, museums, and galleries. Better high streets and town centres.”

Richard Robinson, CEO Atkins UK & Europe, said: “The government’s firm commitment to infrastructure delivery is very encouraging and we welcome in particular the investment in affordable housing and the continued focus on addressing regional inequalities as set out in the chancellor’s statement. We’re also very pleased to see the National Infrastructure Strategy published and will carefully review the document over the coming days, recognising that a single coherent plan is crucial if we’re going drive up productivity through the efficient delivery of infrastructure projects which provide value to the taxpayer.”

Patricia Moore, UK managing director at Turner & Townsend, said: “The message from government today 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.”

National Infrastructure Commission chair Sir John Armitt welcomed the government’s focus on investment in local infrastructure but said that more local control would be needed to deliver it. “To achieve the aim of levelling up, more long-term funding and control for cities is necessary to bring transformational urban public transport projects to places outside London,” he said. 

“The Commission will monitor government’s progress on delivery and very much hope this strategy marks the beginning of a renewed focus on long term infrastructure policy around which industry and investors can plan with confidence,” Armitt said.

Click here to download the National Infrastructure Strategy.

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