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Spending review must protect infrastructure, ACE tells Treasury

Peter Campbell, ACE senior policy manager

ACE has made the case to government to maintain spending on infrastructure.  The organisation’s senor policy manager Peter Campbell outlines the recommendations made in its latest spending review submission and explains why.

ACE is lobbying government to protect infrastructure in five key ways in its Spending Review submission that was sent to the Treasury as the deadline closed.

  • Maintain capital expenditure on infrastructure
  • Spending Reviews should assume a more strategic approach as previous governments adopted with a greater degree of cross-party support.
  • Longer spending envelopes for relevant infrastructure departments should be considered.
  • Allow devolved governments and regional bodies to hold on to more of funds raisedlocally to support local infrastructure investment.
  • Protect government spending in areas that will allow creation of apprenticeships to meet the 3M target for the end of this Parliament.

Following its conclusive victory in May’s General Election, the Conservative government has been pressing ahead with its Spending Review, consulting and seeking submissions ahead of the final outcome due in November. This is an opportunity to influence the amount of funding that Treasury makes available to each department and is an important part of the financial processes the government undertakes.

"The Chancellor should further increase the opportunities for regional and local authorities to increase and retain more of the funds raised through local charges."

Infrastructure has enjoyed a privileged position in government thinking, with announcements of extra funding in most of George Osborne’s recent Budgets, and multi-year agreements that provide extra certainty for the likes of Highways England and Transport for London (TfL). ACE’s position in its submission is that this should continue.

Three of ACE’s recommendations deal with just this over-arching issue, ensuring long-term funding certainty through protection of the government’s capital expenditure, a more strategic approach to Spending Reviews with greater cross-party support, and even longer multi-year settlements, similar to those the Paris Metro enjoys.

An industry that can be confident that funding will be forthcoming and less subject to changes as political whims shift will be able to plan more effectively. Resources can be devoted to training and upskilling the workforce as companies are confident the work will be there for them, and costs incurred from having to gear up and down can be minimised.

This will enable delivery of the infrastructure to be streamlined, costs reduced, productivity boosted, and the economic recovery embedded on a more sustainable footing. This is the government’s clear priority for this parliament, as productivity data consistently highlights that the UK is less productive than competitor nations by as much as 30 per cent.

This parliament will also see more power devolved to the constituent nations of the UK, as well as new regional-metro authorities, however the Spending Review is widely expected to see further squeezes on central funding for these regions. Given the importance of local and devolved authorities as clients to the industry this could have harmful implications and put delivery and prosperity at risk.

To that end, ACE has recommended to the Chancellor that he should take the opportunity of this Spending Review to further increase the opportunities for regional and local authorities to increase and retain more of the funds raised through local charges. This will enable government to reduce central grants while ensuring localities are still able to afford the investment they require.

"An industry that can be confident that funding will be forthcoming and less subject to changes as political whims shift will be able to plan more effectively."

Finally, with the government setting itself the target of delivering 3M apprentices by 2020, a new apprenticeship levy out to consultation (click here for more information), and an extremely ambitious pipeline of work to deliver in the next two decades, ACE has suggested that now is not the right time to look to reduce budgets in this area. It is important that the next generation of engineers is brought through.

So when considering those spending envelopes that are associated with apprenticeships, the Chancellor has been urged to ensure these are protected as much as possible in the Spending Review. This will ensure that consistency and the high quality of schemes can be maintained and enable industry to train its workforce to the necessary standards.

We now have to wait two months for the final outcome, as submissions and suggestions are considered internally by the Chancellor and his team. ACE is hopeful, however, that those suggestions outlined will be acted on and the we will see just how seriously the government takes its commitment to infrastructure.

For ACE’s full submission to the 2015 Spending Review click here.