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Building Relationships

Where will the work come from now?

Chancellor George Osborne’s spending cuts, announced last month, cut a swathe through public sector construction programmes for the next four years.

The construction industry can expect to lose an estimated £20 billion of work over the next four years as a result of the Comprehensive Spending Review, despite the announcement that there is £3 billion more in the pot than was announced in the emergency budget in June (source: Building). Housing and regeneration were the hardest hit areas of public spending, with the Department for Communities and Local Government now facing budget cuts of a massive 75% by 2014/15. However there is still a limited amount of funding for capital projects, particularly in transport and energy and to a lesser extent in health and education.

The capital budget for transport has been reduced by 11% - representing an £800 million cut in funding by 2014/15, but a number of major projects have escaped the axe. The National High Speed Rail network, Crossrail, the Birmingham New Street Station upgrade and a number of regional projects that are expected to have a positive impact on the local economy, such as the A11 road widening scheme in Norfolk and the Mersey Gateway bridge, have been given the go-ahead. These are expected not only to provide work for those directly involved in projects but also to generate additional work by helping regenerate local areas and attract new business.

The Government has pledged £1 billion for a carbon capture and storage demonstration project, to promote renewable technologies, as well as announcing that £200 million is to be invested in port facilities and technology to facilitate development of both offshore wind and energy efficiency technology for buildings. There will be less money for the Green Investment Bank than the business community had hoped for, but there will still be £1 billion available to help promote the establishment of green technologies and businesses.

In the health sector, despite cuts of 17% over the next four years, priority funding has been given to key hospital schemes including a £150 million project at Papworth, the £288 million Alder Hey Children’s Health Park project in Liverpool and a £400 million replacement for the Royal Liverpool University Hospital.

In education too, a limited number of schools projects have been given the green light, including 600 former Building Schools for the Future and Academies projects. Around 700 school projects remain on hold but the Government has said that some work on these will be funded, and has promised limited capital funding for essential maintenance and primary school building programmes.

For more information go to www.hm-treasury.gov.uk

The Watts Bulletin is the technical companion to the Watts Pocket Handbook, the essential guide to property and construction, as used by professionals since 1983.

Watts Bulletin editor: Trevor Rushton.