Chancellor of the Exchequer Phillip Hammond recently presented his first – and last – Autumn Statement to Parliament. In the days since, construction professionals have had time to digest what the Autumn Statement means for the industry as a whole – and despite mixed reactions from some quarters, it could potentially be good news for construction.
Taking into account some of the most prevalent and well-publicised challenges the construction industry has faced, particularly in the last twelve months, the Autumn Statement features a number of ideas and initiatives that seem to target these pain points – in particular, building confidence, addressing productivity and improving infrastructure.
Building Confidence Through Investment
High on the agenda was the availability of more investment than has been seen in recent years – covering both housing and infrastructure. A pot of £2.3bn will be spent on 100,000 new homes in desirable locations, whilst a separate £1.4bn will be directed towards building 40,000 ‘affordable homes’. Add to this investments in transport technology, infrastructure and R&D and the end result is the £23bn National Productivity Investment Fund (NPIF).
But what does this mean for construction? As we’ve previously spoken about within our whitepaper on procurement stifling growth, the cyclical nature of politics often has a negative effect on construction investment. This is because priorities shift as elections come around. Hammond’s plans, however, have been built to break that cycle, with target dates reaching 2022 for National Productivity Investment Fund spending, and the National Infrastructure Commission (NIC) retaining its decision making until 2050.
If the successive government keeps to the word of our current government, then this fresh new investment could restore the confidence that has been lacking – and arguably, holding the industry back – since the recession. With confidence restored and steady support from the industry’s biggest investor, construction firms could be about to thrive once again.
At the heart of Hammond’s Autumn Statement was the notion of ‘future-proofing’, focusing on improving how business and industry operates before turning attention towards the meatier proceedings. This productivity drive was targeted at a wide range of businesses and industries, but particularly resonates with construction, thanks to oft-discussed productivity issues.
By asking NIC to undertake a new study on emerging technologies which can improve infrastructure productivity and creating the NPIF, it seems the government has embraced the Farmer Review and its wisdom, as the industry had hoped it would. If we can focus on setting (and meeting) these longer term goals and investing in skills and infrastructure projects, then the construction industry can start to move towards being more productive – and reaping the rewards of that.
Finally, as Brexit-fever took hold, there was panic that large and expensive infrastructure projects would be cancelled. Not only would this have affected construction firms, but also the public making use of transport and in need of stronger infrastructure. The Autumn Statement seems to have put that fear to bed, with huge infrastructure announcements – much to the relief of many.
£5bn is expected to be used to stimulate Britain’s roads and railways, with £1.3bn focused on tackling congestion. The NIC and its access to the NPIF will also hold a lot of sway over infrastructure, with £390m pledged towards future transport technology, £100m towards accelerating the East-West Rail line linking Oxford and Cambridge, and £450m to be spent on digital signalling across the UK’s train network.
With improving infrastructure at the forefront of his plans, the industry can feel somewhat secure that for Hammond, they remain a priority. As we’ve previously stated on our blog, a focus on infrastructure following disruption such as Brexit is a good idea, and we’re glad the government are thinking along the same lines as the construction industry.
How Has the Industry Reacted?
It goes without saying that for all the positivity, there is still some opposition. Capturing a snapshot of industry sentiment, Building Talks collated quotes from key figures within the industry – with many voices seemingly reaffirming a positive reaction.
Meanwhile, some commentators have found fault with aspects of Hammond’s plans which undermine other areas of the Autumn Statement. Changing the definition of ‘benefits in kind’, for example, has a huge impact on mobile workforces – the people who will be most often called upon to help complete key infrastructure projects.
As with all previous statements, we have to wait and watch as the government actions these plans. We hope – as we’re sure industry professionals do too – that the results of Hammond’s Autumn Statement are better productivity, stronger infrastructure and a large confidence boost for the industry. If not, then we could be facing difficult times ahead.