Pre-budget report; Construction.
Alistair Darling's plan to assist the construction industry by bringing forward £3bn of infrastructure work was overshadowed last night when it emerged that the Treasury has ordered a review of its huge overhaul of the English schools estate.
Although the chancellor yesterday announced the fast-tracking of £800m worth of primary school construction and refurbished secondary’s, a rethink of the £45bn plan for new schools and for an improvement in the education workforce would be a severe blow to the building sector.
The schools programme is thought to be worth more to construction firms than the Olympics and the proposed expansion of Heathrow airport put together.
The pre-budget report identifies a series of areas to be targeted under the public value programme for additional savings.
It said that the Department for Children, Schools and Families is "assessing the value for money" of the £45bn Building Schools for the Future (BSF) programme, which promises to rebuild or refurbish every school in the country. Two other programmes, the deployment of teaching assistants in every classroom and the expansion of free childcare, are also identified as a target for savings.
Ed Balls, the children, schools and families secretary, hailed the expediting of the £800m of schools spending as good news for the construction industry.
Councils will be invited to put forward over Christmas plans for new schools and qualify for a share of the money, which was already allocated for 2010-11 but will be brought forward a year.
Balls said: "This decision means that building or refurbishment projects, particularly in primaries, already coasted, designed and ready to go, can now start as soon as possible. It also means that local authorities can get even more value for money from current, larger projects by extending them with this funding advance.
"The vast bulk of the projects that can be brought forward will be small-scale modernisations and refurbishments - giving immediate cash injections to thousands of small and medium-sized businesses fitting out these new facilities."
The £800m will accelerate the renewal of primaries and modernise secondary’s. "This could bring forward the adaptation of 2,000 secondary classrooms to improve personalised learning, energy-saving measures in around 140 secondary schools, the building of kitchens in around 300 primary schools, and the conversion of rooms for mother-and-baby groups and other community uses in 800 primary schools," the pre-budget report says.
There were suggestions this week that the Building Schools for the Future programme would be expedited but that did not materialise in yesterday's report.
The programme has been hit by delays and there are concerns that the deals reliant on privately finance initiatives could slow in the New Year as the credit crunch bites.
John Dunford, general secretary of the Association of School and College Leaders, said: "More money to refurbish schools is good news. BSF has suffered because it's not been able to deliver fast enough. I suspect that the government has drawn the conclusion that they can't speed up BSF."
Elsewhere in the pre-budget report, Darling promised an extra £775m for the construction industry over the next 16 months by bringing forward spending on housing and infrastructure projects that were only due to get funds from April 2010.
Nearly a third will be spent on making existing social housing more energy efficient and installing new kitchens and bathrooms, while £150m will be devoted to new social housing and a further £175m to major council house repairs.
Ministers hope the remaining £200m will help ensure that major housing expansion and regeneration in key areas can at least get off the ground during the recession. There have been doubts that the government's hopes of 3m extra homes in England by 2020 can be achieved without a huge injection of cash into priority programmes.
The Home Builders Federation said the £150m for new homes - enough for about 2,000 units - was "painfully inadequate in today's circumstances" and would have little significant impact on protecting jobs and improving housing supply. Much more investment than the "seriously disappointing" funds for new projects and much more investment was needed to get work under way on sites with upfront cash for builders.
The government will also bring forward £700m of transport infrastructure projects. Of that, £150m will be spent on 200 carriages for train companies - but they are part of 1,300 new rolling stock units already announced.
The remainder will be used for road building schemes, leading to speculation that projects such as widening the M25, or the A14 on a 21-mile stretch in Cambridgeshire, could be expedited.
Widening major roads is very expensive. An audit of plans to widen the M6 north of Birmingham estimated the cost at £1,000 per inch. A pot of £550m would on that basis buy just under nine miles of new road. Announcements of specific projects are expected today.
Stephen Joseph, executive director of the Campaign for Better Transport, said the government would generate more jobs by investing the cash in maintenance instead of construction. "They are much better spending it on something less capital intensive. Building roads requires a lot of equipment and fewer people. Maintenance is at least more labour intensive."