There was some relief for the construction industry in the Chancellor’s decision not to slash public sector capital spending by as much as had been feared, with healthcare and education faring relatively well in the Comprehensive Spending Review.
It had been expected to fall by as much as 35% over the next four years, but will now fall by just over 30%.
As a result the cuts to public sector construction spend are expected to be £3.5bn less than was announced at the time of the Emergency Budget.
Michael Ankers, chief executive of the Construction Products Association, said: “We knew this was going to be a difficult Review as far as construction was concerned. However, the Chancellor has acknowledged the important role that capital spending on construction can play in helping to provide for a private sector-led economic recovery.
“Nevertheless, public sector investment in construction over the next four years will be more than £20bn less than in the last four years and that will have significant consequences for the construction industry.
“We hope that following today’s announcement there will be a recovery in confidence in the private sector now the uncertainty surrounding the CSR is out of the way.”
Michael Boyd, partner with Pinsent Masons, said: “The NHS has fared much better than most. It emerges with a real-terms increase in funding every year, with capital earmarked for new hospital construction at St Helier, Royal Oldham and West Cumberland.
“However, it is not all good news. There will be a 17% decrease in capital spending and the Chancellor was at pains to point out that the NHS would be expected to play its part in the cross-government war on waste.”
Kate Orviss, also a partner at Pinsent Masons, described the schools capital budget of £15.8bn as a “welcome” announcement.
“Clarifying that 600 schools will be rebuilt or refurbished is good news but we need to wait and see the detail of how this will be implemented (and when) to assess what opportunities will exist in light of the cuts to the Building Schools for the Future Programme,” she said.