The “no” vote in the independence referendum has ended a two-year period of uncertainty for cross-border construction businesses and positions Scotland for more private sector infrastructure investment, according to consultants Aecom and EC Harris.
Edinburgh-based Aecom director Peter Robinson, in charge of the firm’s work in the water sector, told CM that the two-year debate had created layers of uncertainty for the 330-strong office in its bids to Scottish, wider UK and overseas clients.
But he was looking forward to 27 March, the date on which a forthcoming Bill to transfer new tax-raising and spending powers to the Holyrood parliament should have its second reading in the House of Commons.
"Already a number of large infrastructure projects that have gone ahead in recent years. But with more powers, there is certainly the prospect of a more prosperous future for Scotland within the UK."
Peter Robinson, Aecom
He told CM: “It will be interesting to see how more devolved powers might generate a fund for investment in public sector services, in schools and the NHS.
“Already a number of large infrastructure projects have gone ahead in recent years, such as the new Forth Road bridge (pictured), the A9 dualling project and the new Borders Railway, and the Commonwealth Games was a good vehicle to maintain investment in construction. But with more powers, there is certainly the prospect of a more prosperous future for Scotland within the UK.”
Graham Hill, lead partner for EC Harris in Scotland, agreed that the pre-referendum uncertainty had led to many clients adopting a “wait and see approach”. “That’s been taken away and we won’t now have 18 months of uncertainty leading up to independence, although there is still uncertainty as to what the new constitution and new powers will look like,” he said.
But he was less certain that there would be a public spending devolution dividend, pointing out that “the wider UK is half way through an austerity programme, so to make good on the pledges made [by the Westminster parties on Scottish funding] will require absolute focus on making every pound work. For instance, in schools we might see more modular classroom products.”
However, he anticipated that Scotland could be successful in attracting private sector investment into health, education and infrastructure projects. “There is a lot of potential investment in the private sector, I think we should work harder at making projects and investment programmes accessible [to investors].
“Scotland’s Non Profit Distributing model [Scotland’s version of PFI] has been quite successful, but we could be more ambitious in how it’s deployed, for instance in programmes to improve an entire area, or linked to better health outcomes.”
Scotland’s construction sector
- Gross value added in the Scottish construction sector was £5.8bn in 2012, down from £7.9bn pre-recession in 2008. In the whole of the UK, 2012 construction GVA was £83bn.
- The Scottish construction lost 68,600 jobs between 2007 and 2013, when it employed 162,300 people.
- Scotland’s infrastructure pipeline accounts for 20% of its total order book, with projects include £4bn of wind farms, the £800m Coire Glas Hydro scheme, and carbon capture project at Peterhead Power Station, a government FEED contract
Source: The Real Face of Construction, CIOB
Aecom’s Robinson also pointed out that the referendum debate had laid considerable stress on the question of Scotland’s oil, without much discussion of its role as an exporter of renewable energy.
“I think there’s a huge opportunity missed. Scotland can provide a significant percentage of Europe’s renewable power, but all of these great opportunities to release hydro and wind power need investment to come from a wide range of public and private sources – the private sector might invest in generation, but there needs to be public money for upgrading transmission and distribution infrastructure. That was disappointingly overlooked in the debate.”
And at EC Harris, Hill said that he hoped that the referendum had drawn attention to the diversity of ideas and policies within the UK. “I would certainly back the idea that there isn’t a monopoly of good ideas in London, there are lots of ideas and talent in other parts of the UK, not least in Scotland.”
