Government defers pain on capital spending

25 June 2010

Capital expenditure was spared fresh cuts but the industry was left waiting for hard information after spending decisions on housing and school building budgets were deferred under the Budget, Building reported.

But the magazine also reported that the fate of the Homes and Communities Agency’s Kickstart and local authority housing programmes will be made public after next week, and that news on the £55bn Building Schools for the Future programme is expected within weeks.

All other capital spending decisions will effectively remain in doubt until the Comprehensive Spending Review in October.

Meanwhile, Construction News reported that several billion pounds worth of projects passed during the final months of the Labour Government would go ahead.

About £7bn of spending on construction projects got the go ahead after being called in for review and all seven Building Schools for the Future projects approved since January, worth a total of £480m,  have escaped unscathed. In addition, all 26 academy projects called in were also approved.

UK Contractors Group director Stephen Ratcliffe admitted that the damage was lighter than many expected. “The reaction from many of our members is that it could have been a lot worse.  But what we really need to see now is clarity on the rest of the Government’s plans.”

Wates strategy director Steve Trusler said he hoped threats on spending from the coalition were largely bluster to prepare the industry for lesser cuts.

It is understood that spending decisions on BSF were put back due to debate over which schemes will continue. It is expected that most that have reached preferred bidder stage will go ahead in their current form, although sources have warned of “grey areas”.

Chancellor George Osborne said on Tuesday that he had decided to protect capital spend overall in order for the country to “continue to compete in the modern world”. He said: “The absolute priority will be projects with a significant economic return to the country.”


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