Osborne's £6bn cuts slices deep into construction

28 May 2010

Chancellor George Osborne cut swathes out of the construction industry as the coalition government set out how it would achieve £6.25bn of savings this financial year.

In the days following the announcement, Construction News gathered details from spending departments on their detailed plans, which involve cuts in every sector from roads and rail to housing, green building and schools. Local authority funding and PFI schemes have also been hit.

Network Rail is to reduce its spending by £100m which means that a £50 m project to upgrade 10 stations - including Manchester Victoria and Clapham Junction - will not go ahead.

On the roads, three Highways Agency schemes, deemed as low priority, have been deferred as part of a £54 m plan outlined by the DfT and will no longer start on site this year.

In housing, the Treasury has said there will be £150m in savings from the last government’s housing pledges, with £50m cut from the Kickstart programme and the remaining £100m from the affordable housing budget, primarily hitting the low-cost home ownership scheme.

It is thought there may also be a consultation on cutting the housing market renewal budget – the controversial project to demolish and rebuild homes in failing areas - by up to £50m.

The Government has, however, put aside £170m to invest in 4 000 social housing starts.

The announced cuts this week do not affect Building Schools for the Future and its delivery body Partnerships for Schools, but a spokesman said: “They remain part of a wider conversation ministers are having. The savings announced today are just the beginning of the story.”

Savings of £160m will be made by delaying PFI projects, while hundreds of projects signed off by Labour this year, including several schools, hospital and transport projects are also now at risk. An announcement on the future of the schemes is expected soon, following a review.

At the Department of Energy and Climate Change, the £34m Low Carbon Building Programme, which provides incentives to encourage the uptake of low-carbon building technology, has been cut.

The programme has provided 20,000 grants for capital and installation costs of microgeneration equipment. However, all existing grants are secured.

One major London project affected is the UK Centre for Medical Research and Innovation, due to be built next to St Pancras. The Government revealed it would be phasing funding rather than doling out the £250m lump sum pledged by former Prime Minister Gordon Brown.

The Olympic budget is also affected with the Olympic Delivery Authority told to cut its budget by £27m.

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