Marie-Claude Hemming, director of operations at The Civil Engineering Contractors Association (CECA), addresses the challenges facing the infrastructure sector at this uncertain time and makes the case for continued investment.
The UK economy is in near recession, with prices steadily rising.
This scenario is a result of a number of factors, but notably due to the impact of Covid and the war between Russia and Ukraine which is impacting on supply chains and energy prices. The impact of Brexit and its effect on labour and resources also plays a role.
In response, the newly elected leader of the Conservative Party and prime minister Liz Truss has capped energy prices for both consumer and business use and has announced some tax cuts to boost consumer spending.
However, while the financial markets continue to maintain a negative outlook, it is anticipated that there will be some cuts at the end of the month to public spending outside of the NHS and the Ministry of Defence in order to balance the books and increase confidence.
CECA appreciates that there may not be any further planned increase in Government spending on UK infrastructure in the near future. However, we are keen to highlight the ramifications of substantially decreasing any public spending plans. CECA is the representative body for companies who work day-to-day to deliver, upgrade, and maintain the UK’s transport and utility networks.
With more than 300 members throughout England, Scotland and Wales, we represent firms who together carry out up to 80 per cent of all civil engineering activity in the UK, in the key sectors of transport, energy, communications, waste and water.
Our members include some of the largest construction firms as well as a range of small specialist and regional contractors. Our industry supports the employment of over 200,000 people in the UK with annual activity worth £25bn.
After the economic crash of 2008, subsequent governments scaled back investment in a range of public infrastructure projects. This led to the collapse of many businesses and scattered a key workforce.
This loss of staff from businesses of all sizes devastated our industry. Furthermore, the then paused projects were more costly in the long term - when governments of the day retrospectively acknowledged their strategic value and were forced to re-procure at a much greater cost. Over the last decade, the construction industry has made the case for sustained infrastructure investment.
This has been supported by governments and has been reflected in increased spend and the recognition that infrastructure investment goes hand in hand with economic growth. At the same time, industry has played its part in the drive to efficient, collaborative and optimum value projects by working with Government and clients to develop, adopt and implement the principles of the Construction Playbook, the Value Toolkit, Project 13 and other transformative reforms such as Project Speed.
Long-term Whitehall support for our sector, combined with an efficient industry response, ensured that when Covid struck, the construction industry managed relatively well. We were encouraged by Government to continue to play our part, post-COVID, as part of #BuildBackBetter.
But now is a critical time. Before the summer Parliamentary recess, CECA was fairly sure of Government’s commitment to infrastructure spend. While this has continued following the mini-budget and the announcements reinforced at the Conservative Party Conference, we recognise the challenging economic circumstances the UK finds itself in. As such, it is vital that the construction industry reinforces all efforts to demonstrate its value.
CECA research has indicated that for each £1bn increase in infrastructure investment, UK-wide GDP increases by a total of £1.299bn and for every £1bn of infrastructure construction increases overall economic activity by £2.842bn.
We welcome the Truss Government’s intention to fully commit to existing plans and projects such as the next rail, roads and water settlements and the Integrated Rail Plan and the levelling up agenda.
Just as important is continued support in the drive to net zero and energy efficiency. We acknowledge the challenges of arguing for further investment in these difficult times – and we are not doing so - but instead are warning about market decimation and increased long-term public cost if existing opportunities and commitments fall by the wayside.
In the short-term we believe that there are three key steps Prime Minister Truss and her team must continue to take to support our industry and ensure market confidence in the coming months:
- Maintain certainty, consistency and continuity of existing investment programmes.
- Work with industry to target business support where it is needed.
We look forward to the next fiscal event at the end of the month, which we hope will generate the market confidence needed to reboost growth. As an industry we will continue to play our part in driving efficiencies in our projects, employing local workforces, and delivering innovation to meet the needs of a twenty-first century society.
If you would like to find out more about our work, or have any questions please visit ceca.co.uk or email marieclaudehemming@ceca.co.uk
