Darling’s Budget was about as good as it could have been under the circumstances – but the real challenges are only just beginning

There is a well-known Westminster saying that Budgets that are well received the day they are presented rarely look as good 12 months after the event. Conversely, Budgets that initially fail to impress can often appear in a much better light with the benefit of hindsight. Alistair Darling will be hoping that the latter scenario turns out to be the case with the Budget he presented last week.

The chancellor faced an almost impossible task. In the midst of the sharpest global economic downturn for decades he was under pressure to deliver further measures to stimulate recovery. The construction industry, in its many forms, was not short of suggestions about how he should do this. On the other hand the extent of the public debt arising both from the cost of the fiscal stimuluses already in place and the inevitable decline in tax revenues caused by the recession, restricted his room for manoeuvre. In my judgment, he did not make at all a bad job of playing this tricky hand.

Although he had no scope for further substantial spending, he avoided undermining the steps already taken to kickstart recovery. Had he opted for immediate spending cuts, as many of the critics had been calling for, there would have been a risk of choking off recovery almost before any signs of an economic turnaround had appeared. Instead, the chancellor opted for a series of relatively modest but carefully targeted measures designed to reinforce steps already taken and to encourage investment in technologies that will help lead us out of recession. Funding to encourage low-carbon energy and manufacturing initiatives, and further investment to support the housing market were particularly welcome.

We need to face up to the challenge that will be posed by the squeeze on public expenditure that can be expected in the years ahead


From a series of visits I have made over the past month to existing and prospective construction sites, it has been clear to me just how crucial sustained public investment is to help maintain capacity and avoid the recession imposing even further damage on the industry. The impressive progress now visible on the Olympic site, the start of work on the central London Crossrail stations, the accelerating pace of procurement in the Building Schools for the Future programme and the impact of the Homes and Communities Agency in unblocking stalled housing and regeneration schemes bear testimony to the importance of well-targeted public investment.

Indeed any detailed analysis of the impact of the recession on construction sectors will show how vital counter-cyclical public investment is in mitigating the damage and helping recovery. There are, however, two fundamental concerns. One is the need to ensure that we get the best possible value for money from this public investment. Second is the damage to sustained recovery caused by the fall in public investment after 2011.

The Learning and Skills Council’s gross mishandling of the further education college renewal programme is a reminder of the scope for achieving efficiency savings through better oversight of procurement. With marked variations in performance between the arms of government, there should be a strong emphasis on learning from those departments or agencies, such as Defence Estates, that have proved most effective at delivering projects cost-effectively, and disseminating their good practice. This is one obvious early priority for a chief construction officer, assuming the post is filled before long with a suitably qualified individual with the necessary powers and authority to deliver results.

The chancellor opted for carefully targeted measures to reinforce steps already taken and nurture technologies that will help lead us out of recession


We also need to face up to the challenge that will be posed by the squeeze on public expenditure that can be expected in the years ahead. If this is not properly handled, it could seriously threaten the maintenance of longer-term investment programmes such as schools, hospitals and social housing.

This is not just a case of ensuring that we get good value for money. There will also be a need for creative delivery models that use a limited supply of public finance to lever in more investment. In the housing context, thought is already being given to ways in which the increased values likely to be generated by today’s investment might be tapped to support programmes a few years down the line. There really will be a premium on creative and innovative thinking along such lines if the recovery is not to be put at risk by longer-term funding shortages.