The Autumn Statement’s emphasis on improving the productivity gap is welcome but the government need to provide more details

John Hicks

With improving the UK’s productivity at the heart of this year’s Autumn Statement, it was encouraging to see the chancellor identify infrastructure as a key driver. The £23bn National Productivity Investment Fund to be spent on innovation and infrastructure over the next five years is welcome news. However, a vital component missing from the statement was a clear pipeline of projects, which is so urgently required to provide increased certainty for industry and potential investors. 

In his speech, the chancellor announced he has asked the National Infrastructure Commission (NIC) to make recommendations on the UK’s future infrastructure needs using a fiscal remit of between 1% and 1.2% of the country’s GDP each year from 2020 to 2050. While this is a commendable move, it cannot risk delaying the delivery of much-needed projects.

Any hold up to reinforce the pipeline of projects could delay private investors from having clear visibility of potential opportunities. After all, with public finance under immense pressure, the chancellor is already relying on investment from the private sector to help bring forward many of the schemes currently in the pipeline. Post-Brexit, private investment in infrastructure will be key to help boost the UK’s competitive standing.

Any hold up to reinforce the pipeline of projects could delay private investors from having clear visibility of potential opportunities

A lack of clarity could also have implications for the entire supply chain, from manufacturers to skills training. Industry needs to plan now for what skills are needed to deliver future schemes. The recently published CBI/AECOM Infrastructure Survey 2016 found that 86% of infrastructure providers are concerned that skills shortages will affect the UK’s ability to deliver the current infrastructure pipeline. With businesses eager to equip themselves with the right skills, certainty around the future pipeline is now more important than ever. 

The Autumn Statement’s emphasis on improving the productivity gap does, however, provide fresh impetus for industry to build on the findings of the Farmer Review. The opportunity for industry to be far more joined-up with its clients in how it approaches skills is key. Also important, are the opportunities to make a career in the built environment more attractive to young people by moving to a digitally-enabled way of working.

The Farmer Review explores different ways to raise productivity by making work less labour intensive, such as through offsite construction. The Autumn Statement’s linkage between infrastructure investment and productivity gains now gives industry what it needs to engender these types of productive methods such as accelerating Building Information Modelling (BIM) into Detailing for Manufacture and Assembly (DfMA) and more offsite production.

The NIC is expected to publish a report in 2018 that will set out a vision for UK infrastructure up to 2050, which will be updated once during each parliament. A strategic long-term approach that goes beyond the election cycle would allow industry to plan with real confidence that the demand and support for new infrastructure will be sustained. However, industry and the lending community still require a new pipeline of transparent, viable projects in the intervening period.

Publication of the much-awaited Housing White Paper will hopefully provide the detail behind some of the headlines in the chancellor’s speech. Anything less will only increase the plight of Jams – those households “just about managing”. Let’s hope its recommendations are radical. With the vast amount of underutilised land in public ownership, a fresh look at this could perhaps be the main lever government can pull.

John Hicks is director and head of government & public for AECOM