Confirmation that the government is backing the NIC is welcome but their approach to infrastructure is still falling short of the mark


George Osborne’s recently favoured catchphrase, “We are the builders”, was noticeably relegated to a supporting role in his Budget announcement on Wednesday, mentioned only once in a speech peppered with pledges that this would be a “Budget for the next generation.” The industry, though, can feel encouraged by Osborne’s pledge to fund work on two major infrastructure projects that, until this point, had been subject to vastly more talk than action.

The commitment of seed funding to the schemes - HS3, and London’s Crossrail 2 - was widely trailed in the days before the Budget, following publication of three major reports from the recently created National Infrastructure Commission that recommended the projects. But confirmation that the government is backing the NIC’s work is a welcome sign that the views of the body, which was set up with the aim of creating a longer-term view of infrastructure requirements in the UK, will be taken seriously by Whitehall when it comes to competition for public spending.

When Osborne’s Budget is looked at through the lens of the built environment, the approvals of these two long-term schemes, together with around £230m of funding for road upgrades in the North, give some credence to the chancellor’s claim to have delivered a Budget focused on “long-term solutions for Britain”. However, there are two key respects in which the government’s approach to infrastructure is still falling short of the mark of a sustainable long-term strategy.

The first, most obvious point is over the speed of progress on major projects. Although the seed funding is significant, the money for Crossrail 2, initially expected in last year’s summer Budget, has been confirmed nine months later than hoped. And construction bosses have already pointed out the woeful lack of information on timescales for these resource intensive schemes.

This is a straightforward complaint and can be fairly readily addressed - if enough will exists within government to overcome its own bureaucracy, of course. The Budget’s surprise commitment of £700m to flood resilience and defence schemes is a case in point. Although the chancellor acknowledged that the ongoing review of flood risk will have a strong bearing on some of this spend, he has already earmarked cash for five named schemes.

The second, more troubling point is over the continuing disjointed approach to policies that affect Britain’s ability to meet its long-term built environment challenges.

For all of Osborne’s trumpeting of his ambition for a “northern powerhouse”, the policies related to its creation have been dominated by mayoral powers and, when it comes to the built environment, infrastructure schemes. For the concept to work, these initiatives need to be much better linked with policies on housing creation and business. The British Property Federation warned within minutes of Osborne’s speech that his surprise rise on the highest rates of stamp duty land tax on commercial property risks undermining investment in commercial premises in the North.

Similarly, the decision to extend additional stamp duty on buy-to-let properties to institutional investors will cause concern over the viability of build to rent schemes.

The chancellor was keen to emphasise that the government is still investing in capital spending, despite turbulence in the global economy. But with Osborne having to reveal disconcertingly lower forecasts for productivity growth in the UK than previously expected, and responding with a further £3.5bn round of cuts to day-to-day government spending for 2019/20, it’s abundantly clear that every piece of funding that goes to capital investment is extremely hard won. For these funds to create an environment best able to support “the next generation”, the government needs to consider the interaction of the entire raft of its policies over the longer term, not just selected individual schemes.

Sarah Richardson, editor