The chancellor would be wise to look at the last remaining options for growth that will produce something for nothing
The sense of anticipation that accompanies the build up to government Budgets has, recently, tended to be borne more out of habit than any real expectation of material change - at least as far as the construction sector is concerned. In an admirable spirit vaguely reminiscent of the national mood when the England football team embark on a World Cup campaign, the industry’s trade bodies have, each time, persuasively made their representations to the chancellor, calling for the diversion of cash to capital spending and an emphasis on “shovel-ready” projects - and then watched, not particularly surprised, as the government’s response first lacks the scale desired and then largely fails to deliver results.
Wednesday’s address by the chancellor looks in danger of heading the same way. With some dubbing it the “empty Budget”, and George Osborne already having set a date - and a cost cutting agenda - for a spending review statement in June, most departments will just be pleased if they stave off the squeeze.
But there is a marked shift in the scale of expectation in the Budget submissions from many industry interest groups this time around - and, if the chancellor is prepared to pay them attention, the basis of what now seems like the only credible plan of action to fuel growth in the economy from construction.
With an election just two years away, the coalition is fast running out of options in the projects it can use to demonstrate growth. There is no longer time to gain a pre-election boost through long-term infrastructure projects - even though certainty around them is still crucial to the industry’s longer-term planning. In addition, the delays to the Priority Schools Building Programme - held back for a year by the review of PFI, and now at risk of being pushed back further still by lack of detail around the financing model - are a reminder of the time it can take to translate newly announced public work from conception into reality.
Instead, as the CBI and others have recognised, the best option now for growth lies in focusing attention on work programmes for which the foundations are already in place.
These include further investment in the NewBuy initiative, which is already leading to encouraging signs of growth in private housebuilding (page 14). The Priority Schools Building Programme, with hundreds of schools whose case for building work has been approved, also offers the prospect of quick returns.
So here, the government needs urgently to find a solution to its private financing headache, or temporarily extend the number of directly funded projects to allow the programme to gather momentum.
And then, of course, there is the Green Deal. The initiative’s potential to kick-start repair and maintenance work is, as we have repeatedly reported, being hamstrung by a lack of commitment at the heart of government to the green economy - something which would cost Osborne absolutely nothing to make. For this reason, we have made a call for a clear commitment to green as an engine for growth the focus of our own Budget submission (page 21).
All of these measures could be achieved at no or minimal financial cost to the government - and yet have the potential to show near-immediate returns in the form of economic growth. So for a chancellor who seems wedded to the principle of conjuring something from nothing, they are surely bets worth making.
Sarah Richardson, editor