Construction industry consultants have warned the government that the industry will struggle to deliver the chancellor’s latest spending review

Cost consultants Turner & Townsend and EC Harris this week said the industry was overstretched and that cuts in public sector staff would reduce the government’s ability to deliver its ambitious building programmes.

Last week chancellor Gordon Brown announced a spending programme that included an additional £1.3bn for housing, £3.8bn for education and 7.2% and 4.5% for health and transport respectively.

Bob Hewitt, a partner in T&T, said he had serious questions regarding the industry’s capacity to cope with the programme.

He said: “The industry is already at full stretch. Hospital building programmes have recently been reined in because of fears that the industry lacked capacity and resources – Paddington health campus being one casualty – and this is exacerbated by the troubles affecting PFI contractor Jarvis.”

His view was backed by Graham Matthews, head of public sector work at EC Harris, who pointed to the slow bidding in the public sector.

The industry is already at full stretch. There are fears that it lacks capacity

Bob Hewitt, Turner & Townsend

Matthews said: “We may see a lack of interest in the more complex and costly-to-build opportunities as the industry cherry-picks the most promising and easy-to-bid-for opportunities.”

Hewitt also warned that a reduction of 104,000 civil servants, as proposed in the spending review, could undermine delivery.

He added that the proposed relocation of civil servants into the regions could prove costly in the short term.

He said: “Costs attached to relocations include staff relocation packages, acquisition of new offices, redundancy and local recruitment.”

Sir Michael Latham has joined EC Harris’ public sector division, which has a current turnover of £41m in fees. He will chair the firm’s public sector executive.
A trio of tax experts has also joined EC Harris’ integrated property tax unit. Martin Silvester and Jeremy Chapman will join the Birmingham office from KPMG while Helen Smith arrives at the London office from Deloitte & Touche.