Major contractors are urging the government to take advantage of the low cost of construction services by increasing spend on building projects.
James Wates, the chair of the UK Contractors Group, has written to chancellor George Osborne in advance of the Comprehensive Spending Review to urge the government to protect capital spending as far as possible from the forthcoming cuts, and to take advantage of the buyer’s market.
Wates said: “Construction costs have fallen significantly over the past year. So now is an optimum time to reap the best possible value from investment in, for example, housing, schools and hospitals. This is a great deal for the taxpayer.”
Wates added that current projections are that capital spend would fall to 1.4% of GDP by 2013/14, which he said was “significantly less than the 2.25% below which the condition of the country’s built assets will deteriorate”.
He called on Osborne to commit the government to a long-term investment plan, to improve the planning system, and to oversee the introduction of framework contracts for “as many programmes as possible”.
The letter came on the back of the Confederation for British Industry’s submission to the Spending Review earlier this week, which called for the protection of the £15.9bn Crossrail project alongside other major capital programmes. This also called for capital spend to be returned to 2.25% of GDP as soon as possible, in order to improve the UK’s position of 34th in the world in terms of the quality of its infrastructure.
The calls follow continued speculation over the severity of planned budget cuts at the Comprehensive Spending Review on October 20th. Newspaper reports suggested that the Communities Department, the fourth biggest capital spending department, has now provisionally agreed budget cuts of 30% with the Treasury.
Deputy prime minister Nick Clegg gave the Liberal Democrat party conference this week some assurances over cuts. He said: “We will not let capital spending - investment in new buildings, infrastructure and repairs - be swept away as it has in the past.”