Industry concerned over cuts despite Spending Review outcome

Industry figures have expressed concerns over the effect on capital programmes by the revenue spending cuts imposed by last week’s Spending Review, despite chancellor George Osborne’s decision to protect capital spending.

Fears have been raised that capital spend could still be cut if cuts prove hard to implement or forecasts the spending review was based upon prove optimistic.

Rebecca Larkin, economist at the Construction Products Association said “the risk remains that if current spending cannot be reduced as much as anticipated, [government] may cut public construction projects to achieve its aims of eliminating the deficit.”

However, she added that it was a path government seemed “unlikely to want to pursue again” after the sharp contractions in public sector construction that took place after the austerity cuts in 2010.

Simon Rawlinson, head of strategic research & insight at Arcadis, said the government was “pushing delivery risk from central government to local government” at the same time as cutting local government budgets by 55%, meaning councils could choose to cut project spend.