Industry fears the Comprehensive Spending Review’s doubling of workload will push it to breaking point.

The industry fears that the tidal wave of transport work announced by the government last week will worsen the already severe skills shortages in construction.

The response follows the announcement of a £70bn, 10-year transport plan plus a £2.5bn planned housing spend in the Comprehensive Spending Review.

The transport spree is expected to double workload in the sector. Doug Willis, director of civils and infrastructure at engineer PB Kennedy & Donkin, said it would cause problems because consultants had been shedding engineering staff. He said: “Many of the most qualified [engineers] have had to go overseas to find suitable work and some have left the industry altogether.”

Michael Chambers, head of policy at the RICS, added: “In the next 10-20 years, people are actually predicting labour shortages growing worse. It’s a major area of concern.”

The transport plan will include extensive road widening, upgrading of the East Coast Main Line, modernisation of the West Coast Main Line and the completion of the Channel Tunnel Rail Link.

Meanwhile, the housing spend will be split between social housing schemes for London and the South-east and tackling the UK’s housing repair backlog.

It’s excellent news for the construction sector, which will be able to plan for the long term

John Prescott, Deputy Prime Minister

Figures for construction spend within education and the NHS were due to be announced after Building went to press.

Leslie Kent, analyst at stockbroker Seymour Pierce, was upbeat about the effect of the Comprehensive Spending Review. He said that the overall construction spend could change the City’s perception of the industry.

“This should prove to the investment community that building is far less cyclical than 10-15 years ago,” he said.

Deputy prime minister John Prescott said the plan would change the way the industry approaches economic planning. He said: “It is excellent news for the construction sector, which will be able to plan for the long term.”

The Housing Corporation will build 56 000 homes for housing associations in London and the South-east over the next three years at a cost of £872m.

However, a spokesperson said the building target would only marginally exceed its current new-build programme of 18 000 houses a year.

These figures for housing put flesh on the skeleton of the housing green paper

Nick Raynsford, Construction Minister

Up to 500 000 homes will also be renovated in the next three years, mostly in the North. In addition, £600m will be spent on private finance initiative projects over the next two years.

Construction minister Nick Raynsford said: “This is an attempt to ensure funding for all key areas of housing. These figures put flesh on the skeleton of the housing green paper.”

Ian Gunter, business development chief of French contracting giant Bouygues, said the firm was keeping a close eye on the government’s planned social housing spend.

Gunter said: “Social housing is a very interesting area generally. We’ve already had discussions with the Housing Corporation and a number of housing associations. We have traditionally always done a lot of social housing, it’s a sector we believe we have something to offer. Building costs are cheaper across the Channel and we could introduce that to the UK.”

Gunter added that Bouygues wanted to directly employ more British craft workers to prevent skills shortages hobbling its UK expansion plans.

The House Builders’ Federation’s head of external affairs, Julian Smith, welcomed the new cash for social housing, but called for government changes to the planning system to increase the number of new-build houses.

Construction’s share of the Spending Review

The 10-year transport plan – total £70bn The major projects are:
  • Upgrading of East Coast Main Line (London-Leeds-Edinburgh)
  • Completion of Channel Tunnel Rail Link and West Coast Main Line modernisation
  • Upgrading of Great Western Main Line (London-Bristol-Wales)
  • Completion of Thameslink 2000, construction of East London Line extension and CrossRail
  • New light rail systems for Leeds, the West Midlands, Bristol, south Gloucestershire and Hampshire
  • 360 miles of motorway and trunk road widening and 30 trunk road bypasses
Housing spend – total £2.5bn
  • New social housing – 56 000 homes in the next three years
  • Extra major repairs allowance, particularly targeted at the north of England
  • Council/private sector link-ups for housing maintenance
  • Major housing private finance initiative schemes