While there doesn’t appear to be any significant new money across the board in the Comprehensive Spending Review (CSR), the chancellor clearly remains committed to infrastructure investment, having already earmarked significant spending on vital infrastructure projects in this parliament.
The additional funding now available to Network Rail announced in the Hendy Review should also provide industry with enhanced certainty around project delivery.
The CSR offered more detail on how the Government plans to spend the £100bn committed to infrastructure by the chancellor in October.
Richard Robinson
The Department for Transport has been allocated £46.7bn for key infrastructure, so that construction on HS2 can begin and delivery of the Road Investment Strategy (RIS) can continue. Given the pivotal role of infrastructure in driving the economy, the accelerated delivery of such programmes is now key.
In addition to the investment to continue the RIS confirmed in the CSR, there will be a second RIS published before the end of this parliament. This will set out how a new Roads Fund will be invested, which will be paid for directly from the revenues of Vehicle Excise Duty from 2020/21 and used to finance future roads investment.
Improvements to local roads are as important as upgrades to the Strategic Road Network (SRN), so the £250m that has been ring-fenced for tackling potholes on local roads over the next five years is welcome. However, it’s vital that investment in motorways does not happen at the expense of the local network. Following years of underinvestment in roads, many would argue that increased investment beyond what has already been promised is required.
The additional investment for Network Rail provides greater certainty for industry, which can only be a good thing for the economy and for passengers. But Sir Peter Hendy rightly points out that the delivery of CP5 programmes will need to be viewed holistically with Network Rail’s supply chain rather than planned separately.
This integrated approach to planning should take place not just within Network Rail but across other sectors too. After all, major programmes such as the Thames Tideway Tunnel and Highways England road schemes will draw on similar areas of the supply chain, so this must be considered and accounted for.
Of course an integrated approach to planning will require greater collaboration between the public and private sector. Collaboration can help ensure the right skills and procurement tools are in place to support the delivery of vital transport programmes. And the latest round of departmental revenue cuts announced in the CSR will likely make closer working relationships between the public and private sectors more important than ever.
While local authorities face similar budget constraints, increased momentum for devolution and the decentralisation of business rates are cause for optimism. Both should give local authorities more autonomy over the delivery of local infrastructure and have a positive impact on the pace of progress.
Central to the delivery of the major transport programmes in the pipeline will be equipping the next generation with the right technical skills. The planned apprenticeship levy could therefore be punitive to some of the companies taking the lead in training and developing the workforce of the future.
The Government has said the levy will be introduced in April 2017 at a rate of 0.5% of an employer’s paybill, to deliver 3 million apprenticeship starts by 2020 through raising £3bn by 2019-20.
Each employer will receive an allowance of £15,000 to offset against their levy payment, meaning 'that the levy will only be paid on any paybill in excess of £3m and that less than 2% of UK employers will pay it', the Treasury says.
More detail is required about how the £15,000 allowance will work in reality. There is also concern that the levy may cause some employers to cut the number of apprentices they hire at the very time they need to be building up apprenticeship schemes.
Bringing the UK’s much-needed transport projects to fruition at a time of increased pressure on skills is no mean feat. But the focus must now be on delivery. Let’s hope the Hendy Review is a catalyst for greater integration across the full spectrum of transport projects. Greater public and private sector collaboration and innovation are needed now more than ever before.
Richard Robinson, chief executive – Civil Infrastructure, Europe, Middle East, India and Africa, AECOM
