Pre Comprehensive Spending Review
The Government’s long awaited Comprehensive Spending Review is due to be published on 25th November 2015. Whilst the news in this is unlikely to be wholly positive for the construction industry, at least it will remove the uncertainty which is clouding the public sector at present, and allow us all to better plan for 2016 and beyond.
I have recently attended the IHEEM healthcare conference, and the Education Estates conference, and a key message from both of these events has been that despite these two sectors being on the face of it protected from cuts, even they have suffered since the election. One interesting point was made in that it is not their entire budgets which are protected, so there is added pressure to find savings in the smaller elements of the budgets.
The Government’s document “A Country that lives within its means” states that “The Spending Review will prioritise our investment in the NHS……..and we will continue to protect spending on schools……..”
But this protection has not been reflected in the number of new projects coming through in these sectors. The next wave of the Priority Schools Building Programme (PSBP2) was announced earlier in the year, but the CSR has slowed down the implementation of this. This delay has meant that the £2bn in investment planned has not yet started, obviously having a negative effect on the construction industry as these are projects we could all be working on now, and also creating an issue for the schools who are waiting for the investment.
The number of new projects coming through in the healthcare sector has also slowed down, particularly when looking at the Procure 21+ framework where the number of new projects has reduced in recent months, and although the value of projects remains high, this is primarily due to several very large projects and programmes of work, rather than the churn of schemes there has been in recent years.
I have concentrated on education and healthcare, but the position in other major sectors including housing, transport, and defence is the same. In my view, whatever the outcome and contents of the Comprehensive Spending Review may be, we will be in a better position by the end of 2016 as there will be more certainty, all of these government departments will know where they are, and will be in a better position to begin committing to higher levels of capital spending.