Glenigan’s reaction to the Government’s Spending Round

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The Chancellor has given a welcome commitment to long term capital investment in the nation’s infrastructure and built environment, whilst unveiling a renewed cuts in general public sector spending.

However the Government will need to look to the private sector to deliver much of this investment Although some key departmental capital budgets are being increased in 2015/16, overall departmental capital expenditure will total £48.3 billion in 2015/16, a mere 1.3% rise in real terms. 

A particular bright spot is a 6% rise in the Department of Transport’s Capital budget to £9.5 billion which is intended to deliver new road projects as well as supporting investment in the rail network. In addition the NHS capital budget is being broadly maintained at £4.7 billion. 

Elsewhere the Government is looking to support the creation of a further 180 free schools, 20 university technical colleges and 20 new studio schools in 2015/16. However, these projects will be funded from capital budget that is shrinking by almost 2% in real terms. The sharpest cut is to the Department for Communities and Local Government capital budget which is to fall by 36% to £3.1 billion, with the Government looking to private sector funding and higher rents to sustain investment in social housing provision. 

Glenigan research recently identified a £114 billion central government pipeline of potential construction projects, including a host of both infrastructure and building projects that could potentially have provided a major lift to construction activity over the next two years. Whilst most capital budgets have avoided the sharp cuts seen to departments’ general expenditure, it will be essential that the promised funding is effectively deployed to ensure that as many of these projects move forward as planned.

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