The chancellor announced yesterday a series of project cuts after Labour found a shortfall of £22bn in spending inherited from the previous Conservative government.
Schemes cancelled include the Stonehenge Tunnel on the A303 and Boris Johnson’s New Hospital Programme.
“If we cannot afford it, we cannot do it,” Rachel Reeves told MPs.
Long-term impact
The news did not impress Noble Francis, economics director at the Construction Products Association (CPA), who said that Labour’s project cancellations follow on from similar moves by the Conservatives and as such, “is a constant government failure”.
Francis shared on social media six points digesting the chancellor’s decision: “Transport infrastructure and hospital projects are investments, not spending. Directly they provide construction activity and employment plus, indirectly, they drive growth in the wider UK economy and productivity. Pausing, delaying, reviewing and cancelling projects hits all these.
“Infrastructure and hospital projects are needed long-term. Pausing, reviewing, delaying and cancelling vital projects doesn’t save money as these projects, or similar ones, will just have to be built later but at a higher cost.
“The pauses, reviews, delays and cancellations to infrastructure and hospital projects follow on from the previous government’s infrastructure pauses, delays, reviews and cancellations last year so it is a constant government failure.”
‘Depressingly predictable’
Francis continued: “The wider problem is that government’s stop-start investment is highly damaging. Firms across the construction supply chain (architects, contractors and product manufacturers etc) cannot justify making large, upfront investments for a long-term return in skills, capacity and more efficient construction methods, which means major construction projects will be even more expensive and take longer to build.
“New and better-quality infrastructure and hospitals should be drivers of economic growth and productivity (which would, incidentally, help to reduce public sector debt). More and better quality infrastructure is not just nice to have when public finances are good and the government shouldn’t view it as the easiest thing to cut when it is struggling to deal with balloning public spending in other areas (as it inevitably leads to cost rises later although that ends up as someone else’s problem).
“For those reading our latest construction forecasts, it’s depressingly predictable, so much so that it doesn’t affect the forecasts as we assumed governments would pause, review, delay and cancel projects. e.g. the A303 Amesbury to Berwick Down (Stonehenge Tunnel) scheme was highly contentious and expensive (officially listed at £1.7 billion but its cost hasn’t been updated for years), so it wasn’t even in our latest forecast. Also, note [that] government will pause, delay, review and cancel more projects next year as its focus is on short-term finance.”
