Budget 2021: all eyes on funding for UK's 'build back better' revival

Out-Law Analysis | 26 Feb 2021 | 4:03 pm | 2 min. read

Construction and engineering companies will be looking to the UK chancellor to provide sufficient upfront funding to enable them to support the government's plans to drive the country's economic recovery from the coronavirus crisis through new infrastructure projects

Without the initial capital investment from public funds, the government's 'build back better' and 'shovel ready' agenda will struggle to get off the ground. Rishi Sunak's upcoming Budget announcement on Wednesday 3 March is therefore of major significance for the UK's infrastructure market.

Blundell Nigel

Nigel Blundell

Partner

It simply is not possible to have a stop-start approach to large projects  

Build back better is the opportunity to use new techniques to create better infrastructure and buildings. Use of off-site and modern methods of construction can create greater efficiencies and certainties of outcome. Homes England is an enabler of modern methods of construction in the housing sector. The advances in digital construction enable the greater use of data and this is consistent with enhanced need for building safety following the Hackitt report and the impending Building Safety Act.

The government has also made clear that building back better means building back greener. In its December 2020 energy white paper, the government set out its plan to deliver on its legal commitment to achieve 'net zero' green-house-gas emissions by 2050.

Collins Stacey Nov_2019

Stacey Collins

Partner

There is no doubt the government wants to see climate change issues being front and centre in considerations of who gets chosen to deliver the infrastructure needed

The energy white paper reflects the government's ambition to be a world-leader in tackling the challenges of climate change. It has made clear that when rebuilding the economy climate change strategies and, in particular, decarbonisation should be at the heart of government policy, support and regulation.

This build back greener focus is also emphasised in the recently published Construction Playbook which, amongst other requirements, states that in all future procurements contracting authorities should adopt the use of standardised 'whole life' carbon assessments to understand and minimise emissions throughout the life cycle of their projects. This will take a bit of time, but the intent is there and the private sector should be getting ready to include decarbonisation options in its tenders. There is no doubt the government wants to see climate change issues being front and centre in considerations of who gets chosen to deliver the infrastructure needed.

There is substantial opportunity across the sector but the biggest issue for large scale schemes is the prompt availability of public sector funding to allow the shovel ready projects to start.

Understandably government is prioritising spending, particularly in transport to ensure it meets future demand. After years of growth, the future is now unpredictable and decisions on timing are difficult.

However, for long term projects, enterprise or collaborative contracting models such as the ICE's Project 13 frequently require the team to be formed at an early stage, prior to the price for the contract having been established. Building back better requires a different look at ways of delivering major schemes. To work most efficiently, these major projects need funding to be committed so that the planning design and implementation stages are seamless.

If projects become delayed because periodic design and funding approvals have to be met, the projects become less efficient and more expensive as teams have to be retained in the design phases and are not as productive as they can be. It simply is not possible to have a stop-start approach to large projects.

It is important that once government has decided priorities, timetables are established and funding fully committed from tender stage. Otherwise there is the risk that best value from the collaborative enterprise models will not be obtained,  contracting models will not evolve and a huge opportunity to change methods of contracting for the better will be lost.